Original URL: http://www.theregister.co.uk/2008/04/27/shuttleworth_microsoft_yahoo/

Ubuntu man says Microsoft's about to 'swallow a hand-grenade'

Shuttleworth pegs Yahoo! as a path to Flail

By Ashlee Vance

Posted in Servers, 27th April 2008 20:33 GMT

Interview Well, here I am just a few miles from Yahoo!' headquarters and Microsoft's Silicon Valley residence. It's Sunday, and I've yet to hear screams from either camp. So, it seems that Microsoft's call to action deadline around the Yahoo! buy is passing with a lack of fanfare. Yahoo! may surprise us yet by leaking something to the New York Times or perhaps Steve Ballmer will call up his buds at the Wall Street Journal, but in lieu of such actual movements, I'm left wanting.

And so it seems appropriate to turn back to Mark Shuttleworth, the ultra-rich spaceman funding the Ubuntu operating system project. As our stats logs tell it, you people can't get enough of this dude even though he's suspected of torturing woodland creatures in a Chelsea dungeon. Whatever. Call your local PETA representative. The open source march will not be stopped by some bloodied wombats and pandas.

During a recent interview in London, Shuttleworth had plenty to say about Microhoo.

"The Microsoft and Yahoo thing is fascinating," he told me. "I think the ad game is lost. So, Microsoft buying Yahoo! now on search? Come on. Two failing operators will just continue to decline together. On search, I think it's totally a waste of time."

Well, if the deal is not about selling search ads, then what's going on here?

"Yahoo is basically a conduit to a content creation company, and I think that is a deadly business to be in," Shuttleworth said. "For Microsoft to own more content when content is unprofitable and content generation is unprofitable is risky, I think."

Gee thanks, Mark. The content creation business is actually tremendous. Especially when you readers click on the ads surrounding this story. Can you see them? (Actually, forget the ads. Just send me an e-mail, and I'll direct you to my PayPal account.)

"So, for Microsoft, this deal is all about flailing," Shuttleworth said. "For them to succeed in that next generation game, they will need to have a vision that is better than Yahoo!'s vision, which is better than Google's vision, and they need to execute it.

"I think this game will swing from the desktop to the web and eventually back again in really interesting ways. They already have a hell of a big investment in whatever their vision is. It's not like they were waiting to buy Yahoo!. They were spending gagillions of dollars, which they have, on data centers for that sort of vision. So, what does Yahoo give them then? A brand, which they will probably screw up."

Even with all that going for Microsoft, Shuttleworth found time to highlight another troubling area.

"Integration is one problem, but no one is talking about another of Yahoo!'s big issues, which is salaries. Their strategy was basically to hire thousands of people to create content and thousands of them in countries where they are cheap. We see the salaries in those countries going right through the roof. So, I wonder if Microsoft isn't about to swallow a hand-grenade."

Ballmer swallows hand-grenades for breakfast, Mark. That's part of what battling anti-trust regulators for years and years and years is all about. Why do you think he looks that way?

Ah, but there is a plus side to this whole planned acquisition, and that's the open source angle.

Shuttleworth sees Yahoo!'s open source army invading Microsoft.

We're not sure if the free software zealots will have much luck espousing the virtues of Zimbra over Exchange, but they may convince Microsoft to fire up something beyond a dog and pony show around open source code.

"Not all of what we heard with their interoperability announcement was predicated on a game they are playing with the EU commission," Shuttleworth said.

"And, if they did buy Yahoo!, the good thing about it would be 20,000 free software advocates reporting to Steve. I figure there are already about 5,000 within Microsoft. These are guys that could articulate a vision for Microsoft that doesn't depend on the old business model.

"Increasingly there are signs those guys are getting heard. There will be good voices there saying, 'We can do things differently.'"

It's a touching vision, although Shuttleworth remains skeptical that Microsoft's shareholders will be moved by the idea.

Speaking of open source bullies, let's have a look at Oracle. I hear that Oracle thinks Red Hat is more or less a joke that will be snuffed out of existence soon enough. And all it will take to do the snuffing is this CentOS mimic play.

"It is really interesting what they have done," Shuttleworth said.

