The competition for the next wave of enterprise computing has heated up since Microsoft announced its Windows Azure strategy a month ago. While the jury is out in some quarters about Microsoft’s ability to actually deliver the reliability, security, and even the interoperability that is promised, the timetable has accelerated the plans of competitors and forced some to define themselves in terms of the cloud at a dangerous moment.

Sun Microsystems has been under particular pressure to realign; analysts and even Sun employees such as Tim Bray have been outspoken in their pleas for Sun’s executive team to jettison unprofitable ventures in favor of some kind of cloud strategy. CEO Jonathan Schwartz has hinted in recent months of some wood behind what Sun calls its Grid effort, and will this week roll out Sun’s JavaFX 1.0 front end technology to compete with Flash/Air and Silverlight.

JavaFX could be one of the casualties if Sun decides to pare technologies along with the 18% of its employees it’s trimming. Other cuts might include the NetBeans development environment, which has kept pace with or even bettered Eclipse in quality but not in uptake, and OpenOffice, the free Office replacement. Unfortunately for Sun, Google Docs has stolen some of the strategic thunder with an on-demand product from a company that can afford it.

Google is feeling some pressure as well, as its odd messaging around a Gmail Video chat plug-in reveals. Though the company has made a big deal about only supporting open Web technologies, they have much less to say about the use of proprietary technologies in the video plug-in. Coming at the same time that CEO Eric Schmidt attacks Azure as a way “to gain enough share in cloud computing to force other people to use its standards,” the use of Flash and the reluctance to answer direct questions about it seem disingenuous, something Google has steered clear of as it builds out its own standards such as Chrome and Android.

Schmidt’s attack also suggests that Google has assessed Microsoft’s cloud effort and found it substantial enough to warrant a political rather than technical challenge. Yet the video plug-in also implies an attempt to improve the “rich” aspects of its Ajax framework as online versions of Office reach beta in the next year. Ironically, Microsoft’s Live Mesh/Silverlight combo will work on Windows, Mac, and Linux (via Novell’s Moonlight port), while no Linux plug-in has been announced for the video code.

Apple’s cloudish efforts may get a boost when the company releases its Push notification technology, allowing a rumored over the air MobileMe synchup with Notes. Not only would that bring in the rest of the enterprise email world, it would also deliver the necessary infrastructure for iPhone developers to release useful micromessaging clients. Qik.com’s new support for transcoded iPhone-compatible versions of Qik videos would fit nicely in such clients, bypassing Flash and Silverlight in the process and blunting pressure from Android. Without Google’s Web religion and with a burgeoning revenue model, Apple can afford to move to the cloud at its own pace.

At a time when startups are tamped down to survival mode, the cloud seems the province of the wealthy. By betting early and building just ahead of the startup market, Amazon has joined the gorillas at the table. Sun remains a player if only because the various acquisition or breakup scenarios seem more unlikely. And Jonathan Schwartz’ ability to dance with Microsoft when he needs it may come in handy as Azure nears the marketplace. Somebody will provide the big freaking Webtone switch for these cloud data centers, and storage is the new black.

Google and Microsoft are alone at the top of the pyramid. The usual caveats don’t hold much water when looked at objectively. For a company pigeon-holed as making it up as they go along with no cross team coordination, the Google desktop is an organic work in progress with new components and management tools emerging week by week. Building out via XMPP from the Gmail hub is allowing users to orchestrate realtime services into a consumable stream and reliable archives available cross-client.

The rogue video plug-in may violate Google’s messaging, but the first time you nail up a video chat with someone on a PC from your Mac, you’ll know something substantial has occurred. In a world where the console real estate is measured in pixels, I’m still running Skype as a legacy app but switching whenever I see the telltale camera icon in Gchat. With calendar, docs, mail, XMPP, video, and audio all on one screen, the momentum is considerable.

For its part, Microsoft is no longer at war with itself. That may have been the only way to manage the company in the face of no opposition, but for the first time Redmond is competing more with Google and to a lesser extent, Amazon, than between versions of Windows or Office. The Google console may lack persistence and offline aspects, but the video plug-in signals a much more pragmatic approach than many have expected. By the same token, Microsoft is far less encumbered with its response to Google’s attack than we thought before Azure was revealed.

That’s because users don’t perceive Microsoft as the dominant force in computing any more. When I open Gmail, I’m conditioned to expect the latest addition. The more time I spend in the realtime world, the more I look to solutions that will fit into the environment I have chosen. When micromessaging proves too fragmented for XMPP, I add the Twhirl Air client to present a more alert-driven version of the various feeds. In other words, my usage reaches a point where more professional tools are necessary, and I integrate RIA capabilities to finesse the transition.

But what happens next? For now, it’s unlikely I’ll switch off the Gmail desktop. There’s no competitive Ajax client, but I have no special allegiance to Air should a more robust Silverlight client emerge. My iPhone could care less where the back end lives that synchs via the new Push notification engine, so I can choose between Mesh and whatever Google releases to compete with XMPP on the desktop. Google has to compete not only with Microsoft but Apple in that arena; I’d love to integrate GCal and missing features of Gmail on the iPhone, but not until Push is released will it happen, and perhaps not quickly even then.

Micromessaging is not the only area where Microsoft can make inroads, but it’s easily the most significant because of the requirement for open standards. Even though those are still unsettled, Microsoft has carefully mandated open access to its platform and has no wiggle room out of that contract given its Borg baggage. Interestingly, Google has opened a hole into the Gmail console with the ability to add widgets. Imagine Office Online docs available on the Gmail console, or a Twitter feed that interleaves docs and appointments from both stores.

The intersection of social media and the cloud will drive most of this strategic realignment. The argument that cloud computing will fail because we won’t trust our bits outside our direct control ignores two truths: the economics outweigh the potential liabilities, and we have no idea where our data is in any case. The more valuable our cloud data becomes, the less likely we will be to complain about unauthorized access. The more social graph data is baked into these information sharing transactions, the more valuable the shared data will become.

The terrorist attacks in Mumbai played out not only on cable networks but for the first time since the election on computer screens. CNN offered a live feed at the top of its Web site that required downloading Flash 10 to operate. The beta client is reminiscent of the Olympics Silverlight client, which allowed switching between multiple feeds. In this new coverage, you could switch between CNN International and several CNN affiliates, including CNN IBN, the Indian sister network reporting locally about new attacks not yet visible on the main network, as well as a no-audio behind the scenes look at the Anderson 360 set in New York.

As the coverage continued, one British lawyer at a hotel currently under attack talked via phone from his barricaded room. He told CNN anchor Jonathan Mann that the hotel guests were communicating via Blackberry and cell phone. Mann belatedly realized he was asking questions – How close are you to the fires in the building? – that could alert the attackers to the guest’s location, and asked him to mot give any more details that might give away his position.

