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This is Bill Gates last CEO Summit. Here is the link to his keynote speech where he talks about innovation.

Here at the UC Summit I just sat through a talk by Eric Swift, Microsoft’s Senior Director of Unified Communications, where Eric talks about the innovation of software in the Unified Communications area. This is ironic because Bill Gates has been talking about the impact of software all the time he has been at the helm of Microsoft. Now it seems that Microsoft is poised to move those advances into new emerging areas like Unified Communications. Unified Communications is the Web 2.0 trend in the telephony sector. It’s big.

Eric goes on to say that presence and identity are at the heart of all their software advances for Unified Communications for users and enterprises. He notes that the biggest challenge is the network problems - loss, latency, jitter, delay, connectivity, security, etc…

Eric Swift highlighted the two biggest trends for adoption of Unified Communications - 1) opt-in for users (verses the brut force implementation practices by enterprises), and 2) the massive adoption of ‘hosted’ services.

Note: I asked Eric to talk about how he sees Live Mesh (vis a vis Unified Communication solutions) - He gave a non-answer; It’s clear that Live Mesh is great solution for consumers and possibly much stronger for Small Medium sized Enterprises verses the deep and heavy Microsoft Unified Communications solution. Microsoft has some positioning to do on Live Mesh and their Unified Communications solution.

Overall I was impressed with the notion of software being the major advance for this new trend. I hope the network guys can solve the software problem around DDOS, delay, jitter, loss, connectivity, and security… Until the network issues are resolved video is a pipe dream in Unified Communications.

UC Summit is an exclusive conference of leading vendors, analysts, consultants, and opinion leaders in the growing area of Unified Communications (post from cofounder Blair Pleasant on day 1 of the UC Summit). Here we have the opening keynote by Mark Straton Senior Vice President of Siemens Enterprise Systems. Mark delivers the keynote speech at the Unified Communications Summit 2008 - UC Summit 2008.

In this talk Mark talks about the role of software in Unified Communications. More importantly Mark addresses the growing opportunity around consolidation. It has been rumored that Siemens is spinning out or selling its software enterprise group. Candidates include Microsoft, Nortel, IBM, and Cisco.

UC Summit 2008 is the first conference for UCStrategies.com - a growing authority blog on the vertical of unified communications.

Founder of UCStrategies, Jim Burton, comments on the state of Unified Commications. He says “Unified Communications has moved beyond the IP PBX and the soft phone on our PC. Very significantly, its reached the point where end-user behavior has created the need for more flexible communication tools and access to information at any time from anywhere. Going from “what will the customer do with it’ to “how will technology meet the changing communication patterns of the end-user” was a twisty road. But here we are - at a point where the narrow, twisty dirt road is about to widen and become a busy 6-lane highway!”

The interesting think from Mark Straton speech is the speculation that a major consolodation will happen nad that Siemens Enterprise (Unified Communications software group) will be bought in the next 60 days by a major player. My guess it will be someone who values software. The only name Mark didn’t mention in his keynote is Nortel.

If Nortel is the candidate to buy Siemens unified communications division what does this mean to their Microsoft relationship?

Today’s Microsoft retreat is a victory for Silicon Valley and all the startups.  Now that the troops are pulling out of Silicon Valley everyone is jumping up and down eager to get down to business - except the bloggers who are all trying to figure out what happened (not including Kara Swisher she was on top of this story from day one).

This outcome was clear to me from day 1 - Yahoo would fight to the death rather than roll over and take it up the butt from Microsoft.  As this chapter of history comes to a close the story is bigger than what the stock number was or one particular issue.  It was bigger than all of that.  As I wrote in February it was the Silicon Valley Poison Pill in action.  The culture in Silicon Valley is deep in tradition and this trophy in Yahoo was not going to Redmond.  Hey I’m a big fan of Microsoft and Dan’l Lewin here in Silicon Valley (except that blogger idiot Mark Ashton), but the culture of Silicon Valley just won out.  This is going to make one great John Markoff story for the NY Times. - go ahead John run with it.

Another story line here is the big win for all those starving Web 2.0 companies looking for a partner - Yes Yahoo will remain free to be a real force in the Web 2.0 community again.  Now with open social (yes reported here first) and with upcoming announcements of Yahoo opening up.  Yahoo is born again.  As we the kids cheer in baseball Yahoo employees are cheering - “2 out rally….2 out rally….2 out rally…2 out rally”.  If this doesn’t wake up the dead at Yahoo nothing will.

