The Gillmor Gang - Dan Farber, Robert Scoble, and Robert W. Anderson - talk Big 3 vendor sports. Recorded Wednesday, June 11, 2008.

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Gillmor: Hi, this is Steve Gillmor. Welcome to the Gillmor Gang. It’s Wednesday, June 11th, I believe. And we are going to talk about — I don’t know.

Do you have any theories, Dan? Welcome, Dan Farber.

Farber: Ah, any theories about what to talk about? Well I just saw Erik Schmidt today. He was speaking at a little forum interviewed by Ken Auletta of the “New Yorker” in an event sponsored by the Newhouse School in San Francisco.

He really didn’t have a whole lot to say that we haven’t heard before. But I can share with you a few little tidbits from his remarks. If I can find it. It started off very general. And one of the things that Google is well known for saying is that they are doing things to help people and help the world.

So, he said, “The goal of the company is not to monetize everything. Our goal is to change the world. Monetization is a technology to pay for it. Google’s ambition is to solve big problems and impact a lot of people.”

OK. So you know we have heard that before. And then after a bunch of us reporters were standing around talking to him and one of the questions had to do with Yahoo. And Google’s stance has been that they would like to see Yahoo stay as an independent company for obvious reasons, one being that they don’t have a great regard for Microsoft, and they feel that Microsoft would abuse its Windows franchise, etcetera, via Yahoo.

Then I asked him a question regarding Google’s business, which is to say, he was saying very nice things about, “Oh, it’s great to have Yahoo independent and Yahoo is doing very well in display ads, much better than we are.”

So I said, “OK, now let me understand this. Right now in the U.S. your search share is about 68%. In the U.K. it is almost 90%. And you seem to be getting to a point where people expect you to have 90% of all search over time, over the next few years. So, wouldn’t you want to do the same thing in display ads?”

He said, “Well that’s not the way we operate. We just do what’s right for customers.”

I said, “Well, you know, Wall Street is probably interested in that.”

He said, “Well Wall Street is not what we signal on. We signal on providing great services to people.”

So it seems like Yahoo is in this kind of conceit where they can be very magnanimous and say, “Oh, we just want everybody to do good work and grow the Web and we don’t think about our competition.” But at the same time it is a little bit disingenuous.

Scoble: Hey, this is Robert Scoble.

Gillmor: Hi, Robert.

Farber: Hi, Robert.

Scoble: I’m in the car with the Jackson Fish Market.

Gillmor: Make the fish come to you.

[laughter]

Gillmor: So, Robert, why don’t you mute for a second?

Scoble: OK, I’ll mute.

Gillmor: While we talk. So Dan, do you really buy this, “We are just in the market for customers.”? I mean, it just…

Farber: I think everybody can say that, you know, “We are only interested in satisfying our customers.” But at the end of the day your shareholders care about your revenues.

So if you have a blip in your revenues and it turns out that Yahoo is doing a better job than you are in a space, then I think you’d be very competitive about trying to take share away from Yahoo just as Microsoft and Yahoo are trying to take share away in the tech search space from Google.

Gillmor: But he doesn’t seem to respond to that, except to deny.

Farber: No, I think they are just trying to fly above the fray because they can’t…

Gillmor: It’s reminiscent of, you know, how they aren’t going after Microsoft Office.

Farber: Right.

Gillmor: Which they used to say and it turned out to be bullshit.

Farber: Well, it’s just a conceit. You know, it’s what they can say to avoid controversy and just to continue about their business and focus on what they can do as opposed to focusing always on the competition.

Another thing he said that the media coverage is all obsessed about winners and losers. I’m quoting him, “In fact, what is really important about technology is you have the opportunity to redefine the game over and over and the winner redefines the game.”

Gillmor: Did anybody ask him about his issues with being on the board of Apple?

Farber: Yes, he was asked about that. In regards to conversation about the iPhone, he recuses himself. It doesn’t happen that often. But it does seem a bit odd.

Gillmor: Did anybody talk about the competitive aspects of MobileMe versus the Google?

Farber: Not at all. Not at all. And you know he’ll continue to say that Android is a software platform. It’s not a hardware device.

Gillmor: Right. But when Microsoft asked about Windows Mobile, they don’t say, “Oh, this is just a software platform. It’s not a device.”

Farber: No, I think it’s just style of public speaking that Erik Schmidt has gotten into where they kind of package things up and tie a bow around it and say, “We don’t think about competition. We just think about serving customers. We’re not like Microsoft in the sense that Microsoft is known and is known to be rapacious and extremely competitive.”