Someone needed to do it. And what's interesting is that it's not just someone. It is a pretty serious company that has effectively done a CentOS. For everybody's sake, it will be very interesting to see how the business model works out.

They seem very confident about it. They told me that they've signed up their first non-database customer, which I think is great.

Inherent in their decision to remain fully compatible with Red Hat, which is a commitment they make to their customers, are a couple of key factors. On one hand, that buys them very rapid access to an existing pool of servers. But on the other hand, it kind of limits their flexibility and their ability to invest in the product itself.

I suppose you could say they are not investing in the product - they are investing in the support organization. And in that sense it is a really cunning plan. The issue is that customers want to know what the road map looks like. They want to know when you'll add features or why you chose a specific thing like Xen or KVM. Effectively, Oracle has outsourced all of those decisions to Red Hat.

Oracle will find themselves in a position where, if this business is successful or strategically important to them, they will need to fork or buy Red Hat. They will do one of those things within three to five years.

So, there you have it. Red Hat has maybe five years to go, according to the Ubuntu man.

Enough software chat though, Mark. Let's talk about that infamous topic of cloud computing and then, er, about how rich you are.

Shuttleworth reckons that the cloud is here to stay.

"There will be a crisis of confidence where a 100 start-ups will go bust, and everyone will think that was a bad idea," he said. "But, to a certain extent, we are already living in that cloud world. For me, I can lose my laptop and be pissed off but not devastated. The things most important to me are intrinsically backed up - stuff like e-mail and photos. "

You might think Ubuntu would enjoy a major place in the cloud build out, although I hear precious little of the OS's presence with the angels. Yahoo!'s doing the FreeBSD thing. Google has its own, super-tweaked Linux in the data centers. Microsoft eats its own dog food, Amazon seems to be on Red Hat or CentOS, and Sun's in Solaris country.

Whatever. The hardware clowns aren't making money off the cloud anyway, right?

"One of the big server manufactures who shall remain nameless was telling me that their vision was to be selling to the cloud. I was thinking that it's a lot more profitable to sell a server to a mom and pop shop than it is to sell servers to Amazon's EC2. With EC2, they buy in bulk. They can negotiate your right down. And they can control their slack whereas every mom and pop shop has a machine that's sitting there doing nothing.

"I don't think people make a lot of money selling servers to Google."

Eh, Intel seems to think it's a good enough business.

Anyway, you're rich, right? How's that working out for you? You must feel some guilt about having so much when all those poor bastards at Bear Stearns are about to lose their jobs?

"As a very lucky billionaire, I have issues with certain situations," Shuttleworth said. "For example, other people invented public key cryptography, but I was one of the few that hugely benefited from it. There is a certain element of a debt to be repaid. Perhaps a certain amount of what I do with Ubuntu is part of that."

If you're like me, then you've got to find the rich fellas over at places like YouTube pretty revolting. They've hijacked this "community" malarkey just so they can get a bunch of teenagers, cat lovers and wannabe porn stars issuing videos for free. Then, boom, a handful of people get rich off this memepile. "YouTube was very clearly a businesses from the beginning. There were investors. They were providing a service. I don't think the folks who uploaded their videos have a moral claim against the guys who built that business."

Okay, you brutal capitalist.

But, come on, the internet has just turned into a no muss, no fuss feudal system where any Stanford grad can set up a fiefdom in his dorm room. So, the spoiled get more spoiled, while the rest of us are left with food stamps and Twitter tweets.

"We have a general issue at the moment in society with inequality," Shuttleworth said. "There was an article in the FT that was looking at the hedge fund guys and it said that the last time income inequality was so high in the US was 1928. That didn't work out so great for anyone.

"The ideal situation for me is if we created a culture in the very successful of extreme generosity. That to me would make it more palatable."

Okay, hippie.

"I like nothing less than meeting a guy who has been very successful - the worst case is when he's more successful than me - who doesn't recognize there is a lot of luck involved - who doesn't recognize that other people laid the foundations for that," Shuttleworth said.

Who do you have in mind? Jimmy Wales?

"It's a long list. Well, it's a short list. Let's not get into that." ®