This is a win for Web 2.0 and startups around the world but mostly a big win for Silicon Valley.   Yahoooo

Don’t forget how Google is loving this.

I never met Joel Spolsky, but I gather that he is regarded as the ‘burning bush’ in some programming circles.  Regarding Live Mesh - Joel just validated my view with this post and probably speaks for other people who have computer science degrees and business savvy.  His post caught my interest because I took heat on my comments from Live Mesh while everyone like Scoble were doing handstands around Mesh.  I read one document and coined the term “Live Mess”.  I took the lumps from guys like Scoble and moved on.  Some folks love it but my impression was the same as Joels.  Will someone other than Microsoft tell me what Live Mesh solves.  I’m open to hearing anything relevant to the computer science, software, or services technology world that we live in today.

Joel says “the incredible amount of bombast; the heroic, utopian grandiloquence; the boastfulness; the complete lack of reality. And people buy it! The business press goes wild!” The hallmark of an architecture astronaut is that they don’t solve an actual problem… they solve something that appears to be the template of a lot of problems. Or at least, they try.”

Here are my tweets from the day of the announcment…

	Furrier @scobleizer first impression of under the covers is too complex - it’s an OS and not clear to me what it’s purpose is..seems bloated 10:10 PM April 22, 2008 from web in reply to Scobleizer
	Furrier Microsoft launches new product - Live Mess 10:05 PM April 22, 2008 from web
	Furrier microsoft marketing-make things as complex as possible - oh thats the product strategy as well..first impression of mess-too complex for ?? 10:04 PM April 22, 2008 from web

War! What is it good for! Absolutely nothing! - Say it again!

Are wars really good for business? Is tech entrepreneurship in recession heading toward depression? The battle between Microsoft and Yahoo is reaching it’s climax (if not already). However, there are some very interesting and unique perspectives come from two blog posts that jumped out at me - Kara Swisher and Fred Wilson. Kara has the funniest headline saying “Jesus is coming” with the storyline about the inside scoop on the ‘dance’ between the two. What strikes me with Kara’s post is that Yahoo might already be defeated in the ‘braindrain’ that they have been experiencing. Even if Yahoo survives is it already dead on the vine?

Fred Wilson only draws a reference to the battle in his post about liquidity - saying that with no IPO market we are in trouble and worse the tech giants are playing with assets like toys. I think that Fred is on to something with no liquidity (other than M&A by big firms). Is this really a robust market for innovation where the big guys are doing all the acquiring? Is this the ecosystem that produces good entrepreneurship?

What ties both these posts together is the trend that acquisitions might not be the best for innovation - Kara bluntly states that AOL’s acquisitions aren’t doing well. While Fred says it’s great to get the cash but Yahoo hasn’t done well with their acquisitions. Meanwhile the capital markets are a mess.

As an entrepreneur with four kids I’m concerned about the prospects for all entrepreneurs in this current environment. Maybe I’m just not feeling good today. Startups should have some friction, but not outright frustration. I’ve been doing early stage startups for 10+ years and never seen this much frustration since 2002-03. We are in a tech recession or at least a grinding halt.

I’m one of the most optimistic guys (all entrepreneurs are), but my mood on this startup market: Bear

If your in the Internet Tech business you can’t help watch the Yahoo disaster unfold - the invasion by Microsoft. Living in Silicon Valley, you can’t swing a dead cat here without hitting an exYahoo employee or someone related to Yahoo. Pretty much everyone in Silicon Valley knows whats going on at Yahoo. It’s a kinda ‘public secret’. But who has the best coverage?

I’ve been getting asked: “who has the best blogosphere coverage?” - Hmmm - That’s hard because what is a blogger? The NYTimes blogs? Techmeme has mainstream outlets on their site leading stories all the time. This brings me to ‘Dodgeball Coverage” analogy.

Dodgeball Journalism: is the difference between speed, accuracy, and strategy. Watching the blogosphere and mainstream media work on these stories reminds me of playing dodgeball.

It’s the blogosphere guys/gals who run up to the line and grab the ball while the big mainstream media guys/gals who sit back and watch everything unfold. Sure the bloggers hit a few stories right away then they die off. Mainstream media guys/gals sit back watch, assimilate, and hit the big stories for the big audiences. It’s a strategy and skill difference between speed, accuracy, and strategy.

