Yahoo, Microsoft, and Cloud Computing

A few months ago, we called attention to the excellent article by George Gilder and Bret Swanson that pointed out some of the indicators of the arrival of the "third phase of Net evolution" that Mr. Gilder has seen approaching for two decades.

In the wake of the "collapse" last weekend of Microsoft's bid to buy Yahoo*, there has been plenty of analysis and commentary, but very little discussion of perhaps the most important aspect of it all, which is the fact that the deal itself (which may well still take place, according to astute observer Henry Blodget and others) is a very clear indication of the direction computer-enabled applications are moving.

The Gilder and Swanson article above, in fact, points it out: the fact that "PC-king Microsoft" must pursue "net-centric Yahoo" is a harbinger of the arriving paradigm of "cloud computing," in which the processes and storage that has been confined in boxes on your desk or in your home (where Microsoft has dominated) move back to the connected "cloud" of the internet (where Yahoo, Google, and other players have been better able to provide the tools users need for navigating and manipulating information), where users can tap into it at will from any location.

Many continue to be oblivious to the rapid arrival of cloud computing and the changes it will bring not just to entertainment but to many aspects of business, medicine, even the military. The willingness of Microsoft, the dominant company of the previous paradigm, to venture billions of dollars in pursuit of Yahoo, should clarify the central importance of this new paradigm.

*The Principals of Taylor Frigon Capital Management do not own shares of Microsoft (MSFT) or Yahoo (YHOO).

For later posts on this same topic, see also:


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