But if you’re not competitive, if you don’t have that in your culture I think it’s very hard to survive in this industry. So as I said before, it’s not quite — you know, he’s spinning. He’s obviously spinning very nicely.

Gillmor: Right. I mean, I don’t — I think it’s their mutually exclusive arguments that being rapacious and being aggressive are two different things.

Farber: Right, one is in which you are breaking some regulatory fundamentals, such as business practices that aren’t acceptable. And the other is you are just doing what comes naturally, which is to try to beat your competition by doing a better job.

Gillmor: Well, I mean Microsoft — there is such a thing as the recidivist argument, which is that there is a percentage of criminals, and when they come out of the system they don’t go back because they are reformed. So, I mean do we give Microsoft the benefit of the doubt?

Farber: Well, I think Microsoft has been very closely watched and monitored.

Gillmor: Right. So do we give them the benefit of the doubt? Are they presumed guilty until proven innocent?

Farber: Well, I think that’s the way their competitors would like to have it, is that they’ll bring up the antitrust, the monopolist every time they can. Just like in a political campaign, for example, everybody says, “OK, well McCain is just the son of Bush.” etcetera.

It’s the convenient thing to do as opposed to what the reality might be, although in the case of McCain it’s pretty hard to see much distance between him and Bush. I thought I’d bring some politics into this.

Gillmor: No, I appreciate that. We just had an interesting political discussion on News Gang. So those people that were still in the chat room, I’m sure they are enjoying this. They’re talking about quotes from the Bible, it looks like. Oh, “rapacious.” “Given to a seizing of plunder or the satisfaction of greed. Inordinately greedy, predatory, extortionate. A rapacious disposition.”

OK, now the Gilmore Gang pop quiz. Which does this apply to? 1) Google 2) Microsoft 3) Google 4) Microsoft?

Farber: I would say…

Gillmor: Are we supposed to vote for Google or Google or Microsoft or Microsoft? Well, do you have any other votes? I mean Apple?

Anderson: Apple?

Gillmor: Who said that?

Anderson: Robert Anderson, hi.

Gillmor: Right, are you voting for Apple as being rapacious?

Anderson: No.

Gillmor: OK. I don’t think that Microsoft is rapacious. And if they were prior to that, Bill Gates is retiring in 12 days or 20 days. What do you think about that, Dan Farber? Do you really think that he’s retiring? Or do you think he’s going to, as some people suggest, come back two months later and just take back over?

Farber: First of all, retirement is the wrong word. He’s still going to be the chairman of the company. He’s stated publicly that he’s going to spend at least 20% of his time on Microsoft-related issues, such as next generation Office and new user interfaces and education software and so on. So he’s not leaving.

Scoble: This is Robert Scoble. By the way, yesterday I was sitting next to one of the hot topic techs on Windows 7.0, and he said Bill is still very much involved in the company. He’s dealing with a smaller number of teams now than he used to be, but he said he’s still very involved in the core group of teams.

Gillmor: Well, I’m sure that’s true that he’s involved. But I think that for the last two or three years… I mean in the “Wall Street Journal” article he acknowledged that he basically has taken a step back and let Ballmer run things.

Anderson: That was in 2000. It’s been eight years since he was…

Gillmor: Even on the Yahoo deal, for example, he said that he’s up to speed on it. He knows about it. He’s in line with what Ballmer is saying about it.

Anderson: Give me a break. Give me a break. Give me a break. Microsoft doesn’t spend $45 billion dollars and Bill Gates isn’t totally involved.

Gillmor: OK. Well, first of all, they didn’t spend the $45 billion.

Anderson: Well, whatever the case is, he was certainly involved in the $45 billion transaction that hasn’t occurred, may not occur, or may occur.

Gillmor: Well, I think there are some very good reasons to take a look at who is in charge at Microsoft these days. And I think that the assumptions that are being made in the mainstream media are not altogether correct or coherent.

I mean for example, there’s a lot discussion about how there’s some sort of distinction between Ballmer and Gates, but that Ray Ozzie is in a different part of the company. There’s a lot of understanding about what’s really going on at Microsoft over the next two months, that I don’t think has really been discussed. Let me put it that way.

Anderson: Why don’t you shed some light on it for us?

Gillmor: Well, I can only say what I just said. But you can sort of unpack it by looking at what it is. Who’s in charge? Do you think Steve Sinofsky is in charge of any large part of Microsoft? He’s, by the way, the chief of Windows. He used to be the chief of Office.

