The cliché "Go big or go home" is a business philosophy that Microsoft's CEO Steve Ballmer is used to embracing in a bear hug – nearly always, as is his impetuous nature, on the side of going big.

With Yahoo's (NASDAQ: YHOO) senior executives doing all they could to fend off Microsoft's bid for the search firm, however, Ballmer on Saturday decided it was time to take his Microbucks and go home.

The rare defeat leaves Microsoft (NASDAQ: MSFT) weakened, a pair of analysts said, but nonetheless committed to continue forward on its own. Meanwhile, some observers wonder whether the battle might not be over quite yet.

Microsoft's bid, had it succeeded, would have been the largest acquisition in the technology industry's history. Most important for Microsoft, the combination of the two companies' search properties would have created a stronger second place competitor to Google (NASDAQ: GOOG) in the consumer search arena.

According to tracking firm comScore, Google garnered 59.8 percent of U.S. searches this past March, while Yahoo came in at 21.3 percent, and Microsoft search entities came in at 9.4 percent. Both Yahoo and Microsoft lost market share in the month – albeit small.

However, Ballmer and company have said all along that Microsoft would continue to invest in its own organic search technologies as well as in other acquisitions meant to strengthen the company's sagging market position in the all-important online search service market – along with the advertising dollars it would bring in.

Ballmer, in a letter to Yahoo CEO Jerry Yang on Saturday, said that a hostile takeover battle would be counter productive, particularly in light of "poison pill" moves Yahoo has made meant to make itself less attractive to Microsoft.

Referring specifically to an "experiment" that Yahoo has been running with Google, whereby the search giant will provide some search outsourcing to Yahoo, Ballmer said, "In our view, such an arrangement with the dominant search provider would make an acquisition of Yahoo undesirable to us."

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Although Microsoft has invested billions in an area that is still hemorrhaging cash, Ballmer clearly understands the importance of being left further behind in what grew from an interesting niche market in the 1990s into a giant money machine.

The company doesn't break out how much it makes or loses on search advertising, but the business group that owns the responsibility for search, the Online Services Business, lost $228 million in Microsoft's third quarter of fiscal 2008, which ended March 31.

Microsoft all but ignored search early on, and many observers at the time said that it missed the Internet search wave the same way that it initially "missed" the Internet in the mid-1990s.

Unlike the Internet, however, Microsoft has nothing it can bandy into search dominance the way that its ability to bundle the Internet Explorer browser with every copy of Windows enabled it to overcome Netscape – not that it hasn't tried.

The question remains, though, what will the company do without the platform and the creative talent it would have gotten in a Yahoo buyout?

"We have a talented team in place and a compelling plan to grow our business through innovative new services and strategic transactions with other business partners. While Yahoo would have accelerated our strategy, I am confident that we can continue to move forward toward our goals," Ballmer said in a statement that accompanied his letter to Yang.

The demise of the deal didn't cheer investors in either company, however. The two companies' stocks reflected that ennui. Microsoft's stock closed basically flat on Monday, with a loss of $0.16 a share to $29.08. Yahoo closed down $4.30 at $24.37.

Indeed, Yahoo is already facing investor lawsuits for fighting off the deal, and is likely to face more.

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