One company in free-fall, another treading water and the third literally shooting into outer space … This week offered a unique look at the life cycle of great high-technology companies.
The company in free-fall is, of course, Yahoo! In spurning Microsoft’s offer, the company’s executives seemed almost gleeful, as if they dodged a dangerous bullet and could now return to the status quo. Even a deal with Google, which is rumored to be in the works as I write this, won’t be enough to turn around Yahoo’s fortunes.
If the history of mergers and acquisitions teaches us anything, it is that if one company wants you, it’s likely that others do as well. It’s like sharks –if you see one, there’s probably a lot more nearby. And, worse, if that first one manages to nick you– as Microsoft did by not only setting a de facto price on Yahoo but also exposing the lack of discipline amongst the latter firm’s senior management –then the blood in the water is likely to set off a feeding frenzy.
Last week that blood drew one of the world’s biggest Great Whites, Carl Icahn, who systematically set about to buy up Yahoo shares in order to land a board seat, fire executive Jerry Yang and his lieutenants and then dismantle the company. Icahn is betting — and would you care to bet against Carl freaking Icahn? — that he can sell off pieces of Yahoo to total a whole lot more than he will pay to capture control of the entire company.
And that’s only the beginning. Jeff Weiner, the guy who runs Yahoo.com and Yahoo Messenger and Yahoo Mail, is splitting from the company to go work for a couple of venture capital firms. He joins a growing list of Yahoo’s best and brightest who have already bailed out of the company.
If there is any Intellectual Capital equivalent to Moore’s Law it is that, no matter what their public explanations, when the smartest folks leave a company that company will soon be in serious trouble, and wherever those folks end up, that company will soon be a whole lot more successful.
Right now, Yahoo is bleeding talent from every doorway. And that means that even if Yang and what remains of his staff can manage to right their listing company, Yahoo will still be dead in the water, lacking in the kind of talent it will need to get moving again and keep up with the competition.
As I said a couple weeks ago in this column, Yahoo should have taken the Microsoft offer. It will never see that kind of money on the table again.
Meanwhile, the company treading water is Apple Computer. I don’t have to tell you that this week was the Apple Worldwide Developers Conference in San Francisco, historically the venue at which Steve Jobs comes out on stage with “oh, and one more thing” and announces the next great Apple product that will change the world.
It is the single most popular, influential and (among competitors) envied event in the entire tech world. It started almost a quarter century ago with the original Macintosh introduction and has only grown in cultural influence ever since with the unveiling of the iMac and all of its subsequent permutations: the iPod, iTunes and the iPhone.
Having attended a few Apple conferences, watched many, and this year followed it live on the Web, I’m always reminded of my old days as a movie reviewer.
For a long time, San Jose was an important Sneak Preview location for Hollywood, and so part of my beat was to go and cover one of these events at some local strip mall multiplex or cinedome. Sometimes I got lucky: I saw both “Breaking Away” and “Indiana Jones” with Spielberg in the audience before the rest of the world did.
But most of the time, I ended up with some dreck like “Americathon.” These were always interesting in a different way because the theater would be filled with shills from the studio who had a career stake in the film being shown.
While the rest of us plebians would sit with our chins in our hands, these movie folks would cheer at every action scene, laugh uproariously at every stupid joke and in every way try to convince us and themselves that the crap we were watching was “Annie Hall.”
The Apple Worldwide Developers Conference can be a lot like that. Every announcement, especially when Steve is alone on stage, is met with cheers, and every throw-away remark gets a laugh from the True Believers and Macolytes.
There’s nothing wrong with that if you’re willing to give your heart to a giant corporation, but it can be disorienting, momentarily opening the door (even in this skeptic’s heart) to the legendary Jobs Reality Distortion zone … and regrets and second thoughts the next morning.
This year, the big moment was when, on the giant screen, Jobs first announced the iPhone II then rocked the room by putting up a price on the screen for the “Jesusphone Junior” of just $199, two hundred bucks less than its year-old predecessor. That number caused a collective gasp, then a roar of approval. Apple had done it again! Now it would take on Blackberry!
Only in the cold white light of a new day did reviewers and pundits begin to look more closely at the announcement. And that’s when they noticed that while the iPhone II did have some major improvements (GPS, 3G, etc.), the big news the price drop was something of an illusion.
Yeah, the phone was cheaper, but AT&T was jacking up the usage fee from $20 to $30 … meaning that in the two-year life of the contract, the iPhone II will actually cost more than the iPhone I. Meanwhile, Apple wouldn’t be losing much revenue with the price cut because it would largely make up the difference from the AT&T kickbacks.
That’s why, despite the sound and fury of Monday’s event, you haven’t seen the kind of press coverage and general cultural hysteria that surrounded the original iPhone announcement last year.
Apple has had such a remarkable run of astounding new products that this one, though a solid entry, seems like something of a letdown. We’re all still willing to give Apple the benefit of the doubt hey, maybe next time! but it is interesting to note that the company has historically under Jobs come up with one of those earth-shaking new products about once every three years.
That’s quick by consumer electronics standards, but more than a generation in tech. And the world may be a very different place in 2011 just ask Yahoo.
Indeed, it is not an idle question if it will even be Steve Jobs on stage to make that next announcement. His dangerously thin and emaciated look at this year’s event has led to a lot of speculation this week even on the Drudge Report whether Jobs is ill again.
The gossip site ValleyWag ran a series of photos of Jobs from the past decade, including during his near-fatal bout with pancreatic cancer, and it was hard not be concerned about the man’s current health. Apple quickly responded by saying that Jobs was merely suffering from a flu bug (and others pointed to the weird macrobiotic diets of Mrs. Jobs), but the publicity damage was done.
And deservedly so. Steve Jobs has always been excused from duties demanded from other Fortune 500 CEOs, not least of which is full disclosure. When he was diagnosed with cancer, Jobs had a fiduciary responsibility to notify Apple’s shareholders. Instead, he kept it secret for months, breaking a public trust. It’s no wonder then that his recent appearance has been met with runaway speculation and disbelief in Apple’s denials.
We can only hope that Jobs is fine and in good health and will continue to be the most important CEO in America. But this week’s images are a reminder that he is very mortal, and someday it won’t be Steve Jobs up there on the stage at the Apple WWDC. And since the company has never found a way to succeed over time without him, what will Apple do then?
Finally, there was this week’s news from Google: co-founder and multi-billionaire Sergey Brin has paid $5 million (comparative chump change) to joyride on a Russian Soyuz rocket to the International Space Station.
Hey, if you’ve got it, enjoy it. And it’s not as if this is some rich guy’s lark: Brin and partner Larry Page were the guys behind the $30 million Google SpaceX prize, which will likely prove a critical milestone in human space exploration.
Still, Brin’s act is entirely characteristic of the young founder of a superhot Silicon Valley company. This kind of conspicuous consumption will draw cheers now, but when Google plateaus (which may already be happening) it will be seen in a much darker light by shareholders and employees. It’s fun to be young and rich. … but as Steve Jobs and Jerry Yang should warn Sergey Brin, one way or another it doesn’t last for long.
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