In an earlier segment, an academic from the University of California at Berkeley was interviewed via cell phone and what looked like a Webcam video feed. Twitter was mentioned numerous times by Mann and other reporters as an early and continued source of information about the violence. Over at competitor MSNBC there was no live feed, but ongoing video updates, one of which was embedded on a Mahalo page and then tweeted on the micromessaging service.

FriendFeed does not yet support realtime feeds of its search functionality, but even at this early stage of the service it took 30 pages of messages to go back 20 minutes in time. Robert Scoble and a swarm of FriendFeeders loaded an alpha PeopleBrowsr that aggregated Twitter messages, Flickr images, and YouTube videos, though within 30 minutes it had slowed to a crawl. And while the CNN main feed concluded with the announcement that the government was now in control, the IBN network was reporting negotiations still underway inside the hotels.

Watching cable news seems to be in a major transition, as breaking news seems to be an excuse to move relatime coverage to the Web. Earlier today I watched the complete Obama press conference on demand on MSNBC and only switched to CNN when I realized they had both on demand and realtime coverage. Both the Flash 10 code and CNN Live are in beta, so it’s not clear whether this is a planned rollout or one that was accelerated by the attacks. What’s sure is that social media and news are merging before our eyes.

If Twitter wants to make money, it needs to do to others what they’ve been trying to do to Twitter. That is, extend its lead in market share by solving the problem of cross-platform micromessaging. With activity streams from Facebook, Microsoft, MySpace, FriendFeed, and a score of smaller players flowing over RSS, XMPP, and HTTP Push, Twitter can consolidate its power by cloning the best of its competitors’ offerings.

Key to this jujitsu is the understanding of what constitutes a micromessage. Though Twitter’s competitors for the most part frame the issue as one of interoperability, in fact Twitter is in the unique position to define the platform on its own terms. If Twitter provides tools that allow users to integrate their messages, social graph, and discovery mechanisms with all other systems, Twitter in effect becomes the Post Office of the new messaging paradigm.

FriendFeed has done an exceptional job in the last few months modeling this strategy, and soon will reach a tipping point where it will be worth assembling a near replica of the high value parts of a Twitter Follow and discovery cloud. Already you can use the Imaginary Friends functionality to aggregate “friends” from multiple services, and create a Friends List and associated realtime feed to simulate much of the Twitter UI. But Twitter’s embargo of realtime Track data keeps other services from exploiting the Twitter user base as an organic messaging cloud akin to Google’s search cloud.

However, if you turn this defensive strategy around and make Twitter the hub for not just the cloud it controls but all such messages, the resultant business value begins to mirror that of Google’s opportunity. Where Adsense exploits Google’s search portal as leverage across the Web, Twitter can syndicate its dominant realtime results across its competitors’ services. TrackRank becomes a much more efficient value proposition, harnessing as it does not only behavior but social swarming characteristics.

For Twitter to atomize its service into an open architecture is a leap the company’s executives and investors may not have the stomach to attempt, but they don’t have to look far for an example to guide them. Microsoft, with far more baggage as well as corporate culture working against opening its architecture, has made just such specific commitments with Mesh and the Live Platform with Mac and Linux clients, a sync protocol built on top of open standards, and Azure’s pervasive support for REST.

As much as the media wants to look at Twitter et al as a consumer service likely monetized via advertising, the value to companies internally as a vehicle for managing one-to-many collaboration relationships may prove far more important. Executives can manage by starting fires and watching to see who puts them out. Managers can convert internal messages first for business partner and eventually public consumption.

By defining the interchange points for micromessaging intercommunications, Twitter can use its market muscle to stay ahead of attempts to clone it from below or above, and at the same time stay ahead of attempts to pick off enterprise applications of its model. And most disruptively of all, Twitter can turn its competitors into user acquisition and business process development partners. But wait too long and the moment will pass. Can Twitter afford to miss a fail-whale of an opportunity?

Interesting factoid while awaiting Track’s return to Twitter and debut on FriendFeed. This evening I’ve been perusing the FriendFeed message base, an increasingly enjoyable and dare I say it valuable experience. In the process I replied to a few comments from several days ago, including one from a Phil Glockner:

I just noticed Steve seems to be actively using FriendFeed, at least moderately. Therefore, I say welcome, and sorry I called him names a few months ago. :)

A few minutes later, TwitterSpy, a Track replacement service, reported the following in a GChat XMPP window:

twitterspy: stevegillmor: luckily I didn’t see them. re: http://ff.im/5UDi

Note the re: which expands to the full conversation. What’s happening is that I’ve turned on forwarding to Twitter in FriendFeed, which not only is smart enough to handle posts from Twitter by suppressing circular loops but to promote the context of a comment thread to the Twitter audience. FriendFeed’s attention to detail and nuance is a welcome development in the not necessarily ready for primetime micromessaging community.

In fact, I’ve been one of the worst actors in the drama, and deserve every bit of the hostility that some in the FriendFeed community have exhibited. FriendFeed has come a long way, and its steady innovation in the realtime space and a surprising move to open its outbound architecture bit by bit are adding up to a fast follower strategy that just may prove decisive for the growth of micromessaging. As Christopher Harley said a few minutes later in the same thread:

I always thought Steve would like FF. What am I saying? No I didn’t.

Me neither. It’s nice to be wrong every once in a while.

It’s not the famous Web 3.0 the semantic crowd has been lobbying for for years. It’s not the next big thing or even the next little thing, or whatever the Times touted when it went nuts for micromessaging today. It’s Web 2.2, and it stands for incremental improvements that, oh by the way, add up to a big leap.

I’m branding this as an homage to the latest iPhone OS 2.2 upgrade, which surfaced a few days ago with limited fanfare centering mostly around new walking and public transportation views in Maps and improved memory and stability. But the new realtime podcast support is a very big deal even in its carrier-crippled limitations. Apple has opened the doorway to free audio and video content direct to the iPhone over both WiFi and radio, leveling the playing field for these media types with the rest of the Web.

In order to protect AT&T from saturation of its 3G network, podcasts greater than 10MB will be queued for downloading the next time you enter WiFi range. You still have to use iTunes on the Mac or PC to subscribe to a show feed and automatically download each episode, but everything else is now open including streaming over 3G. I streamed this week’s Gillmor Gang, which runs a bit over an hour while on the road; it downloaded as soon as I got close enough to my house to switch to WiFi.

The Gang began just before podcasting became popular, and soon averaged double the downloads of streaming users. Of course, the iPhone and its radio access to the Web didn’t exist back then; hence the name podcasting. Direct downloading opened a small crack in the wall with the iTunes WiFi store, allowing direct purchase of songs over WiFi. Even 2.2 still won’t work with 3G, and of course streaming is not an option.

The election campaign brought new popularity to podcasting, as first Keith Olbermann and then Rachel Maddow made their MSNBC political shows available for download. I couldn’t stream Maddow’s video show over 3G but it displayed fine once downloaded, though videos from YouTube stream without issues. President-elect Obama has already started releasing his weekly Saturday addresses on YouTube, and promises press conferences and interactive Q&A’s over the Net.

