"I think there is a world market for maybe five computers." - TJ Watson, IBM
This is a famous misquote attributed to T.J. Watson, IBM's president at the time, misjudging the potential of the PC market. As the story goes, IBM which invented the PC, didn't see the vision as to how big it could become and let others, especially Microsoft, get the lion's share of the value creation. But maybe, TJ Watson did have the vision right and there is really a need for only 5 computers. My friend Ray Conley, made a good case over lunch one day that the statement could indeed be true if you think of the computer in the cloud sense. Could there really be only five computer "clouds" you need to do everything you want? The answer is yes, and Google, Amazon, Salesforce.com, Akamai and one of Sun Microsystems or VMWare is all you need.
The first computer you need is Google. They represents all the consumer apps one needs. It doesn't have to be Google but it has to be a site like them. All your email, social networking, sharing, blogging can be done by them. Google specifically, has the means to offer you any of the apps you want on line, thus they are the most likely candidate to own this cloud. Incidentally, Facebook can do all these apps but search. A 2008 prediction could be that they actually do something big on the search feature, but I digress.
The second computer you need is Amazon. Not for their ecommerce solutions but for their web services, that I compared to semiconductor fabs on Venturebeat. They represent the consumer infrastructure cloud. Any consumer internet app needs to be hosted somewhere before they can be sent to the consumer, whether it be on Google or Facebook. Very few companies have the ability to build a big, global data center, and Amazon has one you can use, and pay by the byte. They are a good pick to win this cloud.
Between Google and Amazon, the consumer apps and the consumer infrastrucure are covered. Now lets look at the enterprise side. After all, anybody in front of a PC looks either like an employee or a consumer.
The third computer therefore is Salesforce.com. Just as Google gives you your consumer apps, Salesforce gives you your enterprise apps. Their cloud takes care of all the things you need to get your job done. And just like Google, they are open to 3rd parties who will develop on their platform.
The fourth computer, you guessed it, is the one that enables the enterprise infrastructure, it controls your servers, storage etc. The winner here is nebulous. Sun Microsystems definitely has products and solutions here on the backend infrastrcutre, and VMWare is doing that for the servers in the front end. One of the two win. You take your pick, I am leaning towards VMWare, but there is a good case for Sun.
The final computer, is the one that gets all the bits to you. That's the cloud that has the intelligence to move things around. None of the other four work without it. It's a CDN, and Akamai could be the winner to represent the fifth computer.
There you have it. If these companies could completely dominate their spaces, and kill every competitor, you's still be fine doing what you are doing on only five clouds, Google, Amazon, Salesforce, VMWare and Akamai. That's the idea behind this post, but what's the point? Who cares?
There is a Venture Capital investment thesis here. If your company can knock out any one of these five, you have estate making potential in your hands. If your company complements this cloud, you can still do well, you ride their platform, or get bought by them. If you are trying to create a new kind of cloud, you may have a problem.
There is a public company investment thesis here too. That these five companies, call them the "TJ Watson Portfolio" are very well positioned to win in the long term. Just to show you guys I am willing to put my money where my mouth is, follow my profile on zecco.com (covestor version coming soon), and let's see if I am right in the long term.
P.S: I wrote this piece for Om Malik here. This one is the original in more raw form.