Dodgeball Journalism Awards go to the top Bloggers who have been covering the story from the beginning with original and valuable content.

Here is my list of who is providing the best coverage of the Yahoo Microsoft buyout.

CNN Award goes to: Henry Blodgett; Silicon Alley site has been the best in terms of staying on top of the action with the best analysis. Here is the link to the Yahoo Microsoft coverage. Alley Insider is ‘killing it’ with the coverage. It’s the first stop for me.

Best Reporter: Kara Swisher; Here is the link to her blog. This was a hard one because some bloggers from the beginning had been doing great in covering the story but they lost their ’staying power’ on the story and didn’t add to their original positions.

Online News: CNet coverage. CNet has an array of reporters that are contributing tothe coverage. It has been the most consistent site for online news coverage. They cover all the bases diverse and accurate.

Best Editorial: Mike Arrington. Mike’s Decision Time Post. This isn’t for Techcrunch site, but for Mike’s one post. It was the best editorial written on the entire situation. Techcrunch as a whole has been covering Yahoo, but Techcrunch came in late and has been lagging in the coverage.

Utility Players: ???? - the rest of the blogosphere

Dodgeball Strategy Comedy on YouTube

Now you can be entertained by the upcoming personality on YouTube - DaxFlame… he’s a big hit with the middleschool kids. Here he talks about his Dodgeball strategy.

Mike Arrington had a great post this morning on Yahoo’s decision time.   Love the war reference. Mike agrees that Silicon Valley will be a war zone with collateral damage. The rats are already leaving the ship as predicted by Josh Kopelmans post today.   I’ve always loved Yahoo, but no matter what happens their fate is sealed.

The Microsoft invasion is happening and Google isn’t Netscape. Google is executing. This war will certainly be epic.

I’ve said that you can’t compare this Microsoft to Microsoft of the mid 90’s, and you can’t compare Google today to Netscape of yesterday.  Google is excuting and Yahoo isn’t.  It won’t be an easy fight for Microsoft.

As an aside I received an interesting comment from a Microsoft insider the other day.  He says “Since you’re thinking about MSFT/YHOO, my 2c: First, it’s a $44 billion admission that MS couldn’t get search and advertising right. Second, the culture clash will be dramatic. The only good part about it is that MSN could never decide if it wanted to be Google (alpha engineers) or Yahoo (content gods); now they’ve implicitly chosen the latter. We’ll see if that works. The trailblazers are actually aQuantive. They were assured that the MS engineers would do what the aQuantive biz people decided. Too early to tell if that’ll actually work, but it’ll be a leading indicator for the success of the YHOO acquisition. I’m not sanguine…”

The next logical question in this epic battle is “who is leading the troops for Microsoft”?  Looking at Microsoft leadership (the generals) will speak volumes about their plans to occupy Silicon Valley.  

Marc Andreessen wrote a post on the impact to Silicon Valley if Microsoft and Yahoo buyout happens.    I believe that this massive war is changing the landscape but in a positive way.   This tech war becomes a catalyst the urgency is now.   Marc has experience living the last war when he was a Netscape.  Some might have forgot but the Microsoft assault on Netscape actually validated the market and created the wave and bubble of Web 1.0. 

What Marc is trying to say is that this war might actually propel Web 2.0 up in a big way.   Nice post Marc - it’s a must read - inside baseball - post. 

I agree with his post that it will be a net positive in that other companies will have to ’shore up’ their positions.  I like how he put it..Marc says “if the Microsoft/Yahoo deal does go through, those same companies in many cases will be looking down a very scary double-barreled shotgun of an ascendant Google and an armored-up Microsoft”.   

As I mentioned in my previous posts, entrepreneurs and big companies have to understand the mentality in a war time venture.   If a business big or small gets caught in the battle during wartime, they need to be a supplier or arms dealer.  

Here are a few strategies for business during tech war time:  1) be a supplier or arm dealer, 2) build value and cash flow positive and stay out of the way - bunker away, 3) pick a side and join their mission.  

Google answers Microsoft two days after Microsoft invades Sunnyvale.   Google is not backing down.  This is going to be good.   John Markoff writes a piece that this will actually be good for Silicon Valley.  I am not sure but it will be fun to watch.  Google is not Netscape.  

People: we are in a full-on WAR between Microsoft and Google.  Now Google fires back in a blog post saying Microsoft’s unsolicited $44.6 billion offer for Yahoo Inc. “raises troubling questions.”