Scoble: According to the architect I sat next to, he’s certainly still in charge of Windows 7.0. It’s certainly 30% of the company?

Gillmor: It’s 30% of the revenue, whether it’s 30% of the company or not moving forward? Now we can start talking again about what Schmidt is really talking about when he says that they’re not aggressive.

If Google wasn’t aggressive, then why would they be doing things like what they announced with the Gmail Labs Initiative? Why would they be going after the social environment with about seven different initiatives they’ve been announcing over a period of the last three months, one right after the other?

You’re a reporter, Dan. Mary Jo Foley talks about some sort of business office — correct me with the correct terminology — but some sort of announcement about a social type of project that’s going on at Microsoft?

Farber: Yes, it’s an enterprise social project.

Gillmor: Yes. Do you really think that that is a comparable in scope or aggressiveness to what Google is doing in a social space? I don’t.

Farber: It’s a very different thing. And there are many companies that approached this notion of how do you build a social fabric for the enterprise, ranging from prediction markets to just ways to find people in the company who has certain kind of expertise, ways to socialize different departments together. So many companies provide that.

Microsoft just looks at it as it’s a business opportunity to sell more software in corporations, which is much easier, and not in conflict or in place of coming up with a consumer strategy. And it seems that Microsoft’s consumer strategy this way has two parts.

One, see if Facebook is at some point available for them to acquire. And two is do something very similar to what I think Yahoo And Google are doing, which is… I think MSN has about 500 million people who go to the site. And many of those people use email or instant messenger.

Is there a way to remake the hailstorm, which is everybody has a profile, an identity? And it’s all strung through Microsoft’s backend, and through a lot of its services. But it’s more open in the same way I think Yahoo is open.

Gillmor: You’re talking about Mesh.

Farber: Well, I think Mesh is a foundation for that, yes.

Gillmor: Right. So Mesh would be a significant project on the order of what Google is doing. Google has always, and we already touched on this, Schmidt has always basically used misdirection or indirection to talk about their efforts around Gmail, Google apps, etcetera, etcetera.

But they’ve rolled out consumer facing applications, which then the bits are flipped and all the sudden they become corporate apps. And they have an aggressive policy in that area, as opposed to Microsoft’s, which as you point out is one that’s very, very future facing and namely Mesh, which we don’t know yet whether it’s going to get the traction.

If Steve Sinofsky is really in charge of fully a third of the company, which as Robert suggests, then he would seem to have far more leverage in terms of moving the company forward into the on-demand enterprise base, which I think is absolutely not true.

So there’s sort of a disconnect between these small satellite enterprise projects, or experiments, on the one hand, and the larger visionary and potentially open architecture of Mesh. And if you take a look at who the players are inside Microsoft who are actually — to use a term — change agents, I think you’ll come up with some different names then are normally and obviously rendered in the media.

Farber: Yes, but you could think of that on one hand, they’re banking an enterprise off of SharePoint with some collaborative features that are setting a social dimension. And on the other hand, they’re trying to build a platform for the future, which is where the live Mesh comes in.

Gillmor: Right. But the question is which? If you’re shooting at the same target, which they both are, which is some degree of standing in the Internet operating system that is being built out right now, the question then becomes whether or not Mesh is going to cross — whether that target is going to move into position of the flight of the arrow that IT and other people are making in the enterprise space faster than what Google is doing by building it out with customers and then turning it over to IT.

It’s sort of an iterative transitional development like what IBM and Lotus did with Notes, rather than boiling the ocean.

Farber: We don’t know yet what this Microsoft social network for business is. It’s called Town Square, they’re supposed to announce it tomorrow. It’s supposed to be Facebook-like, but everything is Facebook-like in the sense that people understand, “Oh, Facebook works. Let’s just mimic that.”

And it’s part of SharePoint. So that’s a billion-dollar business that they’re hooking this feature — basically it’s a feature — off of. So that makes a lot of sense.

Anderson: It’s not really clear that it’s going to be something that they’re going to be hosting. It looks like it has to do with their Office Labs stuff. And it’s not clear if that’s something they’re going to sell along with SharePoint or put it into the cloud.

Farber: I don’t think it makes any difference, because they’ve hosted SharePoint on premises [...] behind their firewall.

