Think of the great rivalries that you know: good vs. evil; Red Sox vs. Yankees; Hertz vs. Avis; Duke vs. UNC; Microsoft vs. (in order) IBM, Novell, Netscape, AOL, Linux, Google, the Department of Justice, Sun, Sony, the European Commission and now, Cisco.

Both companies are dominant in their main markets. Both need new worlds to conquer. Both have seen their growth slowed. Both have embarked on new initiatives based on acquisitions. Charlie Giancarlo, Cisco's chief development officer, scours the world buying intellectual assets for pennies on the dollar. Microsoft does the same, often moving these companies to Seattle so they can be close to the Mother Church. Both companies have billions of dollars on hand. Microsoft has bought dozens of small technology companies, as has Cisco. Cisco has paid really big bucks, $6.9 billion, for cable TV technology company Scientific-Atlanta, mainly because Cisco is not credible with the cable guys. Microsoft bailed out the cable industry a few years ago by investing $1 billion in Comcast, hoping the move would win it friends (it did) who would let the company put its cable box on every TV (they didn't). The cable guys loved Microsoft's money but not its intentions. Sidney Topol, former chairman of Scientific-Atlanta, was once at a Yankee Group conference where a skeptic asked him how earnings would be the next quarter. He replied, "When I come here, I don't talk earnings, I talk concepts!" The skeptic said, "That bad, huh?"

A few years ago I suggested to both Cisco CEO John Chambers and Bill Gates that the day was coming when their companies would be competing against each other. Each replied that I once again had my head up my rear, that they had nothing but respect for each other and their spheres of influence were completely different. Both were lying through their teeth. Kind of like Don Corleone saying that Barzini was his blood brother for all time.

Where will Microsoft and Cisco compete - and when? Let's start with IP telephony. Both companies are pushing hard to get their unified clients on the desktop. Essentially, Cisco's Unified Communicator and Microsoft's MS Communicator do the same thing. We used to say that unified messenger was a "zero billion-dollar business," but that is no longer true.