The big picture behind Google, Microsoft, Yahoo, AOL, Real, and Sun deal-o-mania

Maybe I'm crazy.   But if you ask me, there's a super big picture that's begining to form when you start to look at all of this week's announcements, or maybe-announcements involving Google, AOL, Real, Microsoft, Apple, Yahoo, Sun and more.  If I'm not mistaken, just about everyone is taking sides in preparation for what appears to be a two-way show down with an odd-man out.  

Let's start with Microsoft and Yahoo.  What most people aren't aware of is that the two were already chums on the entertainment front where Yahoo's music store only sells music that runs on devices that are compatible with Microsoft's PlaysForSure (that should really be "PlaysForSuren't") digital restrictions management (DRM) technology.  So, with every music subscription that Yahoo sells, it's just feeding the Microsoft beast because in order to play that music, you have to buy a device from a manufacturer that licenses its playback and DRM technologies from Microsoft (follow the money).  

As it turns out, in true enemy-of-my-enemy-is-my-friend fashion, Yahoo and Microsoft have a mutual problem in Google.  It's apparently only a matter of time before Google, who also in enemy-of-my-enemy-is-my-friend fashion recently teamed up with Microsoft foe Sun, turns on some sort of firehose that realizes Sun's "the network is the computer" dream and aims it at Microsoft's Windows and Office.  Those latter two products are both getting major upgrades and are going to require more hardware, not less. Meanwhile, with their demonstrabley thinner technologies and applications, Sun and Google have the power to go in the opposite direction.  So, Microsoft has issues with Google on that front in addition to the issues that Microsoft and Yahoo could already have with Google on the search engine, instant messanging and Voice over IP fronts (Google recently launched GoogleTalk).  Given that Yahoo and Microsoft were already chummy with each other on the multimedia front, why not merge their walled gardens to increase the utility of both in hopes of heading off any more defectors (end users) from taking in oodles and oodles of Google (at the expense of everyone else).   So, it should come as no surprise that the two finally made their instant messenging services compatible with each other.

Meanwhile, while the Microsoft/Yahoo camp begins to take shape, Google can't possibly lie down and let that truck run it over.  So, why not join forces with Comcast and the 800 lb. gorilla of instant messaging: AOL (should we call it GoogAOLe?).  By the way, that's the same AOL that just released a $99 PC through CompUSA .  Picture applications and services flowing from Google and AOL, through Comcast, to a dirt cheap AOL PC).  A harbinger of things to come (especially since Sun is involved)?  There forms the nucleus of our two camps. 

Now comes the question of who is going to join the fun.  Well, let's check out Real. Pretty much everybody in the digital music business has had their lunch eaten by Apple and its iTunes software and its iPods.  Now that every record label feels the need to keep music lovers from actually listening to the music they're buying, the labels are pretty much going with the biggest DRM names in town: Microsoft's PlaysForSure and/or Apple's FairPlay.  Real's ecosystem really doesn't really have much of a chance against those two gorillas and Apple, despite the name of it's DRM technology, isn't really playing fair.  It's not sharing it's technology with every Tom, Dick, and Harry like Microsoft is.  So, naturally, it makes more sense for Real to settle up and join ranks with Microsoft.  Part of the Real deal is that RealNetworks will promote Microsoft's Windows Media technoloiges (a.k.a. the playback and DRM technologies) in its Rhapsody-to-Go service for mobile entertainment.  So, now Microsoft and Real are hooked up against Apple.

So, where are we?  Microsoft/Yahoo/Real vs. Google/Sun/AOL/Comcast.

Meanwhile, Apple, the odd man out currently because it's not in either of the two aforementioned camps launches its video iPod.  Most people are worried about what the video is going to look like on that tiny display.  What they should really be worried about is how much video content is going to get shoved into the market that's wrapped up in Apple's DRM Fairplay technology.   In the past, I've likened Microsoft and Apples's war of the playback/DRM technologies as something like the tortoise and the hare.  Since the iPod first hit the market, Apple has been racing to sell as much FairPlay-DRMed music into the market has it possibly can.  Why? Because it ensures the future of the company.  As I said earlier, except for the new iTunes phone from Motorola, if you want to play that music, who do you have to go to to play it?  That's right. Apple.  

Meanwhile Microsoft has a competing technology for music, but it's not doing nearly as well as Apple's.  At least not yet.  It's busy licensing it's playback and DRM technologies to as many licensees as it can to create the same sort of feeding frenzy around its PlaysForSure ecosystem has it did with system vendors for the Windows ecosystem (much to the chagrin of Apple).  It's even giving away its DRM technology until the end of the year just to stimulate interest. By the time 2009 rolls around, when analysts think MP3-player demand will spike, I suspect the balance of power in the audio market will have shifted substantially towards the direction of the Microsoft PlaysForSure ecoysystem.

On the other hand, between all the computers, handhelds and telcos that are in the Microsoft video camp (and there are very many), Microsoft's video ecosystem makes all other comers -- including Apple -- look puny by comparision.  Today, Microsoft controls the video.  Apple controls the audio.  Neither is happy with the situation because it forces them to divide and conquer the market with their incompatible playback technologies when both (and their shareholders) would be better off having the entire market to themselves.  But before Apple can try to slow the Microsoft media juggernaut down, it needs to do what Microsoft has already done -- mobilize it's video technologies.  Enter the video iPod.  Now, much the same way it has been driving FairPlay-DRMed audio into the market, expect it to do the same with video.

Am I missing anything? Maybe my meds?