Anderson: I want to point out though, Steve, that historically Microsoft, they’re done a lot of this stuff in parallel. So there’s all this great stuff happening with Live Mesh, and then there’s all this work that’s being done with Office in the cloud. My bet is, there’s not a lot of overlap there right now. And it’s going to take a whole other generation to..

Gillmor: If you want to talk historically, again, the “Wall Street Journal” article pointed out a classic example of non-synchronous behavior with ended up being completely wasted, which was the Net Docs strategy. There were two groups inside Microsoft, one which did not have the blessing or the support of the key players, like Allchin, inside the company, and it ultimately was thrown away.

Ballmer was, according to the “Wall Street Journal” article — it was cagily written but it seemed pretty clear that Ballmer was supportive of it and Gates wasn’t. And that’s why it was ultimately killed. And again, the Jim Allchin role inside Microsoft is in play. And I don’t think that we have seen who that person is yet, and I don’t think it’s been fully decided.

I think that once Gates is actually in this quasi-retirement role — which I believe to be the case, regardless of what people are telling Scoble. At that point there’s going to be a battle, and it’s probably going to be over pretty quickly because they don’t have a lot of running room against Google right now.

There’s going to be a battle for sort of this consigliore role, the guy that actually makes things happen, protects the crown jewels, and moving forward gets into the right things. Now what Dan said about waiting around for Facebook as an acquisition target, I think that’s exactly right.

But I also think that, if you look at what Mesh represents in terms of the building blocks for a more distributed, more open strategy in the social space, I think that if Facebook gets acquired by Microsoft, it’s going to be a rolling acquisition that’s going to move similarly to what happened with Notes moving from a proprietary development environment to a J2E development environment.

I think that you’ll see that moving to the Mesh development environment in fairly rapid order. I think that’s probably what the strategy with Yahoo was.

Farber: It didn’t seem like there was much of a strategy other than search.

Gillmor: Right. But everybody was talking about how difficult it was going to be to absorb it. If you look at Mesh as being a container which can essentially connect to existing architectures and then, over time, rebuild them in the shape of the new architecture, that’s a fairly rapid redeployment strategy around a Yahoo asset. The fact that it didn’t happen doesn’t mean it wouldn’t happen with a Facebook environment.

So the real question in my mind is, is who’s in charge at Microsoft?

Anderson: You’ve got me.

Scoble: According to the people I’m hanging with right now, Steven Sinofsky’s in charge. Now will Ray Ozzie be in charge tomorrow? We’ll see. But right now it’s clearly the guy who is in charge is Steven.

Gillmor: So not Steve Ballmer?

Scoble: Ballmer is Sinofsky’s boss, right?

Gillmor: He’s also Ray’s boss.

Scoble: Yep.

Gillmor: So answer your own question. The people that you’re hanging with, they probably think exactly what you’re saying.

Anderson: And you’re hanging with the Windows 7.0 team, right? Isn’t that what you said?

Scoble: No. I’m hanging with Jackson Fish Company, which is mostly old Vista designers, developers, PMs, and executives.

Gillmor: Oh, well that’s different.

Scoble: Old option people.

Anderson: Who got kicked out.

[laughter]

Scoble: No one kicked us out [...] [laughs]

Gillmor: I think what you’re describing, Robert, is there’s definitely a battle for the soul of the company right now.

Scoble: Oh, that is absolutely true.

Gillmor: OK. So I think you defined who won. One group takes charge.

Scoble: Who runs Windows? Windows is the core of Microsoft. Whoever runs Windows effectively has control of where the future of the company is. Now if Ray is going to come out with something that’s going to become more important than Windows, and I think me and you agree on where that is.

Gillmor: [...] software architecting. That is a position that is above the head of the Windows side of the company. There’s also somebody in charge of the Office side of the company. Do you know who that is?

Scoble: Today I don’t know.

Gillmor: OK.

Scoble: It used to be Ray.

Gillmor: Well, look into that, because that person is the very interesting new person at Microsoft.

Scoble: Yeah, who’s in charge of Office now?

Man: Antoine, I think.

Scoble: Antoine.

Man: It’s divided actually. Antoine Leblond.

Scoble: Antoine?

Man: Leblond.

Scoble: Leblond.

Gillmor: Go up the stack. Ask them who’s in charge of the business products. Ask them who’s in charge of the business division.

Anderson: Who replaced Ray?

Scoble: Who’s in charge of what division?

Gillmor: Of the business division. I forget what it’s called. The Microsoft business division.

Man: The guy who replaced Ray.

