Out of the Box

Last May, I posted a response to a Randal Stross piece that I thought unfairly compared Apple and Sony stores. However, his Digital Domain piece today on how Microsoft should buy a large business software company such as SAP instead of taking on Google has me scratching my head.

Mr. Stross advocates that, rather than taking on a strong and nimble competitor such as Google, Microsoft should stick to its knitting and acquire a large software company such as SAP as opposed to another strong Web player such as Yahoo!, which one of his sources characterizes as “an old-style Internet access, in decline, and at a premium.”

This is like a trainer recommending that a boxer with a black eye lift more weights to improve his arms..Buying SAP may lead to further consolidation in Microsoft’s strongest market, but it does little to help it gain ground on the Internet advertising gold rush that Microsoft fears Google will use to launch applications that compete with its cash cows. Following Mr. Stross’s advice would effectively mean withdrawal from the online space. There’s a case for Microsoft spinning off that business, but for now Microsoft still sees the Web as its manifest destiny.

If Microsoft were to buy an enterprise vendor to address the Google threat, it should be salesforce.com. Such an acquisition would enable Microsoft to make a stronger foray in software-as-a-service. It could offer real applications to counter what Google might only hope to build one day under the pressure of an offering that is difficult to shoehorn into its free, consumer-focused, ad-driven model

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Last week, TechCrunch picked up a New Yorker story that notes that Eric Schmidt now recuses himself from the segments of Apple board meetings that discuss the iPhone due to a conflict of interest with Google’s Android operating system, about which Chairman Jobs is none too keen. I wonder if he uses that time off to field calls from his fellow Google executives imploring him to get in there and remember the part about organizing the world’s information.

Erick Schonfeld asks what good is a board member who cannot talk about a company’s hottest product, going so far as to suggest whether Schmidt should be on Apple’s board at all? At least for now, Schmidt is benefiting Apple according to the old adage about “the enemy of my enemy.” But I also wonder about the slippery slope. Can Schmidt be there when they talk about being able to access Flickr albums from Apple TV?

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Today, Google made it official that it will bid in the 700 MHz spectrum auction and there’s a flurry of media and excitement around it — most of it premature. How much will Google bid? Will it partner to do it? Will it win? And what will it do if it does win? At least the other shoe has dropped on Verizon Wireless’s open access announcements earlier this week. CEO Eric Schmidt has defended the hedge by noting that it will mean open access regardless of who wins due to FCC requirements.

Even if Google does win, we shouldn’t necessarily expect for it to be a branded carrier. Remember that one of the conditions it wanted from the FCC was mandatory wholesaling. So.. much as with Android, there may not be a “Google Wireless” but lots of different MVNOs using Google’s spectrum as infrastructure.

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