Coupled with reports of a SlingBox-like iPhone Store approved application, YouTube Live’s streamcast via Akamai, and parallel development on Android phones, there’s plenty of incentive for Apple to keep open an avenue for realtime media. But where will this disruption spread next?

Many observers, and some platform vendors, believe Flash is the gateway drug for realtime streaming video. The logic goes that Apple’s refusal to open the iPhone to Flash will eventually help Android or even a Silverlight-enabled Windows Mobile break free and allow those devices to pass iPhone in adoption and developer buyin. But the rapid rise of micromessaging suggests another outcome. If Apple allows enough flexibility via direct downloading and streaming to shift the cost of live video and audio to a subsidized advertising model, then users will stay put.

Specifically, Apple has opened the architecture to allow the reboot of podcasting through its gated iTunes index. It’s logical that some set of API constructs that emulate direct downloading, streaming, and text linking will be made available to developers to allow them to link these capabilities into a single user experience. Apple could charge for such applications, or make available a version of the API for such controller applications that in turn sells user behavioral data to advertisers or even send interactive offers to iPhone users in return for such “free” services.

In this possible future, micromessaging becomes the controller for realtime rich media streaming. FriendFeed already aggregates my various channels, sending announcements of new posts (or podcasts) over the bridge to Twitter and any other service in the chain. If behavior from my Follow cloud suggests I might want notification of some stream and I’m in WiFi range, I can initiate a stream while the program downloads in the background.

If I’m traveling out of range, the micromessaging service can order the news based on my current schedule and mix streaming and downloading to fit the consumption window. Think about it: which radio service makes more sense, what we have today or one that mines the thoughts, citations, and behavior of hundreds of followed peers and tracked alerts? Services such as Live Mesh are designed to mine just such social data to optimize media and information based on location, business imperatives, and strategic triage of realtime information.

Apple’s move may turn out to be just a hint of things to come, or it may signal Steve Jobs’ sense that the timing is right for money to be made in the free zone of podcasting. As Jason Calacanis said on this week’s Gillmor Gang (around 1 hr 4 minutes in), if he was running Microsoft, he’d make a click ad network free for the first quarter million dollars that a publisher makes, and give every advertiser coming in on the first million dollars they spend an extra 200,000 and do that 10,000 times with all the best advertisers in the world.

Or write an iPhone app that uses GPS data combined with streaming and download playback data to connect the virtual and physical worlds at the time of potential purchase. Say you’re running low on gas, and the sponsor of the Gillmor Gang offers a 5 cent discount per gallon less at his station on the corner you’re at. Say you’re planning to watch a certain show tonight but your affinity group says forget it by bailing 5 minute in. Say you authorize access to that data in return for free popcorn at the movie you went to instead.

Both Jason’s and the latter strategy strike at Google’s potential weakness. Microsoft can buy their way in to challenge the black box of Google’s ad engine, while the iPhone’s Free zone can harness the unique power of a person’s affinity group to more efficiently find the most appropriate answer to a specific user’s question. It’s the locus of a gesture-based economy, where advertisers must align with a user’s requirements in order to get his or her attention.

The promise of podcasting was to provide an avenue for expression free of the tyranny of broadcast mediocrity. The promise of micromessaging was to create an open, living, breathing index to the realtime Web. The promise of the iPhone was to release us from the grip of the cartels and free our data to our own devices. We’re close enough to taste it now, and it’s giving us something fun to talk about again.

One of the awards at the Crunchies this coming January 9th in San Francisco is for the best of the enterprise. In this Year of the Cloud, the rush of entrants in the on-demand race is showing no signs of letting up. Microsoft, Amazon, Google, Rackspace, and Apple are just a few of the clouds already in place, and scores of development and management tools from Adobe, Sun, IBM, Oracle, Salesforce, Mozilla, and others add up to a vigorous new arena for competition and innovation.

We haven’t quite figured out how to squeeze this group into just one award, but the nominees will give us some room for honoring the trend. And the rapid growth of micromessaging applications like Twitter, FriendFeed, and Facebook, new disruptions like Gmail’s video conferencing tool, and competition between next gen smart phones like iPhone and G1 suggest a morphing of consumer features into powerful API-accessible elements of cross-application services.

Whether it’s viewed from 50,000 feet as a battle for the new Web OS or down in the open standards trenches as a struggle between open and closed, cloud computing is a genie that will not be stuffed back in the bottle by IT or proprietary platform vendors. Nominations for companies and products can be made through midnight PDT Wednesday, December 10, and voting will run from Monday December 15 to Monday January 5 midnight PDT. Make your vote count.

It’s no surprise what’s happened to the record business in the wake of the digital realignment of the media. Even transitional gambits such as Starbuck’s in-store sales of CDs are going the way of the record stores of yore. Apple is reportedly negotiating with the 3 other major labels to join EMI in banishing DRM, and Paul McCartney’s latest electronique collaboration with some kid named Youth will be available for free streaming before going on sale by the track.

But what may come as a surprise is how long it takes for the music biz to discover what Microsoft, Google, Amazon, and the rest of the tech biz are head over heals about: the Cloud. Look at what the software business is doing in moving from shrinkwrap to bits and you may see the path to profitability in both innovation (creativity) and customer (audience) growth.

Cloud computing is giving startups (artists) a way of extending the developmental phase of a project well beyond the typical investment requirements of even a few years ago. As the platform vendors vie for deep relationships with developers, they are open sourcing libraries, investing in free or step-up versions of tools, and launching API strategies that allow entrepreneurs to easily test, market, and establish user clouds they can leverage to bargain with VCs and bigco’s on the prowl for acquisitions.

We aren’t seeing that dynamic yet in the music scene, but that’s mostly because artists have not yet made the connection Silicon Valley has with where the money is moving. The very tentative nature of the record companies’ accommodation with the online world has put power in the hands of aggregators like Apple, Amazon, and now perhaps MySpace. This power is focused around existing artists with deep catalogs and an aging audience primed to upgrade as the music delivery vehicles are transitioned.

The tech analogy is Office, and Adobe’s Photoshop, and the enterprise backbone of messaging and CRM. Cloud versions of these properties are now beginning to hit the marketplace with force, driven by transitional leaders like Salesforce and Amazon Web Services. Microsoft’s Online Services leverage not just the channel created by Exchange, Sharepoint, and other Line of Business apps but a deep sales organization.

In effect, Microsoft is selling its Greatest Hits packages as an upgrade to the old CD versions, throwing in some outtakes and live versions to get the fans to buy the same thing one more time. But what Microsoft is doing with Azure and Mesh is seeding a raft of new artists with different takes on the old masters – micromessaging, social media, and the virtual stage of streaming realtime two-way media.

