The deal is another chapter in the Yahoo-Microsoft-Google marketplace drama. Various permutations of deals between Yahoo! and Google and Yahoo! and Microsoft have been discussed since Microsoft made a public offer to acquire Yahoo! in 2008. This deal does not include any upfront cash to Yahoo! although, according to Yahoo!, this agreement will provide a benefit to annual GAAP operating income of approximately $500 million and capital expenditure savings of approximately $200 million. Yahoo! also estimates that this agreement will provide a benefit to annual operating cash flow of approximately $275 million.

For Microsoft, the deal is a positive indication that it’s investment in search and launch of Bing in June will pay off. While no solid marketshare numbers have surfaced, Microsoft has created positive momentum and it’s that traction that gave Yahoo! the indication it would need to invest heavily in search to remain competitive with Google and Microsoft. By making the pragmatic decision to cede its search technology to Microsoft, the company effects a potential $700 million swing and shows management is able to make tough decisions.

The fine print on the deal continues to be brought into greater relief, but some key questions have been raised:

Yahoo! has put a significant amount of time and energy into its open search strategy, namely BOSS and Search monkey. According to Microsoft, that platform will fall under its umbrella which leaves developers and publishers to question the future of both efforts as well as their desire to work with Microsoft.

While some contend regulatory issues may not be a major hurdle here, Microsoft is a lightning rod for attention from governing bodies in both the U.S. and Europe. Yahoo! and Microsoft represent the two largest consumer web portals in the world, and portals (as well as their toolbars) are starting points for consumer search queries.

How will Yahoo! sell its search deal to affiliates currently powered by Yahoo’s search engine once the deal in done?

How much time, effort and expense will Google put into throwing roadblocks that stall the deal? Google, the jilted groom in a proposed Yahoo! deal in 2008 has, according to reports, shown some anxiety of Microsoft’s newly found search momentum.

Publicly stating it will be going through a brand refresh in 2009, how will Yahoo! position itself with advertisers, consumers and Wall Street having relinquished one of its key product and services pillars.

What about the future of search-display convergence, which was cited as a key principle in Yahoo!’s rejection of earlier overtures from Microsoft? Search-display convergence, which implies the use of search data to better target display ads, is a key battleground for Google as it seeks to extend its advertising business into rich media and beyond.

One question that’s been raised that may be less important is whether the Microsoft-Yahoo! combination will significantly move needle on search share. Microsoft and Yahoo! together handle about 28% of the world’s searches, as compared with Google’s 65%. However, this question overlooks the strategic challenge that this deal represents. By dividing the search advertising market between premium buyers and self-service “long-tail” advertisers, Microsoft achieves a kind of pincer move around Google, challenging it directly on its home turf of self-service AdWords (it’s primary source of revenue) while empowering Yahoo! to block its expansion into the higher end of the market, the premium advertisers, where search and display convergence (along with mobile and social and online video and next-generation television) are important. In other words, this sharpens the distinction between Microsoft’s “technology company” role and Yahoo!’s “media company” role, making it harder for Google to play both against their alliance.

For advertisers, such escalating competition spells opportunity. AdWords users may now find AdCenter to be a more competitive option, especially in categories where Microsoft has focused Bing’s development like travel and retail, while premium brands and agencies may now find Yahoo! to be more capable of supporting brand campaigns with integrated search and search-related targeting capabilities. The fly in that ointment remains the privacy issues that will impede the flow of search data between the two companies. Watch for this issue to escalate in the inevitable challenge from Google.

I fail to see the wow. The primary change on the home page is a customizable rail/column that allows the consumer to add his or her favorite pages/sites/social networks to provide a one-stop panoramic snapshot of everything that’s important in one’s world. The truth is, customization works best if those sites you want to add are either Yahoo properties or those (such as All Things Digital) who have formatted their content for customizable viewing. The “apps,” as they are called, are in three flavors: Yahoo sites, partner sites (or perhaps those who have worked to make their content suited for preview) and your favorites. A box allows individuals to add their favorites to the front page, but adding my blog and Twitter resulted in a major fail as these personalized add-ons failed to load previews. Adding Facebook, which looks to be pre-programmed, kept giving me a message to log in, but even after logging in, it didn’t work. Makes me wonder if others are having the same issue.

Beyond the customizable issues, why can’t the search box at the top of the page be customized so I can focus on the categories I search most: videos, blogs, news. I’d like to move image search off the main window and add one of my own preferences. And what’s with that little box at the top next to my name that asks for my status? Who sees that, and how do I see others in my network? And, lastly, if Bartz says that video is important to Yahoo, why isn’t there a single video window on the new homepage?

There’s wow and then there’s WOW. In the case of Yahoo’s new homepage, I think it falls short of both.

The cognoscente’s meme of the day is whether or not harsh words on Twitter cut off Sasha Baron Cohen’s “Bruno’s” U.S. box office hopes at the knees. Time’s noted film critic Richard Corliss believes that a decline in opening day revenue to the following day was due in part to bad cyberword of mouth. That is, a flood of movie going Tweeters expressed less than favorable reviews of the film. Given the fact that the average filmgoer cares less about what professional critics say and more what their friends tell them, bad word of mouth can be especially damaging when it is shared in real time. In the old days (maybe 15 years ago) a crummy movie could make it through the weekend with box office intact until folks met at the water cooler on Monday morning.

Pundits who have an excessive amount of time on their hands are combing through Twitter logs to validate or nullify this theory. I believe even if there is a kernel of truth to the “Bruno” mess, there’s a great lesson to be learned for anyone who has a product or service to market or sell: in the Web 2.0 world, a marketing campaign only starts once a product is released. Understanding social buzz and (more importantly) knowing how to react will give new life to the phrase “expect the unexpected.” All the social media monitoring tools and services won’t do a film studio or soft drink company one iota of good if they are not equipped to respond to bad worth of mouth with some agility.

Anyone can plan for success; planning for disaster is another thing. As Monty Python says, “No one plans for the Spanish Inquisition.” Somehow, I sense “Bruno” may be up there with an inquisition.