The shape of the networking industry has long been determined by forces on the outside in what could be called the “on-net” space, and two powerful players there are undergoing management transitions. Apple is losing (at least temporarily, though we hear management expects Jobs’ departure to be permanent) its charismatic CEO and Google is switching its politically connected “professional” CEO in favor of founder Page. How much these changes will impact the companies involved, and the industry, will surely be the focus of much discussion but we’ve got to weigh in with our own views since both Apple and Google are truly seminal forces.
Apple has, more than any other company, transformed the relationship between users and networks—by transforming the instruments that connect the two. Anyone who has worked with, or inside, Apple knows how much Jobs has shaped the company and how much his vision of the future has dominated Apple’s planning. But his style has made it difficult for Apple to do any succession planning despite the state of Jobs’ health, and many inside Apple have suggested to me that charisma and determination have more often slipped into intransigence in recent years. Apple’s vendetta against Adobe’s Flash, for example, have put the company into a position of supporting HTML5 when it’s clear that HTML5 is a benefit to the browser-based Google model of the future more than to the Apple app-based model. In fact, the iPad/Phone incumbency is rendered meaningless if all portable apps are nothing more than URLs into an HTML5 world.
In the case of Google things are a lot more complicated. Eric Schmidt isn’t a charismatic figure, and he’s generally seen by people in the Valley as a bit of a stuffed shirt, a businessman and not a real tech guy. Brought in to add some “maturity” to a management team that investors tended not to trust, Schmidt championed a number of things outside the normal range of an online search giant—most conspicuously stuff like cloud computing and enterprise services. He’s seen as having let social networking languish, losing the space to Facebook. Some say he didn’t back Google Wave properly (others say he promoted it too much). In any case, he’s now being replaced by one of the “infant” founders and there’s a lot of talk that this is going to prevent Google from “going Yahoo”.
It won’t, because Schmidt isn’t the problem. Google is now a public company, a company that has to make money for its shareholders either through stock appreciation or through dividends. I’ve said for years that there’s a fundamental problem with an ad-revenue model—the total value of all advertising can grow only at the pace of GDP, and gaining market share to show strong growth invites (as Google has already seen) regulatory scrutiny. Google really needs to transform itself, and it’s not clear that Page is the guy to do that.
