By Nathan Rudyk

When we began work on turning Microsoft CEO Steve Ballmer’s Dec. 6th speech into this month's podcast, market2world's Producer Phil Hogarth and I spent several hours under the headphones ensuring we accurately captured this milestone in Ottawa’s tech history.

The Big Moment in Steve Ballmer’s talk to 750 assembled senior technology executives occurs during the Q&A section near the end of the podcast when the Voldemort of search engines came up (Steve didn't speak its name, but he also didn’t sound very scared).

After a preamble on how well Microsoft was doing in instant messaging and email, Microsoft’s CEO admitted that “In search, we are the best number three you can be,” then he pinned our VU meters bellowing “AND I DON’T WANT TO BE NUMBER THREE!”

Flashback to 1995: the Voldemort of browser companies goes public with a seemingly unassailable market position of more than 80% of WWW users loyal to its product, and Netscape is billed as the fastest growing software company in history with revenues bolting from $85 million to $346 in a single year. Marc Andreessen is the poster-child of the Web 1.0 era and tech pundits declare Microsoft a sunset company.

Billy Potter does not blink. Microsoft releases Explorer in concert with Windows 95. By September of 1998 Microsoft’s browser dethrones Navigator as the peoples’ choice, the U.S. court system is clogged with anti-trust actions against Microsoft, and Bill Gates is widely vilified. By November of that year Netscape disappears into the bowels of AOL, and AOL in turn begins to disembowel (from a share price perspective) Time-Warner two years later.

This potted history should be instructive to those such as Robert X. Cringely who assume the paradigm-crashing, Microsoft-crushing Googlization of Web 2.0.

History suggests we should assume nothing.

Billy-like eye contact is occurring between Steve Ballmer and Google’s executives. Ballmer may have hinted at some of his Web 2.0 corporate strategy in his Ottawa speech when he mentioned “guys like Yahoo and us” in relation to a Microsoft VOIP offering.

Steve’s wand is a sturdy one. His spells are powerful. Dismissing his ability to fight his enemies is unwise. The blogs of Microsoft employees are telling.

Tis the season for predictions. In 2006 (or sooner) look for some form of alliance between Yahoo and Microsoft to face off against Google's investment in (irony of ironies) AOL, after AOL left Microsoft (more irony, against the advice of AOL’s ex-CEO Steve Case) at the altar. And over the next two years, look for Microsoft’s Web 2.0 strategy to make Google appear more assailable.

Have an excellent Christmas (and/or some time to reflect on the past year in the company of close friends and family), and may your spells be powerful in 2006.

(A version of this blog entry also appears on's "Beyond the Podcast". Nathan Rudyk is President of market2world communications inc. and co-host of