I found a quote particularly telling in the New York Times’ article on Bill Gates transitioning out of Microsoft. Ray Ozzie, chief software architect of Microsoft, was discussing the dangers of Mr. Gates making strategic decisions after not staying informed. He says:

“It can’t be a situation where he’s expected to suddenly, magically come up to speed,” said Mr. Ozzie, […] “You know, did you see the 20 announcements last week that Google did, Yahoo did, Cisco did?“[emphasis mine]

Why would Microsoft, a software, web, and now (sigh) advertising company consider Cisco, a maker of network hardware appliances, a competitor in the same vane as Google and Yahoo? Because Mr. Ozzie has read between the lines as several others have, and seen that Cisco’s pattern of acquisitions indicate that it’s planning on expanding into the online communications market, competing with Microsoft, Google, and others.

More importantly, it will be entering this market from a completely different angle than other companies. Microsoft has ruled the desktop for years, and continues to attempt to tie the web to the desktop, where its strength remains. Yahoo!, a portal from the beginning, continues to act like a portal in its acquisitions and technology development. This has caused problems at times due to a tendency to insist on having a finger in every pie, even when you’ve run out of free fingers.

As Brad Garlinghouse, a Yahoo! VP, outlined in a memo last year, Yahoo!’s effectiveness as a portal suffered when it offered visitors two different options for the same thing. Some of that’s been resolved(we know who won Flickr vs. Yahoo! Photos). The other problem Yahoo! has encountered by applying its portal background to the emerging web is a lack of focus. Garlinghouse said, “I’ve heard our strategy described as spreading peanut butter across the myriad opportunities that continue to evolve in the online world. The result: a thin layer of investment spread across everything we do and thus we focus on nothing in particular.”

This certainly remains true as Yahoo! even now attempts to compete on all fronts. At the beginning of this month, Josh Catone discussed Yahoo!’s plans to compete with YouTube. If Yahoo! truly focuses on that effort, I’m certain they can increase their market share of online video compared to YouTube, even if they don’t overtake it. But the problem remains: focus. While Yahoo! can devote focus in key areas for a time, I don’t believe it can focus on all of them. When is the last time you’ve heard Yahoo! 360 discussed as a serious competitor in the social networking market? I’ve heard Friendster mentioned more in the last month.

Google, on the other hand, is not a portal company, despite what many have said about its ever-increasing collection of offerings. Google is a web service company. It doesn’t matter that Google has both Google Videos and YouTube, because Google is not in the business of pointing users toward anything but what they’re already looking for. There’s no conflict in offering both YouTube and Google Video content in searches, because searchers don’t care where the content comes from, they just want to find it. And producers end up choosing between many different video services anyways; having two services on the market only increase Google’s chances a producer will host his or her video on a Google-owned property.

AOL has as interesting a history as any major company online, and only now looks like it might be emerging from “has been” status to become a competitor again. Which isn’t to say it’s traffic and revenues suddenly stopped existing until now, but rather that forward-thinking companies like the ones above don’t consider a company that isn’t innovating and planning for 2, 5, 10 years down the road a threat. An AOL that is satisfied with its load of subscribers, that maintains the status quo, that copies technology once the market demand is proven, and sits and grazes like a good cash cow is not a worry.

But an AOL that’s expanding, not just catching up but trying new things itself, an AOL that is leveraging its loyal member base (that is still comparable with Yahoo!’s) and bringing them into the world of Web 2.0, that would be something to worry about. On the other hand, it may be too late if AOL has spent too much time in the care of Time-Warner, a media company, and plans on merely shifting its cash-cow focus from internet services to internet entertainment (possibly even re-branding itself as TMZ?).

Cisco, as I mentioned above, would enter the World Wide Web from a background none of those companies have. Cisco could be the company with the best logistical understanding of how information moves from online space, to online space, to offline space, and the company with the most interest in making offline-to-online-to-offline transitions happen more often. In some ways, Cisco is more interested in new media companies succeeding than new media companies are themselves. The more audio, video, and miscellaneous data flow across the web, the more need there is for the hardware(which Cisco sells) to handle it.

Video conferencing? Bring it on! Podcasting? Better than radio! Blogging? A great place to place it all! I meant what I said about John Chambers being a genius. By getting in the business of the emerging web, he not only has the chance to share in the profits from that, but continually increase revenues from Cisco’s core businesses as well. And Cisco would be one of the few companies to not suffer major setbacks due to a possible bust of the advertising market.