Analysts cited by Computerworld said the new partnership could simply be the beginning of a long-term courtship that eventually leads to the merger of the two industry giants.

But if the companies don't merge and the deal isn't renewed, what happens to a Yahoo that has no up-to-date search technology is a big question, says Karsten Weide, an analyst at research firm IDC.

Suggesting that Yahoo has made one heck of a big mistake, Weide said: 'I was never in love with this deal, and I think it's a strategic mistake for Yahoo.'

Jim McGregor, an analyst at In-Stat, said that if a merger with Microsoft is the final result, the move won't be such a bad one for Yahoo. But if a merger isn't in the cards, Yahoo could be in a jam.

Ezra Gottheil, an analyst at Technology Business Research Inc., said Yahoo's big mistake was not accepting Microsoft's offer last year to buy the company for some $45 billion.

'The bad deal for Yahoo was turning down the insane first offer,' said Gottheil.

'Frankly, Yahoo wasn't going to be around at the end of 10 years without it.'

(Arun Kumar can be contacted at arun.kumar@ians.in)