Scoble: They all call him “the guy that replaced Ray” because they don’t know him either. [laughs]

Gillmor: OK, when we find out that guy’s name — if you want, you could go look at my last column on TechCrunch. It’s right in there. You’ll see that that person is in charge of the other third or half of the company that’s not under Steven Sinofsky’s control.

Hello?

Anderson: Hello?

Gillmor: I guess Robert’s gone now. I think that he’s been shut down by the Windows team. Dan, are you still there?

Farber: I’m still here. I’m still here listening to this.

Gillmor: OK. So, Dan, you’re suggesting that Gates is going to retain a tremendous amount of day-to-day power.

Farber: No. He said, in fact when I saw him, he said that he was going to spend 2-3 days a week in his office at Microsoft, and 2-3 times that much time working on Microsoft-related things as they came up. I think as Robert said, he’s going to be narrowing down his field to fewer items. Really concentrate on the things that he’s really interested in, things that he can geek out on. But also in his other role as chairman of the company to protect the shareholder value and protect his own legacy.

So to that degree, if you think of it from the point of view of Gates is very competitive. It’s his company he founded. That he wants to protect his legacy. That he’s not going to be taking his eye off the ball.

Other than over the last few years, he’s basically retrained himself to have a narrower focus, to really identify those things and not get so much in the weeds that are critical for him to focus on. And at the same time, he can be the ambassador to save the world.

Gillmor: Right. The “Wall Street Journal” article was interesting, however, in the way that they worked out this transition. As with most everything at Microsoft, none of this happened this week. It’s been happening for at least, according to the Journal, since 2000. And it’s accelerated in the last two years.

Farber: But it’s not a shock to the system.

Gillmor: Obviously they’re trying to do what they can to insulate it. But at the same time there are many things about it that are a shock to the systems that are not under Microsoft’s control at all.

Farber: No, and I think that’s where the real challenge is, which is Microsoft is kind of on a pivot point right now where all the successes that it’s had in the twentieth century, some of them are translating very easily. And they’ve made a good transition, such as with Xbox Live and in some of the other areas.

But they also know that their business model is going to be challenged in the coming years. And do they have the right mentality in place where they can move quickly, they can make those really hard decisions that allow them to have the kind of success that they had over the last 28 years?

Gillmor: Right. Or at least enter the Internet side of the marketplace and take some degree of reasonable share.

Farber: Well, like Ballmer has said. He said there was IBM. There was Novell, Sony. And they managed to get through all those. Google is a completely different kind of competitor in many ways, that they’re born of a whole now age in which they have advantage.

Yahoo interested them for the reason that they could compete better with Google. But the interesting thing is that it just boils down to a two or three horse race no matter what era you’re in.

Gillmor: So the third?

Farber: The definition of what winning is, is OK, let’s divide the world up into three companies.

Gillmor: Well, I would suggest that in spite of the horror at the idea of vendor sports and dividing the world up, or as Dave Weiner puts it, wasting our time talking about these big vendors when all the action is in the developer-user trenches.

I would say it’s a little of both. But since we’re talking about the big vendors. And you say three. I would suggest that Yahoo is not one of those three. I would say Apple is one of those three.

Farber: I’m not sure I’d put any names in there. I think it’s more of just looking at history. There are these periods of great innovation where there are many who are involved. And then there is consolidation, colonization, and the big get bigger. And it seems to be wired at the human nature.

Gillmor: I agree with it. And people like standards. And the standards that usually manifest themselves are market force standards. And Apple has played that game better than anyone with the iPhone and the iPod.

Farber: Well, and I think that the best thing that these companies can do is build the infrastructure and get out of the way. That way you have a system in which the big companies get their toll, but lots of little companies can innovate and do really interesting things that benefit users far more. And that’s a kind of more symbiotic system that can work well.

Gillmor: Do you think that MobileMe is going to work?

Farber: Well, what does it do? It provides some email.

Gillmor: It basically provides push Blackberry email.

Farber: I think coming from Apple, it’ll have some impact but not huge impact. It’s almost like if you want to get into the enterprise, you have to have something like this, whether it’s Goodmail or Blackberry Mail or whatever it might be.

Gillmor: Right. The problem is that they’re charging for it. And they’re going against companies like Microsoft and Google that aren’t.

Farber: Well they’ll charge for it, because they think they can get money for it.

Gillmor: Yes, so the question is are they going to? I think you already answered the question, which is do you see it as having some impact but not a lot?