This is what the record companies will have to clone – and their task is the same as the one articulated so fervently by Steve Ballmer: Developers, developers, developers. Right now they’re talking 360 relationships, as Edgar Bronfman declared at Web 2.0 Summit was the only deal they’d do with new artists. 360 as in they take a piece of everything the artist does – touring, merchandise, the works – in return for financing the recording process.

And it will work, just as IT won’t fight Exchange servers being hosted by Microsoft in its data centers. The music business has always been about marketing and relationship reach – building careers much as Hollywood did it in the studio era by loaning out stars and pairing them with properties and directors to maximize their investment. But the emergent talent is where these companies will make money in the new context, and understanding just what that new talent looks like is up for grabs.

Is it as simple as emulating the Facebooks and Twitters of the tech world and gather eyeballs to negotiate with the majors? What kinds of “apps” will work in that model? For starters, these new artists need to create an entire ecosystem of media to flow bits across – a new analog to the networks, Clear Channel, Disney machine, and so on. If you want a hit record, you need to get it played on the hit media of the realtime streaming world? What exactly is that and does it even exist yet?

Today it doesn’t, and neither does Facebook or Twitter at any apparent scale of revenue. But take a look at the bitsway that’s emerging, a kind of dotted line that runs through the social media activity stream winding across all of the current players. A series of bi- and multi-directional bridges are popping up between the clouds, with the faint glimmering of standards to intelligently route activity streams and items according to social graph and permission metadata. It may not look like much at first glance, but these little roads will soon carry targeted traffic with much higher valued payloads than the broadcast models they are supplanting.

This new music business is a RIA version of the previous one – liner notes expanding to interactive Trackcasts about favorite artists, concerts morphing into streamcasts of special pairings of artists in virtual settings, sharing the catalogs not only of the past but the actual recording sessions of this new generation of artists. And the same power laws of the new tech dynamic will work for the new artists: invest time and keep the rights to the new delivery streams to negotiate with the labels.

None of this is news to the labels, just as Microsoft and Google and Apple have understand the fundamentals of this transition for years now. What is new is the agility with which small nodes can establish themselves. Drop by FriendFeed and you’ll see a company reminiscent of the size of Atlantic Records or Motown or any number of small startups that spawned the record business. Watch the bass player of one group (Animals) discover Hendrix in a small club and create an archive of performances that still are being mined for new gold. And the wind cries Mary.

It seemed almost like the Good Old Days when everyone waited on Microsoft to show their cards before doing anything. While Adobe took over Moscone West in San Francisco for its MAX developer conference, Microsoft launched its Microsoft Online Services operation at the St. Regis 3 blocks away before an audience of press, analysts, bloggers, and most importantly, business partners. As one Adobe high up said, “Microsoft is focused on the enterprise.”

Left unsaid but only barely is that Adobe’s play is with developers, primarily those reaching the broad consumer playground known as Web 2.0 and its new kissing cousin Social Media. Of course, cloud computing is in there too, but where Microsoft is rolling out cloud services beginning with Exchange, Sharepoint, and Live Meeting, Adobe is selling tools to developers that will ultimately use the cloud to distribute the results.

Microsoft’s Online initiative must be a serious jolt to IBM and its Notes business, which MOS undercuts both in costs and speed of deployment. In a brisk speech by Microsoft Business president Stephen Elop, one early adopter told of his company going home for the weekend on Notes and starting the new week off on MOS Exchange plus the other services. Companies such as Coca Cola Enterprise are moving from Office and Windows as their primary Microsoft investment to MOS, replacing Notes and also switching away from a variety of CMS and home-grown applications in favor of Sharepoint.

At a blogger roundtable one Microsoftee even suggested that Sharepoint is, or will be, the application platform for enterprise apps. He quickly noted that that was the vision, not yet the reality, but for a post-Gates assessment of Sharepoint’s importance in the cloud-aware Microsoft, the emphatic declaration was something of an eyeopener. Equally illuminating was the lack of an answer to a direct question about a Silverlight Office version; while Microsoft is experimenting with engaging with bloggers, there’s even less communication internally across various groups as Microsoft essays the transition to Azure and a Windows Web OS.

Back at an Adobe press briefing (embedded below) with CTO Kevin Lynch, Adobe’s aggressive surge in the mobile space took a great deal of the hour. But that was long enough to hear loud and clear that Adobe plans on being not an uber OS but rather an interoperability layer to manage devices and WIndows/Mac/Linux desktops. It’s almost as though Adobe plans to usurp Sun’s Java runtime as the write-once-run-anywhere platform, only this time by selling the tools to accomplish this rather than the licenses and hardware on top of it.

Lynch also commented on Google’s apparent use of Flash in its Gmail GTalk/Gchat Video plugin. While Google has promised to get back to us regarding an implementation that clearly does not use open source code, so far they haven’t closed the loop. As with the iPhone and Flash, there’s both more and less than meets the eye in terms of progress toward a seamless Web and mobile experience.

When people come up against the realtime experience, they have one of several fundamental reactions. The first, and most pervasive, is excitement, following almost immediately by mistrust. This is great, followed by How can I keep up with this? Next is bargaining: attempting to manage the flow through a combination of filtering and exclusion, reducing the noise but also in the process the surprise, the What you don’t know or don’t know you know.

Even in that first paragraph, all the elements exist: Realtime? So what. Mistrust – you betcha. Why am I being lectured to? Too many words without sufficient context. Why am I being dropped in the middle of this crap? All real reactions, a sort of gauntlet you’re forced to run to understand something you haven’t yet thought or want to think about. That’s realtime alright.

Before realtime we had the Web page, a nod to the cerebral. Here’s a document, with a title, author, corroborative links, supportive advertising or similar model, and attendant comments, linkbacks, and related archives. RSS came along and added a notification system to an organic information space that lived at the user’s discretion outside the boundaries of the originating sites.

RSS aggregators captured the contours of this refined information in one or more UIs, the river of news popularized by Dave Winer in his seminal Radio application and the 3-pane email views most recently dominated by NewsGator’s FeedDemon and NetNewsWire. When on-demand versions proliferated, Google Reader soon became the default container. It wasn’t until Twitter that the lead changed hands again.

Today, this minute, when information happens, Twitter or some micromessaging stream, delivers the nugget first. Links, which had lost some momentum as RSS spread, regain some of their power to maintain control of the flow from one object to the next. But conversational aggregation has also become a powerful container, from two competing directions.

The first, the Track function in Twitter, allowed realtime conversations to occur between discoverable points. That is, anyone on the Twitter network could monitor a thread of individual tweets, and then, by addressing someone with an @ reply, initiate a one to one conversation. Using Track at both ends on one of the participant’s names, the conversants could continue as long as they directly cited each other or used the mutual tracked name as a kind of conversation tag. Eventually, they could formalize the relationship with mutual follows if necessary.

