Sometimes it is just amazing to hear the things that come out of the mouths of Microsoft marketers. It seems that the spotlight on the new iPhone is making Microsoft cranky. Since Microsoft Windows Mobile is already on so many phones (no mention of how hard these phones and their special features are for people to use), Microsoft does not see any need to try to create their own phone.

For just one minute, let’s try to forget all about Microsoft’s effort in the MP3 market with Zune and how that has turned out.

So officially, Microsoft is not creating a phone because they are focused on making quality proprietary software since the money in mobile is in software. Meanwhile, Nokia has just paid a fortune to open source Symbian - because the money in mobile is in software. And Google is creating their own open source mobile OS called Android - because the money in mobile is in software. And J2ME is already open sourced by Sun ages ago - because the money in mobile is in software. And Apple has just broken its usual rules by providing a free SDK for the iPhone - because the money in mobile is in software.

OK. Whatever.

Does anyone get the feeling that Microsoft is a little confused? The best line from the entire story which really shows how confused Microsoft seems to be is the quote from Microsoft’s Mobile Communications Business senior vice president Andrew Lees:

We want to give our customers choice.

Microsoft….giving the customer choices….

OK. Whatever.

I think what he really means is that Microsoft has no choice but to let the customer chose.

Nokia has purchased the last part of Symbian that they did not own and are going to make it open source. I guess it just shows that many big companies are realizing that they just can’t put together a really good piece of software on their own. Or maybe they realize that it really does take a village. But maybe what they are really realizing is that they will make more money if they focused on the part of the business chain that they excel in and that brings them the most revenues, not the most headaches like maintaining a complex OS.

So … Microsoft, is it time to open source Windows yet? If you have finally seen the light, please open Windows XP. Then let’s really think long and hard if we want anything from Vista bolted on.

One of the premiere opportunities to present to VCs is happening tomorrow at the Microsoft campus. The event is called Under the Radar and happens every year. I had considered applying Geogad for the event until I looked at the application form. It looked like they were looking for startup companies that were more developed than Geogad.

The list of companies that have been accepted and are going to present is on the Under the Radar web site. The startup cover many areas and are based on several interesting ideas. It may be professional bias, but I still think that the Geogad business model is better than most of the ones that the startups will be presenting.

Maybe next year after Geogad grows up a bit more.

The biggest news in Silicon Valley is the un-news of the Microsoft-Yahoo merger. After three and a half months, Microsoft has finally walked away from the deal in disgust.

No wonder. Yahoo tried everything and talked to everyone they could find to avoid dealing with Microsoft. When that failed, they tried to play hard-to-get with a $37/share price tag. If everyone knows that no one wants to buy Yahoo, it takes a lot of moxie to say that $31 or $33/share is not enough. This strategy depends on the buyer not knowing that they are the only bidder, which obviously was not the situation here.

Jerry Yang, CEO of Yahoo, and the Yahoo board are taking the blame, as they should. When you sit in the big office, you get the lion’s share of the credit and the blame. Maybe Jerry really did not want to sell at any price. According to the New York Times, Jerry and the board exchanged high-fives when they heard that Microsoft was walking away. Yahoo is the most successful company that Jerry is likely to be associated with. I am sure that the programmer/engineer in him did not want to give up his favorite toy or his status as top dog and resident genius.

Poor Jerry. Now he has to prove that his company is really a $37/share company. It does not seem like he has any new ideas about how to make Yahoo more profitable.

Poor Jerry. He should have spent some time in Istanbul negotiating for a carpet or even at a user car dealership trying to buy a car. He would have quickly learned some basics of negotiating. Such as when you have a deal on the table, you work hard to close the deal or you stop wasting everyone’s time.

If Microsoft decides that buying Yahoo makes sense (and there are plenty of reasons why the combo does not make sense), then walking away now is the best plan. They can always come back in a few quarters when Yahoo will still be struggling and the shareholders will have given up hope. Then they can offer $20/share and get essentially the same company and assets. That’s the way to negotiate. 

There is so much to say about Microsoft’s latest actions that I really requires multiple posts.

Patrick Logan’s blog pretty much summed up what regular people think about Microsoft’s Mesh. Probably many folks at Microsoft feel the same way, but they keep their mouth shut. They know where their paycheck comes from.

The saddest part of the post is the last which quotes Bob Warfield.

There are 100 engineers at work on Live Mesh already, and lots of key functionality (like version control) nowhere in sight. Aside from the Tactics of Monopoly, the other Fail mode is creating a giant monolith of software. Vista is a painful example of how far things can go wrong. Mesh is, at its core, another attempt to rework the document and folder file system. Microsoft promised this in Longhorn for years but never delivered.

The sad part is that 100 Microsoft engineers working for two years has produce something that no one is especially excited about. Love it or hate it, Twitter accomplished something much more unique and interesting over a span of two years with only three engineers.  

Warfield’s own analysis goes on to talk about how Google takes a more open approach that gets others excited enough about the app that they freely put their own time into it. At the end of a few months, the initial effort by a few Google engineers and potentially hundreds of unpaid volunteers (see Google’s Android Competition results) quickly produce great results.

It is hard to understand what it is that is holding Microsoft back. It is not that it is a big company. Apple, Google, and Sun are big and have produced some great products and open source platforms. It can’t be that they are not located in Silicon Valley. After all, they are neighbors of Amazon. The problem may be that their management believes that they really are the smartest people in the room. They may truly believe that a few hundred people at the top of the Microsoft corporation really does know more than millions of web users. 

They have a history of producing products that suit them, not their customers. Even their latest Mesh product sounds like a product that is more useful to Microsoft to get control back over their customers than useful to their customers to get control over their data and devices. Maybe some setbacks like Zune and Vista will help them to put the customer first.

Given their history of not playing nice with others, who really will want to work with Microsoft to make their product better? If third parties like Apple don’t want their products like the iPhone to work with Mesh, then will Mesh be of any real use? If it does not work globally, will it end up a partial (or worse, no) solution for customers?  

Possibly the problem that Microsoft has with creating hot new products is that the company functions from the top down but with no real vision of what the future can bring. I remember back in the mid 90’s that it seemed to take Microsoft forever to understand the importance of the the Internet. This delay allowed Netscape, Amazon and other Web 1.0 companies to get a chance to grow. I remember thinking what was wrong with Microsoft that they could not see what every college student at the time could see: the Internet was where everything was going. I guess that Microsoft’s upper management did not talk to new college hires. I am guessing that they still don’t.

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