It wasn't long ago that Microsoft and Cisco were coincident power brokers with little real competitive overlap. As their businesses mature, and their reach expands beyond the scope of their core offerings, the next ten years may be more defined by how they successfully compete against one another in areas like unified communications. Regardless of where you sit on the Microsoft vs. Cisco debate; it's clearly that their fortunes have long been tightly correlated.
This week, both bellwethers announced the appointment of new board members. I don't think they could've gone in more different directions if they tried.
Powell, a Republican and former member of the armed forces, was a high-profile FCC Chairman, maintaining an active media and web presence during his tenure. Powell (the son of Colin Powell) is a career politician, having served stints as an adviser to Dick Cheney, as well as a stint with the Antitrust Division of the DOJ prior to his seven-year run with the FCC. His supporters would point to his support of VOIP proliferation and the distribution of spectrum; while his detractors would point toward his all-too-public run ins with Howard Stern and his support of expanded punitive actions in the fight against "indecency" which cropped up after Janet Jackson's Nipplegate. He resigned from his post in January 2005.
Hastings, a Democrat and former member of the Peace Corps, is the CEO and founder of Netflix; the internet-based DVD rental service. Prior to founding Netflix, Hastings founded Pure Software, which was ultimately acquired by Rational Software. Hastings is a mathematician by background, but has proven himself as a serial entrepreneur. The success of Netflix is a testament to his willingness to take risks; Netflix has completely reshaped the rental industry.
Will Hastings, who clearly understands how to build a disruptive service that captures mindshare of media consumers, help Microsoft push further into the home? Can Powell, who knows his way around the regulatory environment in Washington, help position Cisco as they continue to expand their reach and move further toward the edge? Time will tell.
Note: This is not a recommendation to buy or sell Cisco, Microsoft, Netflix or any other security, but is merely a personal analysis to foster discussion for informational purposes only. At the time of this writing, I and/or funds I maintain discretionary control over, maintained long equity positions in CSCO and MSFT but did not maintain a position (long or short) in NFLX. We also may, at times, carry derivative options on underlying positions as a hedge.