Farber: Not huge. But the whole point is you have to have this whole portfolio of services to get enterprises. And the fact that it’s cool and has a nice browser and now is going to be a lot faster, are all good.

But it needs to have a server that lives nicely behind the firewall, and deals with the corporate email and other data.

Gillmor: Well, but they’re already on a separate track for providing enterprise services for the iPhone. The pitch that they’re making with MobileMe is that this is a consumer service that has the same robustness as an exchange enterprise service.

Anderson: Right. And it also crosses platforms to some degree, right? Because it runs on Windows and on the Mac.

Farber: Yes, it’s another version of iTunes. Except instead of tunes, it’s mail.

Gillmor: Right. So from a strategic perspective, I think the bulking up on the Windows enterprise client is a big deal for Apple. That would go with what you’re saying, Dan. That they’re moving into the enterprise space via the consumer space.

The problem with it is that they’re competing more and more directly against Google, and eventually against Mesh. And they’re going to get into a game of chicken on price sooner rather than later.

Farber: Yes, but…

Anderson: Well, I think the problem with MobileMe is that it fits into something that I don’t like about Apple, which is the Apple lock-in. So is there going to be a MobileMe client for an android device?

Gillmor: Does Microsoft lock in?

Anderson: I’m not talking about Microsoft. I’m talking about Apple.

Gillmor: You’re talking about Apple.

Anderson: But what I think is interesting about Live Mesh, and what I think is interesting about a lot of stuff Microsoft is working on, is that it is cross-platform. And Apple I see, you know with iTunes and with MobileMe, this just being more ways to get all your Apple devices to connect together. And that’s fine.

But there needs to be a story for how you get some other device to also be able to synchronize your data. It can’t just be basically either an Apple OS device or iTunes. To me, it has to be bigger than that. It has to be able to cross over to a different kind of a phone, not just an iPhone.

Gillmor: I’m not sure if I agree with you about the phone. But clearly there’s a desire to, I mean the reason I think they’re going to have a problem with Google, is that Google doesn’t care what your hardware or your software is as long as you are visiting their sites. And their sites meaning their mail site.

The reason that I’m confused about MobileMe, is that they’re asking me to give up Gmail on the client for a cost. I don’t know why I’d want to do that. Just for the ability to have it replicable in real time or pseudo-real time, as opposed to being…

If they were going to create a Twitter system and backend it with the notification system that they’ve announced — which they’ll roll out in September, which goes to their service — I’ll wait for that. Because on of the vendors, unless they shut them out, would be Google. I wouldn’t shift over at all. I’d just wait for Gmail to work with a push mechanism, be it their Apple-provided notification system. Does that make sense?

Anderson: Well, certainly, I think of MobileMe as separate from push mail.

Gillmor: That’s the biggest advantage that it offers. It only offers push notification of email, of photos, and of contacts.

Anderson: It’s like the Blackberry Internet services.

Gillmor: Exactly. With photos. Do you really want to pay to be locked into their infrastructure and their web client? It may help speed adoption of their native application, but I don’t use mail on the Mac. I use Gmail in any case.

With Google Gears now starting to roll out, I would not be surprised to see within the next 30-60 days Gears being deployed on Gmail. The product manager basically didn’t deny it when we were talking to him in person. And he’ll be on the show on Friday, so we can talk to him again.

Anderson: Well, if they’re charging you for push mail, I don’t see the value to that. They’re charging you $20 now and at some point it’s going to be $30 a month?

Gillmor: They’re charging you for a 20 gigabyte cloud.

Anderson: For data.

Gillmor: A 20 gigabyte cloud. It’s not about the data.

Anderson: Well, right. But I’m point is that with a data service, there are already charging you $20 or $30. Forget MobileMe for a second. For $20 or $30 you should get a push email account.

Gillmor: Well, you don’t.

Anderson: I know, but you should.

Gillmor: They’re breaking it out.

Anderson: That’s what Blackberry gives you.

Gillmor: Well, actually I used to have a Blackberry, and it was $45 a month for the data.

Anderson: Not anymore.

Gillmor: OK, they’re responding to the challenge from Apple.

Anderson: Probably.

Gillmor: They’re going up $20 or $30.

Anderson: Everybody’s getting better because of all this. That’s for sure.

Gillmor: Dan, are you still there?

Farber: Yeah.

Gillmor: So what do you think? Do you think it’s going to be successful or are they going to do — I think somebody on the show yesterday suggested that they’ll just back off the price.