FriendFeed provided a more formalized alternative, first with threaded conversations and then with topics organized as rooms. Where Twitter conversations could be tracked in realtime via Track and delivered over XMPP in IM clients such as Gmail’s Gchat, FriendFeed was more leisurely delivered as an aggregation not just of Twitter but blogs, images, videos, and other services. As Twitter dropped both IM and Track, its value as a replacement for RSS readers grew along with its huge audience. In effect, Twitter became a universal controller for content, while FriendFeed captured more and more of the comment conversation around the content.

RSS aggregation had become a victim of its own success. Too much interesting content, not enough dynamic discovery of unexpected value, the growing competition from a threatened mainstream media, the quickening pace of the realtimesphere. Like the Web culture it absorbed before, RSS has spawned its conqueror. Realtime’s Darwinian efficiencies present both improvements in information processing and new problems to overcome.

Realtime harnesses social graph characteristics to improve prioritization. Faced with a limited amount of time to choose virtually unlimited resources, human filters outperform algorithms. I’d rather make decisions about how to invest my time based on a combination of what’s going on and what those important to me think important to them, than rely on filtering based on broader popularity, explicit voting, or link ranking.

A small number of Follows combined with Track produces a high degree of coverage on a daily basis. FriendFeed’s new realtime tools let you create imaginary friends to integrate Twitter follows who aren’t active in FriendFeed; Friends Lists let you mold realtime feeds into high value groups. Configuring FriendFeed to output comments to Twitter makes FriendFeed the input client. And we wait for Track, API access to creating imaginary friends, and other tools to filter in and out of FriendFeed’s aggregation services.

Let’s say we get all of these tools in place and Twitter returns Track as some kind of service for users if not competitors. How do we manage this volume of realtime data? With a new kind of media realignment.

Video becomes a first class Twitter object. Favorite network news such as Olbermann and Maddow create conversational chunks designed to be inserted into Twitter broadcasts and FriendFeed conversations. Since iPhone only supports YouTube, that defines the format.

Tech events adopt similar strategies, microcasting conferences, press Q&A’s, and product releases over chunk channels. Once sufficient industry support is realized, tech companies can provide microstreaming services to customers in their own verticals.

At least one of the record cartel announces a signing policy that offers new and existing artists realtime channels in return for a cut of performance and ancillary rights. Recordings are released first in realtime markets, with relaxed (free) release of concert, rehearsal, and private recordings bundled with the purchase of studio product.

As a condition of this new content distribution model, all microcast content must be made available to all microchannels, and microchannels who carry these materials must agree to support open standards that allow Track in realtime across all channels.

Realtime economics depend on the immutable fact that we don’t have the time for realtime. We need both speed and context, and only our social clouds can provide the self-knowledge necessary to process the flow efficiently. Many of the most valuable information streams are at crossroads where it may well be worth more to sign on to a realtime network with direct control of marketing, merchandising, and publishing. I’d suggest setting up imaginary friends, Friend Lists, and realtime streams from among the talent pool of these industries.

Dare Obasanjo tweets today about why he likes Microsoft Live services and why that means he doesn’t think much of OpenSocial. It seems at least some Microsoftees still think the best way to compete is to talk down the competition, but I guess old habits die slowly.

Here’s a video shot yesterday at Internet Identity Workshop where David Recordon of Six Apart and Kevin Marks of Google attempt to unravel the open standards debate, with the help of Echovar‘s Cliff Gerrish. I’m sure we can find some vendor sports embedded here as well, but for the most part there’s a new spirit of cooperation among the platform players (including Microsoft) as IIW continues to produce progress.

Google’s release of its Gmail Video service is noteworthy for several reasons. It is integrated into the Gmail console, adding voice and video services to the realtime console that is being built out around XMPP. It is remarkably easy to use; Dan Farber just called to test the service and I popped the window out and continued chatting with him while returning to this post. Several alerts on Yammer and Friendfeed’s realtime IM competed briefly in other chat windows. Oh, and Google just added about a quarter of its version of Silverlight to my MacBook Air. Call it Silverlite.

If I hadn’t already installed the new service yesterday to get an advanced look, Farber’s call this morning would have prompted me to download and install a 2MB plugin. The code works with Intel Macs and Vista or XP, and so far only on Firefox and Safari (with some install issues) on the Mac. So by installing the plugin, I’ve basically added a significant part of Google’s multimedia services to this machine. It’s not Flash either. It’s cross-platform, it’s RIA code, it’s not Flash. Am I making my point?

[Note: Flash is used along with proprietary code. More as Google clarifies.]

Couple this with all the new doodads Gmail has added in recent weeks via Gmail Labs: tools to float the IM panel on the opposite side of the Gmail window, widgets to integrate Google Calendar and Docs, and drag and drop functionality to rearrange all these modules on the page. The calendar object is particularly useful, because not only does it display coming events for multiple calendars in a simple scrolling interface, but it lets you add events from within Gmail. In effect, it roundtrips the experience in a way that promotes more and more usage. It’s lock-in by choice, and it threatens Microsoft at its very core.

The 2MB plugin is perhaps even more insidious. Who knows what services it adds that the growing grid of Gmail tools can access. What if Gmail Labs offers a video annotation service, or a podcast recording module, or a collaborative screen sharing capability, or a micromessaging console, or a group meeting organizer/live blogging console, or… These are enterprise apps, popping up on demand or as upsells to what is rapidly becoming a serious Office competitor. And what part of the 2MB can run on Android? This last one will drive Apple nuts, and likely force Silverlight onto the iPhone to boot.

This is Cloud Office, folks, and all you need is a reasonably new machine. It’s also iterative deployment, where 3G delivers a realtime, intelligent caching media fabric that disrupts terrestrial radio, cable television, and the Hollywood studio system. With the 2MB down payment, Google can continue to add code multiplexed with content, streaming additional upgrades and services along with alerts, conversations, and appointment requests. Advertising will morph from selling a product to being part of the product.

By blurring the boundary between Ajax and RIA, Google has found a way to grow into the Mesh that Microsoft is close to delivering from IT outward. In many ways, this strategy is supportive of the new Microsoft as much as it is disruptive of the old. Just as Microsoft can’t be stopped from executing on its cloud strategy in the enterprise, neither can Google from its base in the user cloud. Where the two platforms meet in the middle looks a lot like a hybrid of iTunes and Office.

Friendfeed co-founder Bret Taylor joined the Gillmor Gang this afternoon to discuss Friendfeed’s XMPP stream of its Home and Friends List feeds. I sat with Taylor at the Friendfeed offices and Marc Canter joined intermittently by phone. Canter took the opportunity to vent about Friendfeed’s responsibility to exert leadership in the XMPP space before his line unexpectedly went dead.

