The web is all atwitter today with news of Eric Schmidt's dismissive response at yesterday's Morgan Stanley Technology Conference here in San Francisco to a question from Eminence Capital analyst, Josef Jung, of whether Google sees Twitter's real-time search as a threat. An explosion of schadenfreude-laden articles and a furiously defiant pile of tweets have already responded to Mr. Schmidt's comments that demonstrated a clear lack of understanding of both the present value AND tremendous future potential of the twitter platform. The contrarians at Motley Fool are holding out hope that it was a strategic maneuver pointing to a planned acquisition. But no matter whether a monumental miscalculation or shrewd strategy, the move is a classic page from Ballmer's book of wins and losses, and signals Google's metamorphosis from David to Goliath.
Really, there's no right answer to to the sucker punch of a question. "Yes, it's a threat" would provide an exponential boost to Twitter's credibility and value, while "no, it's not" can only be dismissive of what is clearly a major growth trend and new behavior. But the real mistake was going into enough detail to incorrectly (VERY incorrectly) compare Twitter to existing (and arguably old) technologies (email and IM, specifically), without recognizing the differences. That is what paints Schmidt as out of touch, the wrong generation of leadership, and that is what moves Google into the territory of a Microsoft that either dismisses or acquires the new technologies it doesn't, itself, understand.
Google stock was down 2% (or $2B in market cap) as of this afternoon.