Farber: Oh, I think definitely they’re testing, market testing. And if it proves to be too rich to attract anybody, they’ll back off the price. I think that one of the things is there are a lot of fans and there are a lot of people who don’t have Gmail or whatever mail and are willing to switch, so they can be pure — what we used to call in the old days — “Rainbow Apple.”

So, who knows. But I think it is more about Apple developing a more complete suite of applications for mobile users, or for cloud users, as it were.

Gillmor: Well, they’re kind of the Microsoft in this, if you compare this to the Y2K situation. They have robust applications that they built on their platforms but they haven’t actually moved them over. I think one of the announcements on Monday was that their applications will be available on the new iPhone, including Keynote.

And also the Microsoft application will be available. So I think they’re moving in that direction. What they didn’t talk about was extending MobileMe to include applications, rich Ajax versions of their work applications. But I would expect that that’s the next step.

And then you’ve got Google building up a persistent offline strategy with Gears for their tools. And then you’ve got Microsoft basically, I think in terms of the applications they’ve got a bit of competition coming from Android. So the question is how does Android synch up with Gears and Gmail and the rest of those applications to provide competition for Apple?

On some level I see Google and Microsoft as being bed partners more that Apple and Microsoft, which has been the traditional thing. But not with Steve Sinofsky in charge, which is why I don’t think he’s in charge.

I think this is all going to happen over the next 2-3 months, because the roll-out of these services from Microsoft’s part, I saw something in newsgang.net today where I didn’t read the story, but it was a discussion about whether the Olympics were going to be on TV at all.

Anderson: I saw that.

Gillmor: I’m sure that’s just an overstatement of the fact that whether they’re on TV or not, they’re sure as hell going to be on Silverlight.

Anderson: Well, that’s part of the question. I think the article itself talked about how difficult it will be to actually film this in China. So I don’t know that it has to do with television or Silverlight. It has to do with whether there’s any good video to post at all.

Which I find hard to believe. You think they would have worked all this out a long time ago. But I don’t know.

Gillmor: I think they’re probably talking about time zone differences and things like that.

Anderson: No. Time zone differences, that’s old hat for the Olympics, right?

Gillmor: All I know is what I saw at Mix ‘08, which was a demonstrated application on Silverlight that had multiple channels where you could actually drill down to the camera angle that you wanted to look at things from. That didn’t strike me as a technology-free, TV-less solution.

But what I do think it means is that people are quickly starting to realize that this political campaign and the Olympics are going to be the launching point for the distributed, on-demand Office-like applications delivered over Silverlight and Google/Gears/whatever. And Apple.

That we’re going to see these three platforms coalescing around their strategy, and to some degree competing head-to-head.

Scoble: Do you think it’s going to all around Silverlight? Because at Adobe last week, I saw a pretty compelling office suite that doesn’t require any plugins.

Gillmor: And they’re going to make money how?

Scoble: God knows. I just saw a smart sheet, and they’re going to charge a monthly fee. I’m sure Adobe’s going to charge some sort of monthly fee of some services.

Gillmor: Yeah, but the logic of — competing against Microsoft in the office space has never been a really smart thing to do. And Google is not competing against Microsoft. Google is incentivizing Microsoft to compete against themselves in the office space, and they’re having some effect.

I believe we’re seeing a battle between the Office, Windows and Mesh groups over the next two and a half months or so, which is going to be won by Mesh. And whichever part of those three groups continues to provide the services necessary for corporate deployment on hardware versions of these tools, but also as a transition they get Silverlight.

I think that company will be remade over the next three months in that political realignment. And I don’t see how Adobe has a play. They remind me of NewsGator, always preparing to be bought by Microsoft and never happening. I don’t see Adobe being bought by Google. And if not, who else is going to buy them, Apple? I don’t think so.

Apple has their own succession problems, it’s beginning to look like.

Scoble: Why couldn’t they stay on their own. I think it’s interesting if they can get a…

Gillmor: They don’t have any revenue to support this kind of a strategy. Apple is selling boatloads of phones and machines. Google is selling boatloads of advertising. Microsoft is selling boatloads of Windows and Office. Adobe is Photoshop, for god’s sake.

Scoble: And Acrobat. Acrobat is still selling pretty well.

Gillmor: Oh, come on.

Scoble: Well?

Gillmor: I mean, seriously?

Scoble: Serioiusly. I mean, look at their…

Gillmor: Dan, are you still there?

Farber: Yeah.

Gillmor: What do you think is the relationship between Acrobat sales and any of the other revenue streams of the three players I just mentioned? Do you think it’s a drop in the ocean?