The video below joins the conversation just before that point, and continues with discussion of Friendfeed’s new direction and role with the release of the realtime technologies. While Taylor acknowledged the possible threat to some companies (read Twitter) of providing access to the full firehose of data, he indicated building confidence in allowing businesses on top of the Friendfeed APIs was more valuable for Friendfeed.

Taylor confirmed that Friendfeed in fact does have access to Twitter’s full firehose stream, but that they were only using the stream to serve Friendfeed subscribers and had had no discussions with Twitter about second sourcing the stream for third party developers to add Track functionality. He again confirmed Track was coming to Friendfeed, to mine the full stream of content and not just the individual subscribed clouds of users.

With Friendfeed now supporting bridging to Twitter via IM and realtime interfaces from third parties, it is the logical candidate for being at the head of the chain of messages flowing across the micromessaging universe. Taylor said he was in discussions to add bridging to Identi.ca and other Laconica servers, adding that the similarity of the APIs to Twitter’s made it doable in the near future. Friendfeed’s aggressive step into a leadership role via the realtime tools is paying dividends for the small startup.

In the press room at the Web 2.0 Summit, News.com editor in chief Dan Farber covers Day 2 of the grand old conference, now in its fifth year. Tim O’Reilly and program chair John Battelle have steered the conference from its beginnings as the Peer to Peer and then Emerging Tech conferences to a broadened agenda that tried to subsume the emerging enterprise conversation known as cloud computing.

Battelle’s conversation with Jerry Yang was noteworthy for Yang’s physical gestures – crouched forward in his seat with barely a glance of eye contact as he defended his tenure and ducked any sense of his posture regarding the future. As Farber indicates below, the CEO job is not one that leverages Yang’s strengths. Yang’s posture underlines the unlikelihood of a revived Microsoft deal any time soon given the missed window before the election when the deal could have worked.

The muted presence of Microsoft at the conference – absent from a Day 2 cloud computing panel with execs from Salesforce, Google, Adobe, and VMWare – was mitigated somewhat by a platform panel where Live Services’ David Treadwell traded barbs with Google’s Vic Gundotra (formerly of Microsoft.) But a conference-ending talk and conversation with AL Gore brought the more pressing issues of saving the world to the front and blurred the subtle tilt toward SIlicon Valley in tone if not substance.

Battelle’s skill in asking the news-worthy questions without expecting the answers brought enough clarity to keep the conference valid as a marker of the state of the technology union. While nothing will repeat the first year of the conference or even the upscale show biz quality of the next few, the emotional impact of the Obama election could be felt as O’Reilly and Battelle kept the focus on what to do with this stuff rather than solely swimming in the stream of industry politics. Gore set the tone we will remember in his oddly improvised talk, dabbing his eyes and face and looking a lot like Jesse Jackson trying hard not to burst out crying. This year’s Web 2.0 Summit turned out to be what Gore said it needed to be: a puppy with a purpose.

At the O’Reilly Web 2.0 Summit conference in San Francisco, a context switch from Web 2.0 to cloud computing is well under way. Wired’s Kevin Kelly suggested a variation of the Semantic Web where pages give way to the data on the pages, with each of those chunks representing real objects in physical space, or a Kelly said, anything that can hold an electric charge.

AT&T’s Ralph de la Vega told Mike Arrington that he foresaw a world where phones controlled TVs, coffee machines, cars, and every other device along the way to and from work. The notion of a universal remote or mouse as Microsoft Research defined it years ago is now becoming an economic reality, one that de la Vega suggests is recession-immune as of now. The presence of a keyboard, whether physical as per the Blackberry Bold or virtual on the iPhone, is the new dividing line, with AT&T deriving north of $95 a month revenue versus $58 per month for the average user.

de la Vega responded to an audience question by confirming AT&T will “shortly” release software to allow iPhone tethering to PCs. A German blog also reported an iPhone 2.2 software update will allow direct downloading of podcasts, bypassing iTunes and essentially kickstarting a streaming model for advertiser-supported media on the go. The new service reportedly is limited to 10MB per file, which provides additional ad inventory for longer shows.

de la Vega said AT&T 3G actually supports up to 3.6 megabits service, but today the maximimum available is 700K for phones up to 1.7mbs for laptops. With today’s Wayport acquisition, which adds 20,000 wifi hotspots available to iPhone and other AT&T-supported devices, and AT&T’s U-Verse IPTV service, which bundles wireless access and a screen to screen DVR capability in the home, AT&T is close to establishing an alternate media service that may well supplant cable and even broadcast media control.

As we’re seeing with iterative granularized API access to micromessaging services, the on-demand information services that users can cobble together continue to outperform last-gen models among early adopters. As de la Vega suggests, simplicity and ease of use will soon overwhem bandwidth, carrier, and device restrictions as the key driver of mobile disruption. The old song is becoming: I want my iTV.

Friendfeed’s march toward realtime functionality is already seeing some switching from focus on Identi.ca as the service most likely to dent Twitter’s rule of the micromessagesphere. One star developer, Dustin Sallings is now moving forward with a new XMPP service even as Gnip announces it’s abandoning XMPP services because of problems with servers consuming its often promised but never arriving firehose feed of Twitter public messages.

Sallings and his co-developer Ken Sheppardson appear to have tired of waiting for Twitter to provide access that would allow third parties to deliver realtime track services instead of the 15-minute delayed TwitterSpy which sucks indirectly off the Summize Twitter search output. Twitter recently took IM off their fix list, and Gnip reported no response to requests from multiple developers for XMPP permission.

Now Sallings and Sheppardson are reaching into Friendfeed’s realtime feed and providing Jabber (XMPP) access to and from individual comments. A two-letter naming convention lets you reply directly to comments of those you subscribe to in Friendfeed from your Gtalk or Gchat window. One immediate benefit: Gmail archives the chats, eliminating the 100 message limit Friendfeed currently employs on realtime feeds.

Sallings already provides track services for Identi.ca and other instances of its parent Laconica project. There a re several paths to adding track to enjit, either by constraining the search cloud to those who join the enjit service, or by getting Friendfeed to provide wider access to the firehose. While Friendfeed has not specifically confirmed the timing of its own XMPP output, they have certainly indicated they are working on it. But more importantly, Friendfeed seems interested in carefully building out its feature set via APIs rather than walling the whole container off via business decisions.

Yesterday’s Salesforce partnering with Facebook, along with a similar two-step with Amazon Web Services, indicates the speed with which not only startups and skunkwork projects can achieve velocity but major players as well. At the post-keynote Q & A with Marc Benioff, the Salesforce CEO beat back talk of adding Microsoft Azure to the list of services that can hook directly into the Force.com development model. But eventually Benioff had to concur that it will be up to developers to decide what components, gadgets, runtimes, and Web services will be aggregated.

