Over the last few weeks I've had the opportunity to talk with many people about the Microsoft / Yahoo! deal, and I have to say I've encountered a lot of skepticism. The skeptics range from industry figures (for example, Rob Enderle compares Microsoft's decision to buy Yahoo! in it's fight against Google to the US decision to enter Iraq in order to fight Al Quaeda) to rank and file Microsoft employees who wonder what their company is all about. It's widely held disillusionment. People are asking why Yahoo! when apparently Microsoft can't fix the problems with its existing products.
One employee, for example, has dumped his Microsoft stock and is actively buying Apple. "At the last dip in AAPL", he told me, "I backed the truck up to the door and loaded up". He wonders how Apple can "kick Microsoft's ass" in the smartphone market with a V1, when Microsoft is on V6. Another wrote me to say "You're saying things I haven't yet figured out how to say. I'm continually frustrated by the lack of vision at the top. This is the only company I've ever been at where everyone knows what the problems are, but no one at the top listens or wants to fix it."
Yesterday should have been a massive eye opener. Google, following Amazon's lead, unveiled Google App Engine – their platform in the sky. There are countless other startups vying for the same business: Heroku, Bungee, and Joyent for example. Where is Microsoft in all of this? Scrapping with Yahoo! over yesterday's business, the Microsoft employees with an interest in cloud computing having long gone.
I love Microsoft, or at least the Microsoft I used to know. I spent nine of the best years of my career working there, in the company of the best and brightest minds I've ever encountered in any environment. I'm frequently nostalgic for those heady days, and remain a die hard Office and Windows user in spite of nearly everyone I know switching to Apple products. Increasingly, however, I find myself turning to products from companies that satisfy needs that Microsoft doesn't — iPhone as my telephone, and Joyent to host Facebook applications, for example.
Right now, I worry that the company I used to know is lost. Anti-trust litigation may have broken the back of the OEM PC cash cow that the company has survived upon, but that's not the real issue. The real problem is that the developer community, the strong backs upon which Microsoft built its empire, are looking elsewhere to solve the development problems they have today — increasingly web development problems. Developers are the canary in the coal mine. When they lose interest in a platform, that platform business is in deep trouble.
Google and Amazon, on the other hand, are focusing on the developer needs of today. Databases, elastic compute clouds, and development platforms, rented by the compute cycle and hosted in the cloud, are allowing businesses large and small to quickly develop and deploy new technologies. Development tools like Ruby and Python, and frameworks like Rails and Django are making it cost effective to deploy new services at a rate never seen before.
As one developer said to me "Microsoft has always had undue distraction from competition and that's how they lose markets historically. All you have to do in order to beat Microsoft is go "hey look over here" and then do something else." Google knows this. Google's success in search is the distraction that will cause Microsoft to lose the platform, which is the prize that the team in Mountainview are clearly now playing for.
So I ask, in the midst of perhaps the largest threat that the company has ever seen, who really cares if the Chief Yahoo! and his failing business go to Microsoft? Aren't there bigger issues that need to be faced?