So I saw Squirrel Boy (photo above, shown demonstrating the correct procedure for eating a shit sandwich) this afternoon at a tai chi class and afterward we went out for a smoothie and he was pouring his heart out to me about this Microsoft Yahoo deal. He says Yahoo is stalling for time with this new line about how Microsoft’s offer is too low but in the end he thinks they’ll get rolled up. He says he doesn’t see how anyone can bail them out of this. Google can’t, for obvious reasons. Nobody else has the money or the stomach for it. The place is a friggin mess, way worse than anyone knows. Semel left it a shambles and Yang has just let it keep drifting because he doesn’t have the chops to shape it up.
So then he startles me and says that some of his guys have been thinking about the deal some more and they actually think it could be a good thing and so even though Google will make a big show of opposing the merger, deep down they’re kind of secretly hoping it goes through, because they think it will be a disaster. Then he starts going on again about the cloud. The cloud, the cloud, the cloud. It’s all you ever hear when you hang out with this guy. I was like, Dude, I’m so sick of hearing about the damn cloud. Instead of talking about it why don’t you idiots go build the friggin thing if it’s so magical and all-powerful and important? He says they’re well on their way, farther than anyone knows, and in ten or twenty years there will be only a handful of service providers and if you’re bummed by the kind of vendor lock-in we used to see from IBM in the old days or that we see from Microsoft today, just wait till you see the lock-in that these global compute utilities will be able to get. Eric says this is going to be the golden age of cornholing. It will make the old Bell System crooks look like amateurs. The guys running the cloud will control everything: phone, data, video, television, movies, music.
Eric’s like, Do you have any idea how terrible it will be if Microsoft manages to survive the transition into the cloud and become one of the big global service providers? Look how they’ve behaved in the PC era, and you’ll get some idea. I pointed out that, with all due respect, I don’t tend to believe that Google will behave any better and in fact they’ll probably be worse. Eric said that’s probably true but at least if Google is running the cloud there’ll be a nice piece of action for Apple because we’ll be making all the access devices like skinny notebooks and iPhones and iPods and computers that also act as TV sets, whereas if Microsoft becomes top dog they’ll do everything they can to put Apple out of business.
Eric says his guys have already strategized the entire game plan for the next decade and figured out how the consolidation is going to go and who ends up where. They’ve got it all up on a big whiteboard at the Googleplex. Sun, he says, probably gets sucked into Google at some point. Or into another one of the utilities. Same for EMC and VMWare and NetApp. All the big point product makers. Eric says we’ll see spheres emerging, giant ecosystems around each service provider. The vendors will all try to remain independent so they can sell into all of the ecosystems, but the utilities will try to pull vendors into their orbits and control them. And they’ll have leverage over the hardware and software makers because the service providers will collude with each other to drive the prices of software and components as low as possible. So vendors will get weakened and finally will face a choice of being assimilated into a sphere or just slowly dying. Then there are the vendors who just won’t be needed at all. Example: Red Hat. And possibly Oracle. IBM is simply too big to be ignored but is already being pulled into Google’s ecosystem; they formed a cloud computing pact last fall.
Thing is that everyone was just hoping and praying that somehow they could kill off Microsoft and keep them out of this new era. Nobody likes them and nobody wants to work with them. Eric says they remind him of this kid he knew growing up who would show up every year for Little League try-outs and everyone totally hated him but he always did just well enough to make a team and so they had to put up with him, year after year. He says that everyone was hoping that after Gates left the place would fall apart and the world could move on without them.
Yet now here they are, in desperation, trying to buy their way into the next era. Eric says at first his guys were freaked out but after they thought it through they began to realize that it could be a good thing. For years, he says, Google has believed that the only way Microsoft would die would be if the company made some huge colossal mistake. In other words, nobody was going to kill them; they were going to have to kill themselves. Well, that big huge colossal mistake that everyone has been waiting for Microsoft to make? Maybe this is it.
The Google freaks have played out the scenarios using some monstrous machine they’ve got and they say they cannot envision a single scenario in which the merger actually ends up working. They believe the merger will screw up Microsoft for at least five years, maybe more. By then, Eric says, Google will already be taking down huge corporate accounts for cloud services.
Honestly, he says, the more he thinks about it the happier he gets. He says he almost wants to send Ballmer some flowers but he’s afraid that might seem heavy-handed.