A direct reply mechanism of the type demonstrated by enjit levels the playing field for Friendfeed, making it compatible with Twitter functionality while taking advantage of Friendfeed’s ability to aggregate other messaging services and orchestrating them. Last week saw a new Friendfeed feature that lets users bridge comments out to Twitter, moving a big step forward to putting Friendfeed in the dominant position at the head of the chain, making Twitter a client of Friendfeed and encouraging production of a bridge to other services such as Identi.ca to round out the tail of the micromessaging channel.

enjit’s two-letter reply scheme can certainly be extended to encode not just the message but the originating service. This is the holy grail, where smart clients can handle cross-platform handoffs and manage name collisions and the intricacies of direct messaging. And with Microsoft Live Mesh entering beta, its significant resources and Silverlight integration suggest rich clients that at a minimum make possible offline synchronization and multimedia consoles much like the BBC application shown at the PDC.

What’s truly disruptive is the degree to which developers can wire together these realtime apps across platforms, from Google with its gadget lab tool that allows injecting services into the Gmail console to Facebook’s social graph to Friendfeed’s aggregation router to Mesh’s device caching and multimedia rendering engine. Twitter may be paying the price for ignoring the free range developers who will endow this componentized architecture with credibility and IT investment.

ZDNet’s Michael Krigsman asked me to join a short podcast with Salesforce’s AppExchange Product Line Director Clare Shih and Facebook’s Senior Platform Manager Dave Morin. Facebook COO Sheryl Sandberg took part in Marc Benioff’s DreamForce opening keynote as the Salesforce CEO announced a data sharing partnership with the social media giant. The podcast is available here, and the video version is below.

So much of this long protracted struggle for political change has rubbed off on the tech community. In the partisan windup to this long election process, we’ve become almost inured to the fact that as much as things will continue to be the same, already the “choice” between the two candidates has produced one sure thing. That is, either of the two candidates represents fundamental change from the status quo, no matter how much you want to differentiate further.

So it is with the shift to the Cloud. Whether you’re betting on Google, or Amazon, or Microsoft, or less obviously Apple, IBM, Oracle, or Cisco, the sure thing is that Web services has gone main stream. If this is a horse race at the vendor level, it’s about each company’s ability to harness its innate strengths and migrate its weaknesses. Put another way, the battle is within, not between.

So it is with Microsoft, mere months into Bill Gates’ retirement. Though my friend Dan Farber and others raise the specter of Gates returning to lead Microsoft at some climactic point, more likely Gates has already weighed in and signed off on the strategy unveiled at the PDC in Los Angeles this past week. Steve Ballmer’s leaked memo could easily have been written by Ray Ozzie, with its methodical restating of the software plus services case and the surprising (for Ballmer) summoning of Live Mesh at the end as Azure’s secret sauce:

Live Mesh hints at how our lives will be transformed as the barriers between devices disappear and the option to connect instantly to people, devices, programs, and information becomes a reality.

Who is Ballmer speaking to? Ostensibly customers, the target of subscribers to Executive Emails from Microsoft. But really the refactored executive team inside the company, and in no uncertain terms, the power structure built largely by Gates and managed by Ballmer. To a Steven Sinofsky, “the barriers between devices” speaks differently than to a Bob Muglia, David Thompson, Scott Guthrie, or David Treadwell. That’s because Sinofsky owns only one leg of that PC-Web-Phone stool that the Azure Services Platform rests on.

The second day keynote also hinted at the new political alignment in the company. While the first day introduced the cloud strategy, the second spoke as much to the Palace Guard as it did to the developers. Sinofsky’s Windows 7 brought the first significant developer applause of the week, perhaps a reflection of the sense that the OS would indeed survive the OS/X challenge with its Touch feature set, multi-monitor support, and screen management tools. As a Mac user, I had the odd sensation of feeling like Microsoft was trying to reengage with switchers, a point Ray Ozzie joked about in a later conversation.

But to the Microsoft rank and file, another message was clear. Sinofsky stayed completely away from the rest of the Azure announcements, hewing closely to the fundamental keep-the-trains-running-on-time reassurance that Vista (and by implication Longhorn) were mistakes of the previous regime. But wait, that was Bill’s regime, and Sinofsky is partially running against himself this time out. His former job as Office boss is now owned by Stephen Elop, who did not speak, instead handing that task to junior executives for the Office Online demo.

By contrast, Bob Muglia, who controls the Server group with its burgeoning revenue gusher, straddles both old and new Microsoft. A wily tactician who survived the DOJ meltdown where others didn’t, seems poised to inherit the mantle of Allchin in the new reworked Redmond. To him, the 3-legged stool is all upside “and the option to connect instantly to people, devices, programs, and information becomes” not only “a reality” but an annuity.

Scott Guthrie continued the subtle shift from old to new, highlighting Windows 7 features such as jump lists exposed to developers via Windows Presentation Foundation, a new WPF Toolkit with support for the same Visual State Manager and controls shipped two weeks earlier for Silverlight. .The

Silverlight gives .Net developers real skin in the cloud game without undermining the open nature of Mesh and Azure's REST and RSS/Atom gateways. Ozzie's challenge is not to convince developers of the power of the Cloud, but to leverage Microsoft's legacy cash cows without letting the people who own those groups stifle innovation as they have done for years. The loudest applause line of the two major keynotes was for the BBC's Anthony Rose and his BBC iPlayer demo, where Silverlight and Live Mesh Services harnessed social graph and user behavior that went several steps beyond anything from competitors including Google, Facebook, or Apple.

Now, what’s really interesting here is because this is Mesh-ified, this information is going off to all my devices. So, if I’m in the office and I’ve watched a program halfway through, and I’m now going out for lunch, I can take out my cell phone, and when I go on my cell phone, that program has been synched to the cell phone. And it’s not just the information, the metadata, but through the cloud the actual program is on the phone and the program, in fact, will resume playing from exactly where I left off on my desktop computer.

The PDC developers could smell money, and this was with live code orchestrated by a customer. This makes the questions about pricing and timing moot: Microsoft has the money to get this out there, and the timing is real soon now for a tech community looking to rebound from the tough times ahead. But the developers, though comforted by the Windows 7 snapshot and mildly enthusiastic about the online Office pitch, were voting with their applause for the Silverlight/Mesh/Azure triumvirate as the way forward.

Office for the Web may pan out as just a leg of the stool for collaborative purposes, but the Silverlight Office has never seemed more disruptive. Significantly, no Outlook Web version was shown, suggesting that Ozzie is keeping his powder dry while giving Mesh time to ripen along with its PubSub router underpinnings. Again, from Anthony Rose:

[MSN] Messenger is the largest IM network in the UK. So, for the BBC this is a huge viral opportunity. Imagine all of my friends just a click away, I can share my iPlayer programs and activity feed with them.

We’re looking at the next Outlook, and it’s going to be hard to stop inside Microsoft’s executive war room. The biggest single sound we heard at the Azure rollout was that of silence – a three year incubation period where very little of what Ray Ozzie has been building leaked out, and that which did was couched in terms that gave the old guard little to attack or slow down. Now that it’s here and endorsed by Ballmer in such unequivocal terms, the war for Microsoft’s soul is over. By opening the platform to standards forged in large part by scripters, hackers, and especially competitors, Microsoft has leapfrogged into the lead for mindshare where it counts: inside the company.

