As was always on the cards, Yahoo has rejected Microsoft’s $44.6 billion offer for the company, holding out for an even bigger bid or a white knight partner.

It seems that the Windows and Office software giant may be prepared to increase its offer, but not by enough to satisfy the Yahoo board, which believes the company is worth far more.

However, a further rejection could lead to a hostile takeover battle which Yahoo may find difficult to fight.

Microsoft is gambling that buying Yahoo would transform both companies’ attempts to overhaul Google in search and advertising, the new gold rush on the internet. Its unsolicited offer represents a 62pc premium over the internet company’s recent share price.

However, in a Friday counter-response, Google’s Chief Executive Eric Schmidt called Yahoo CEO Jerry Yang to offer help to stall Microsoft’s bid.

Yahoo is believed to be looking at other ways to survive this “unsolicited bear-hug”, including the emergence of a rival bidder or a business tie-up with Google that will allow it to remain independent.

The Wall Street Journal reports, “No serious alternative bids have emerged, and antitrust experts say Google’s latitude to do even a business deal with Yahoo is minimal because of likely regulatory concerns. At Microsoft, optimism is growing that the $31-a-share offer for Yahoo that it made public Friday will go through in the absence of rival bids …”

There could be a long way to go yet.

Syntagma Digital has had Windows Vista for more than a month on brand new kit intended to replace our XP boxes here in the office. Previous posts (here and here) described our initial experiences, so I won’t trawl through them again.

Although we still have our XP machines running alongside the new Vista boxes, the proportion of usage by time has swung massively in favour of Vista. We’re now using the V-machines for 90 percent of the time.

We’ve finally got our printers working after a hiatus when nothing we did worked. Even now some applications won’t print from Vista even though they work well in other respects. There are still a lot of error messages flying around. But gradually the bugs are being overcome.

Everything else is now happily done on the much faster, number-crunching, new computers. Of course, we’d switched a lot of stuff online before moving over : all email is now done on Gmail — a huge relief on new computers — and much else too. I’ve even taken to using Google Documents for smaller jobs, but can’t quite get myself to use the spreadsheets, especially as we now have Office 2007 Excel working on Vista.

Thankfully, our desk-top-publishing program works seamlessly on Vista, but not the image-handling one. As a temporary measure I’ve been using the Office image software bundled with Windows itself. It works so well, I’ll probably stick with it for the duration, except for major Photoshop-type operations, which we rarely need nowadays as we employ a professional designer in that area.

Apart from that, the increase in performance is so good, we stifle a groan every time we have to use the XP machines.

I know a number of our readers are looking for new computers with XP pre-installed, as they don’t trust Vista yet. Let me tell you, put your doubts aside. Get as much as you can online — Google is a blessing here — and you won’t look back.

Be aware, though, that the “Protection Mode”, which is the default setting for Vista, may have to be temporarily shut down while you add new stuff or get your broadband connectivity working. Thereafter, it’s surprising how quickly you will adapt to the loss af admin powers, which is what it effectively does.

Our advice? Go for Windows Vista now. There’s nothing to keep you on XP but fear of the unknown.

I’ve had Windows Vista for a month now on brand new computers intended to replace our XP boxes, which are still running alongside the new Vista machines.

However, the proportion of time spent on Vista has increased to 90 percent and more. The exceptions are jobs which require the printers. None of the old ones will work with Vista, so I’ll be replacing them very soon.

Of course, I’d switched a lot of stuff online before moving over : all email is now done on Gmail — a huge relief on new computers — and much else too.

Thankfully, the desk-top-publishing program works seamlessly on Vista, but not the image-handling one. As a temporary measure I’ve been using the Office image software bundled with Windows itself. It works so well, I’ll probably stick with it for the duration.

I know a number of people are looking for new computers with XP pre-installed, as they don’t trust Vista yet. Let me tell you, put your doubts aside. Get as much as you can online — Google is a blessing here, buy new printers, tweak your internet connection, and you won’t look back.

The “Protection Mode”, which is the default setting for Vista, may have to be temporarily disabled while you add new stuff or get your broadband connectivity working. Thereafter, it’s surprising how quickly you will adapt to the loss af admin powers, which is what it effectively does.

My advice? Go for Windows Vista now. There’s nothing to keep you on XP but your fear of the unknown.

Google’s announcement of an Office 2007 killer in the form of Google Apps Premier, its subscription package of premium, business applications hosted online, put Microsoft on the back foot today.

For $50 (£26) a year per user, Google Apps Premier Edition will offer business customers a number of web-based applications including email, word processor and spreadsheet. It will compete with Microsoft Office’s desktop-based Word and Excel.

A Microsoft spokesman downplayed the launch, claiming online services such as Google’s are “not alone in altering today’s technology industry. Productivity applications represent a very competitive space in which more than 450 million users around the world have consistently chosen Microsoft.”

The Times (London) reports : “Microsoft’s Business Division, which includes Office, accounted for $3.5 billion of the group’s revenues of $12.5 billion in the latest reported quarter, making it the largest source of sales. However, industry insiders say that Google has been quietly preparing for months to tap Microsoft’s cash-cow. Keen to supplement its lucrative search business, Google has built massive data-storage plants, thought to be years ahead of those so far developed by Microsoft and IBM.”

This “cloud” is now being used to host both software and data, while the internet becomes ever more the operating system.

Tom Austin, of Gartner, the technology analysts, said: “This constitutes a real threat to Microsoft’s business model. Eventually, it will have to switch from limited-use licences to software as a service. That will require a fundamental reengineering.”

Despite investing heavily in Office 2007, which was released earlier this month and which, like its predecessors, is anchored firmly to the PC, Microsoft has earmarked $2 billion to develop its own data centres.

The company added that it is now partnering other businesses “to capitalise on emerging services, such as advertising-based software, subscription or on-demand software”.

Most of the Premier Edition components are already available free. “From today, for the first time, it will charge for “white label” tools that carry its customers’ brands, so that e-mail addresses can be in the name of the client company.”