Google’s blog post, by Google Senior Vice President David Drummond, asks whether Microsoft could “now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC.” It accuses Microsoft, which has been targeted by antitrust regulators in the U.S. and Europe for years, of “frequently seeking to establish proprietary monopolies — and then leveraging its dominance into new, adjacent markets.”

This blog post by Google is a complete smoke screen.  It is clearly a knee jerk reaction to Microsoft’s sneak attack into Silicon Valley last week.  I’m sure right now Google executives are jamming on  a counter attack.  They have to - Microsoft just invaded Sunnyvale.    Word inside Google right now - ‘calling all arms’.

As an entrepreneur you have to understand your environment, an no better time than now.  As big businesses try to figure out their place in this war so do startups.  That brings me to business models of WAR.

What do startups need to do - be a supplier of something.  Something of value and need in wartime.  Picks, shovels, food, shelter, arms, hostages,,.etc - figure it out because the WAR is on.

As John Markoff wrote today on Silicon Valley’s venture view…“There is a sense here among investors that Microsoft, as a more effective counterweight to Google, might actually serve to spur innovation in the Valley.  “When Microsoft was in the ascendancy, there were whole areas of investment that were of less interest to investors,” said William R. Hearst III, an affiliated partner with the venture capital firm Kleiner Perkins Caufield & Byers. “Now you could enter a new area and people will think that maybe one of the two colossuses will be interested in acquiring your start-up.”

Translation:  the opportunity for startups:   be a ‘WAR time” venture.

Entrepreneurs beware Microsoft buying Yahoo could shut down the tech startup scene.  It could send the startup climate back to 2001 levels - nuclear winter shut down.  I lived through 2001-2004.  It was ugly.  

Brad Burnham has hit on a narrow topic about the downside of the Yahoo buyout for Silicon Valley.  Brad’s story is very relevant with ‘macro’ implications to the tech world not just Silicon Valley.   This deal could cripple startup activity.

Efficiency for Microsoft means leverage with suppliers.  Translation:  Startups are suppliers and Microsoft just became Walmart.  This could have a chilling effect on the VC and tech investment community.  This new industry structure puts even more of an emphasis on ‘hits’ or category specific deals.   If the Venture Capitalists are confused today can you imaging what they will do going forward.   This could get ugly. 

Advice for Technology Startups and VCs:  Understand where your company is in the pecking order in this war.  If you’re not an arms dealer then you might want to rethink your strategy. 

Update:   others are thinking the same….  A VC -Fred Wilson; Opportunity for another big player to bid:   News Corp. 

Joe Nocera of the New York Times writes that Microsoft is really a tired competitor.  Not sure I agree that Microsoft doesn’t have the weaponry - under the right battle plan I think that they can compete and surpass Google.  What I am sure of is that Microsoft will not ”kill” Google.    Nevertheless, Google isn’t Netscape. 

Although there are many differences between Google and Netscape, the big difference is that Google is a multifaceted cash producing machine and Netscape was a one trick poney - the browser.  Netscape was an easy target for Microsoft at that time.  Today, Microsoft is fighting a different competitor.  Google has great cash flow and control of the most coveted market -  online advertising.  This fight for Microsoft is to the death.  Microsoft is the underdog not Google.  A case can be made that Microsoft is the Netscape and Google the old Microsoft - the tables are turned.    It’s going to get bloody.

 As I mentioned yesterday Microsoft is officially waging “War” against Google, Microsoft needs Yahoo.  Why?  Two reasons:  it’s search position and it’s user base of registered users.  The rest of Yahoo will fall into a product group or get ‘whacked’.   If this buyout goes down in Microsoft’s favor , then there will be a ‘ton’ of collateral damage at Yahoo.

As the president ial elec tions (can use those political keywords because of a Techmeme flaw) is down to two person races, the Internet battle has been waged.  WAR!  It’s official.  It’s now a two company race:  Google and Microsoft.

I’ve been seeing the battle of the titans coming for sometime, but this is the open gambit of a World War between Microsoft and Google. - the rest of the Internet world is whitespace. 

I was writing up a review on the Google earnings while on a plane coming back from Flordia to Houston.   Two words sum this up: holy shit.

More to come… I have to get on a plane to SJC from Houston.  Unbelievable with impact to all.  This is an A-bomb.  It will affect big companies and startups.  Wow.