Farber: Acrobat sales versus what?

Gillmor: Advertising for Google or Windows/Office for Microsoft.

Scoble: That wasn’t the original question though. Now you’re changing it from having a significant revenue stream that’s going to support of company of engineers that’s going to keep coming up with..

Gillmor: The road is littered with people that tried to attack the Office Suite monopoly. Remember, what was that..

Scoble: I’m not trying to attack Office Suite. I’m saying there’s a new, better work product coming out that is very interesting. And Adobe is a major player there.

Anderson: And you’re arguing that they can remain independent, right? That was what you said.

Gillmor: It’s simply a matter of whether or not they’re going to be able to insert themselves in between Google doing this for free and Microsoft doing it inside corporate IT. Maybe if Salesforce teams up with them and throws out Google, which I think is not going to happen. There’s going to be an announcement in a week and a half.

Scoble: I’m interviewing Salesforce’s CEO on Tuesday afternoon.

Gillmor: Well, Mark’s not going to tell you anything until after his announcement in a week and a half. But at that point, [...] is going to be on stage with him and they’re going to be announcing further evolution of the Salesforce/Google…

Farber: Guys, here’s the deal. Here’s the deal. The notion of a word processor, it’s going to be just subsumed to some degree, and you have these tools that you use and you operate on data. And it’s going to be free.

So if you have something that’s free that operates on data, that’s great. You need to figure out how to make your money in some other way. If you are developing tools for professionals, that’s a different kind of business.

One is going to be more advertising supported, and the other will be supported some subscription. And there’s going to be something in between saying, “Oh, you like some of those professional features? Well, for an extra $3 a month you can have them.”

Gillmor: OK.

Farber: It’s a continuum.

Gillmor: Right. So where does Adobe fit into that?

Farber: There is a case where I think Adobe is more into professional tools.

Gillmor: You think they’re going to fit into that by aligning with Google and Salesforce?

Farber: I really don’t know what they’re going to do.

Gillmor: That’s what they have done in the past. A lot of their early Flex and Air stuff was built on top of Salesforce.

Farber: Right. Those are their platforms. And they’re fighting a lot of the same stuff that Microsoft and Google and everybody else is, which is you have to get developers.

Gillmor: Buy they’re also fighting with toy pop guns against nuclear weapons.

Farber: I would say that there’s something to hat, which is they’re not at the same scale, and it’s very much a scale game right now.

Gillmor: Exactly.

Farber: And I know we’ve spent the whole call on vendor sports, and it’s kind of interesting to see what moves will be made among a few companies to divide up the spoils. And it’s separate but it’s related to the fact that there’s tons of innovation going on in the companies that these platforms build.

Gillmor: OK, last comment, Robert?

Anderson: Well, you know…

Gillmor: Robert Scoble.

Anderson: Ah.

Scoble: [laughs]

Anderson: I thought we were going to call him Scoble.

Scoble: Yeah, really. The fight between the Steven Sinofsky part of Microsoft and the Ray Ozzie part of Microsoft is going to be a very interesting one to watch. I think you’re right. I’m rooting for the Ray Ozzie side, because I think he’s bringing something new to the table, where I haven’t seen really anything new from the Windows 7.0 side.

Touch computing? Yeah. Is that really going to change the game? No. The Microsoft Mesh brings a whole new kind of application into play that we haven’t yet seen. And that’s where my love is.

Gillmor: I agree with that. Robert Anderson?

Anderson: I think that certainly Microsoft has a challenge in that it’s not going to be all cloud or all Windows 7.0. I hope that in the next few months — as you said, Steve, and you may be right — that they can figure out a way to make good decision to push all these things forward in a way that makes sense.

The one thing thought that comes to mind for me, when we talk about the scale of these different companies, Microsoft certainly does have a lot of scale. They also have a lot of things that they’re working on too. And if you took the number of Adobe employees and divided it by the number of Adobe products and did the same thing with Microsoft — or with Google for that matter — it’d be kind of an interesting comparison.

Because Microsoft has just a ton of things they’re doing, released, working on, updating. They’ve got the scale, but they do need to focus too.

Gillmor: And, Dan, anything else?

Farber: No.

Gillmor: This is Steve Gillmor, this has been the Gillmor Gang for Wednesday, June 11th. I want to thank everybody who showed up, and especially those who didn’t. We’ll see you again tomorrow. Thanks a lot. Bye-bye.

[music]

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