Salesforce’s DreamForce developer conference opens Monday morning with the announcement of a new Force.com Sites service. Sites is a new business for Salesforce, potentially extending the thousands of Force.com applications by pushing application data to the Web over Salesforce servers. The new service leverages Force.com’s VisualForce UI construction tools as well as Force.com’s logic, security, integration, and customization services.

While this is more a point upgrade to the platform in terms of revenue and customer acquisition than a major transition, it does signal the willingness to expand Force.com’s cloud into hybrid applications that span both internal enterprise customers and the customers of those applications. In doing so, Salesforce becomes even more of a channel for larger cloud players such as Google and Amazon, and even Microsoft to the extent that Force.com developers are free to integrate services such as Mesh and even Silverlight.

Although Marc Benioff dismisses such an alliance, he’ll have to work fast to expand Force.com outward as Microsoft comes after him from the outside in. Fertile ground may lie in harnessing Google apps and realtime services to populate Sites-enabled applications with smart information services based on targeted user behavior derived from Gmail, Google Reader, IM, and micromessaging. Salesforce can provide tomorrow’s Azure services today while using fear of Microsoft overwhelming the industry again to encourage Google and other RIA cloud players such as Adobe to federate around Salesforce as a rallying point for the enterprise.

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Sun Microsystems is on the ropes. The New York Times says so, the hallway conversation starts and ends with “too bad”, and the wagons appear to be circling around, or rather, behind Jonathan Schwartz, leaving him outside the fort as the gates are closed.

Much of this capitulation to a situation Sun has been in for some time could come from the lessons of this long struggle in our country’s political and economic systems, which have become inextricably intertwined to the point where it apparently matters not at all what either candidate does or proposes. Instead, the public intuition is that change in management is less risky then standing pat.

With all this pressure on Schwartz, perhaps the best way to view the situation is to determine a so-called Failsafe deadline, so described as the point in time beyond which nuclear bombers can not turn back from their missions. In Sun’s case, what difference would a change in leadership make, and at what point?

The technology business is in the throes of a transformation to the so-called cloud computing paradigm. Despite what Oracle’s Ellison has said, Microsoft’s Windows Azure guarantees that at some point in time cloud computing will cross over and accumulate more than 50% of enterprise resource allocation. Calibrating that date will either confirm or undermine the strategies of the major platform vendors.

When Jonathan Schwartz took over the company, Sun was perceived as a major platform vendor with challenges in monetizing its resources. His strategy of marshalling the company’s assets and harnessing the viral nature of open source dynamics has maintained Sun’s relationships with developers, but nowhere has there been the kind of disruptive messaging around the cloud computing paradigm that Schwartz employed to such good effect in marketing Sun in the Web 2.0 phase.

By contrast, even Apple jumped aggressively into the conversation with MobileMe; Google, Amazon, Rackspace, even Dell with a URL grab not only had a message but extended it with price cuts, acquisitions, and social media product announcements. Schwartz, who came to the job with a refreshing understanding of the power of blogging, Web services, and open source, projected confidence that these tools and communities could be intertwined with Sun’s leadership in disruptive hardware design and systems synergy.

The Schwartz version of a Jobsian reality distortion field went this way: If you understand the inevitability of small pieces loosely joined, you can build an interactive swarm-like community that will pool community resources to solve problems before other competitors even start to hear about them from top-down IT hierarchy. This must have been the rationale behind supporting community efforts such as Startup and other Camps. And it certainly was at the heart of the MySQL acquisition, which suggested the use of the open source database vendor as a sales channel through the entrepreneurial radar of the startup community and its open source DNA.

The media questioned where the rubber would meet the road, but as Google, Salesforce, and Facebook gathered incredible momentum and mindshare around Web architectures that spoke to the cool-running data center and virtualization innovations led by Sun, the fact that Sun wasn’t reaping concrete rewards didn’t mean they couldn’t over time.

That’s why Sun’s failure to keep the messaging ahead of the economic crisis is so damaging. Schwartz has always had the full support and partnership of his predecessor Scott McNealy, but the rumors that the board is looking for a replacement speak either to scapegoating or a capitulation to the realities of the marketplace. But why now?

Sun has the money to stay in business, and the portfolio to survive in the marketplace for some time to come. Why, then, is Schwartz’ scalp on the line? Perhaps it’s because, as we’ve seen in recent weeks in the McCain campaign, there’s a line forming to jump ship before the water reaches the band. Certainly the billion-plus loss just reported is enough cover, but more likely the lack of a cloud strategy that makes sense for Sun is at the root of the panic.

What then can Schwartz, or more accurately Sun do to change the dynamics of an increasingly dire situation. For starters, Schwartz has to do what few have done with the cloud computing discussion: answer the hard questions around security, compliance, and identity management with a disruptive view that speaks to Sun’s strengths. Sun has dogs in these hunts, and credibility with communities, particularly the beleaguered financial service which threaten Sun’s survival as they collapse and merge.

Schwartz can draw on a strength we’ve seen little of in recent months or perhaps years, the ability to assess where the marketplace and the conversation can go regardless of where the brass ring may end up. Part of the reason he ascended to the throne at Sun was as a Nixon going to China. Where McNealy baked antipathy for Microsoft into his personal and therefore corporate brand, Schwartz could manage rapprochement via CTO Greg Papadopoulos.

Now Schwartz needs to handicap the cloud wars and decide who the winners will be short, medium, and long term. He’s working with Amazon Web Services, but then so is Microsoft. Google and Apple seem unwilling to forge strategic alliances as App Engine builds out and MobileMe stabilizes without a corporate instantiation. That leaves Microsoft as the wild card with either the most or no chance of exploring mutual interests.

Strange bedfellows, indeed, but what other rabbit does Schwartz have up his sleeve? Either Oracle or IBM would be glad to pick over Sun’s bones and lift Java out of the remains. If Jonathan sits down and ponders Windows Azure, Mesh, and Live Services, does he see the enemy or the emergence of an open cross-platform RIA uber OS that could easily integrate Sun virtualization and middleware to leapfrog enterprise concerns about cloud computing now, as opposed to several years from now when these problems will have been solved through a combination of standards and political restructuring of requirements in the new Washington.

It’s a heady leap, but who better than Schwartz to paint a disruptive picture in a way that takes the pressure off the short term and gives Sun breathing room while other companies have the opportunity to screw up equally well. Schwartz has the opportunity and the bank roll to sell the enterprise on cloud computing across an open landscape not bound by the old political calculations but rather a nonpartisan approach that seems to be driving Obama into the White House. Besides, a decision has to be made before it’s too late to call the bombers home.