I am really fascinated by the recent moves by Microsoft. Microsoft recently moved into uncharted territory as part of a long term strategy that may provide headaches for rivals Google, Apple, Sony, Nintendo and Yahoo. The recent advertising deal with Digg one of the most popular social networking sites that rates articles and multi-media and works as an archival site for researchers was a major blow to Google which held the ad rights  before Microsoft stepped into the picture. Microsoft sealed the deal by investing more than $200 million in Facebook and landing an exclusive advertising deal with them by outbidding Google. These two deals were perfect because most online newspapers and blogs have Digg ratings attached for readers and it enables content providers to have their stories rated in the court of public opinion with ads attached just like Google does now. Microsoft is now setting the stage to create its own version of You Tube that uses Digg. Moreover, Microsoft investing in Facebook was crucial because it puts Microsoft in a market with an influential group of Internet users at elite universities and companies as well as ordinary folks. Facebook works through individual and group networks which Microsoft can post ads throughout the Facebook landscape. Facebook allows one to use 3rd party applications to view and share video, pictures and audio. Oncer again Microsoft can attack You Tube and Google's advertising business which is part of Google's heart. Which leads us to search. All of these things will allow Microsoft's search business to pick up too. This also kept Apple from getting deals with Facebook and Digg too in the future. While Apple is fighting content providers Microsoft is setting up advertising deals and make alliances for the future. While Google is fighting with Justice Department officials over its acquisition of of DoubleClick, the online advertiser, Microsoft is entering the game strong, and is preparing to use Digg and Facebook to launch the development of the Zune, its Xbox gaming line, and eventually the Zune Phone and its Microsoft     mobile software. Microsoft is setting a siege of both Google, Apple, Sony and Nintendo for the long haul through Facebook and its networking power and advertising and through Digg's rating. Apple has to be careful now. On one hand revenues are skyrockets as Macs are selling like hotcakes, iPhones are the rage and iPods are the king and iTunes is the engine that drives them all. On the other hand Apple is involved in an unwinnable war with hackers and its customers over the iPhone and with its content partners on pricing. Apple created the model for successful online music and video downloading and partnering it with the iPod, the Mac, PC's, and now the iPhone. Apple has to make up its mind: is it going to expand its market by marketing its software to PC's and cellular phone makers or will Apple stay too close to the vest with its technology and get left behind when the future is clearly open sourced software especially since Microsoft has cut deals with most of the open sourced developers. Apple needs to make peace with the content owners and sell the content for the price that the content owners want to sell it for and when people stop buying and start pirating then Apple can make a case. Apple should lose the ego and think about the customers who want to download to their Apple network content to their ipods. Apple needs to recognize that Amazon, Microsoft, Sony and the networks are creating their own distribution centers online and they cannot afford to lose marketshare as HDTV will be the law of the land within 2 years. Apple needs to develop relationships with Digg and Facebook for iTunes and for free podcasts since Apple and Microsoft are technically software partners on the Mac, the iPod and the iPhone. Apple can then begin working on creating its own social networking group for all of its iPod, iPhone, Mac and iTunes users and others who want to join the Mac family. The .mac experiment should stay for premium customers who want extra bandwidth and other services. Apple would develop the iTunes Network where it would stream or allow downloadable versions of shows with ads attached so that people can download what they want on AppleTv. AppleTv has not sold well because the HD, storage capacity and DVR capabilities have not been exploited full by Apple and it has not been marketed properly either. A social network would ber a perfect place for Apple to market its devices, its brands and its services. The social network could be called the iTunes Network and it could use cloud based applications of iMovie,iChat, iPhoto and Garageband for short clips to get people to buy more Macs. AppleTv would be the Tv network online that shows continues shows with ads included in them with hosts and Apple could also develop original content of its own so that this could turn into an online television network of its own for professional content providers, up and coming content providers, and consumer generated content. Apple's logical partner would be Google because Google can sell all of the advertisements and push its search and YouTube brands. Besides the GoogleTV brand has not set the world on fire and it could benefit as the for-profit version of YouTube where legal user generated content could be sold or rented. If Apple gets these things rolling it can also get its on-demand movie rental service and its movie download business a boost by having independent, old and some features as advertiser based movies. Apple could then create a mobi-version of this network for iPhones for people on the go that could run through the iTunes Network and AppleTv. However, the real coup for AppleTv would be when AppleTv ran iTunesU programming through televisions for students and professors with ads attached as billboards, icons throughout like soccer games or through straight up advertising and allow the school to choose the advertising as a revenue generator. Naturally, all of this programming would run through the iTunesStore and the iTunesNetwork and AppleTv. Finally, Apple needs to invest in the spectrum with Google and get its own space on line and partner with Cisco, its iPhone partner, and Intel on creating the cloud based system. Quest could be its telecom partner for billing purposes if it decides to enter the residential or corporate side for its computer sales, future iPods and iPhones. The cloud based iPhone with cellular service would be a  blow to telecomms because the iPhone would be an open phone and allow Apple to be independent since Microsoft has said its not bidding on spectrum space so that means that Microsoft will be working with the telecomms and cable firms. Apple should allow third party applications and reserve the right to approve them all just like Facebook does and end this stupid cat and mouse game. This is wasted energy. Apple has been in the phone business for less than six months and is acting worse than Microsoft and the worst telecomm over opened iPhones. The deal with AT&T has helped AT&T with its horrible EDGE service and Apple is getting its image killed. Apple needs to modify that deal or prepare for the day that deal ends quickly because Apple needs a 3G phone and it needs a better network. Besides let AT&T enforce the open phone issue. It's their phone lines they know what people are doing and they should kill it. Apple is just a manufacturer. You don't see Research in Motion, Motorola or even Nokia doing this with their popular lines of phones like the Blackberry, the Razr or the Nseries. Apple needs to tell AT&T that this issue is hurting
Apple and will hurt sales for everyone and take AT&T to court eventually while developing a truly open 3G phone. Apple was right to want control over its phones the telecomms do not make phones and should not be allowed to dictate any more to consumers with closed phones which are not legal in most European nations. Apple needs to prepare for the day that Steve Jobs is dead and gone literally and figuratively just as Microsoft is doing now. Sales are great now, but Apple has created a lot of professional jealousy and competitive enemies along the way and they need a makeover now to handle all of its recent success. If Apple does not develop a social network to help drive more consumers to its computers and devices, and does not build out and market it AppleTv brand it will quickly find Microsoft gaining and even surpassing them. Don't believe me, ask Sony's gaming division. All it takes is having a product that is great but too expensive for consumers and then someone else develops a cheaper alternative with similar features like the Xbox and Wii. Apple cannot afford to take this success for granted and think that things will always be this way because it will not unless their is immediate action taken along with long term planning and action. To be sure, Microsoft is on the move, but Apple needs to take notes for the long haul and learn from Microsofts struggles aned success during this decade because Apple is now like Microsoft was at the end of the 1990 and being hunted is harder than hunting. Fortunately for Apple they already have the devices, the outlets, and the computers; all Apple needs to do is to create an additional outlet that is a hybrid of its iTunes and .mac outlet and MARKET it hard! This will also enable Apple to develop its movie rental download and subscription movie and music downloads for consumers who want it. Moreover, Apple will be able to develop its own original content and user generator based network, AppleTv, for independent and new content producers and make it ad based by partnering with Google. Finally, Apple will find by developing AppleTv it will become a bigger version of Facebook. Well Steve, I have given you the keys to car, start her up!

Chris A. Heidelberg III