Google, Microsoft Look to Square Off on Net and Desktop
For years, Microsoft has been able to use its money and size to muscle aside its competitors. Now it is facing a competitor it cannot push around so easily — Google. The popular search engine is mounting what may be the most serious challenge yet to Microsoft’s desktop dominance.
Jordan Rohan, an analyst for RBC Capital Markets, said Google has larger ambitions than most people realize. And those ambitions will put them squarely in Microsoft’s path.
While most everyone agrees the battle is shaping up to be epic, the front lines are not very clear yet. Microsoft traditionally makes desktop software. Google is known for its search engine. But both sides are quickly encroaching on each others’ turf.
The two firms are converging on the Internet and on the desktop. Microsoft, which has made most of its money by selling software, is increasingly embracing the Internet by creating its own search engine and online advertising service. As such, it will be competing with Google for people’s attention as well as corporate ad dollars.
Google, which makes its money from Internet advertising, is rolling out new products at a furious pace, many of which would traditionally be viewed as software. Basically, Google aspires to offer many of the same capabilities Microsoft does, except it wants to deliver the software over the Internet rather than sell it on a disk. In many ways, the competition boils down to the old way of selling software and the new way of selling, or more accurately, ‘distributing,’ software. Microsoft sells shrink-wrapped boxes of software. Google delivers it to you over the Internet.
It is expected to be a classic business brawl that includes personal animosity, evidenced by Microsoft CEO Steve Ballmer’s promise to bury Google after the Mountain View firm seduced away one of the Redmond, Wash., firm’s top technologists, according to court documents.
Google has pulled off the greatest obfuscation in the history of Silicon Valley: Everyone thinks they are a one-trick pony, he said, referring to the firm’s search engine’s roots. They are going after Microsoft in a big way.
Nothing less than a supercomputer
What Microsoft is up against is nothing less than a supercomputer, according to Stephen Arnold, author of the new book, The Google Legacy: How Google’s Internet Search is Transforming Application Software. He believes that Google, which was founded by former Stanford students Larry Page and Sergey Brin, has up to 170,000 servers to help return results for user queries in a fraction of a second.
The recent partnership with NASA will give Google access to even more supercomputing expertise from rocket scientists.
Google’s ambition, he said, is to have its supercomputer take over an array of jobs now performed on desktops. All users have to do is plug into Google over the Internet to take advantage. The idea, called network computing, isn’t new. At its essence, it dates back to the earliest mainframe computers. More recently, efforts to bring back network computing by companies such as Oracle and Sun Microsystems, have failed to catch fire.
Already, Google has used its computer network to introduce a succession of new products this year including instant messaging, Internet telephone calling, blog search, maps and a video download service. Arnold; a technology consultant who has worked for such companies as Booz, Allen & Hamilton, Ziff Communications, US West and @Home, believes that much more is possible.
It should be noted that to avoid Microsoft altogether users would have to switch operating systems, which is unlikely given the dominance of Windows. A Linux-based operating system would do the trick, but even if users stayed with Windows as their operating system, Microsoft would lose supplemental income and influence if users spent their time on Google’s portal, using Google software.
If Google’s strategy succeeds, it will transform how computing is done, Arnold said. Microsoft could be left scrambling because fewer people would need to buy its software.
I don’t think Microsoft has figured out how to replace the desktop business, Arnold said.
Although Microsoft should not be placed in a casket just as yet. With $37.8 billion in cash and nearly 14 times Google’s 4,200 employees, it’s still the most powerful technology company. The list of Microsoft competitors — including such name brands as Apple, Sun Microsystems and Novell — lying in its wake cannot be ignored.
For most people, it’s interesting to see Microsoft have a rival, said Jim Voelker, chief executive of InfoSpace, a Seattle company that licenses an array of online directories, entertainment and search to other companies.
Microsoft, along with its famed founder, Bill Gates, may have finally met its match is a frequent topic of technology executives. Rightfully so or not, Microsoft has carried the stigma of being technology’s evil empire for nearly two decades. Google, with its exuberant Don’t do Evil corporate motto, is being held up by many as a white knight firm.
Through its high-profile stock offering last year, followed by another stock issue last month, Google has raised billions to do battle. On the other hand, Microsoft’s revenues were nearly $20 billion in just the first six months of the year. Whatever metric you use, Google is still David to Microsoft’s Goliath.
And, as usual, Microsoft is fighting back against its latest challenger with two fists.
Google is the company of the moment, said Scott Kessler, an analyst for Standard & Poor’s. That does not mean that Microsoft does not have some tricks up its sleeve.
Jim Lanzone, senior vice president of search properties for the Oakland-based search engine Ask Jeeves, said Google and Microsoft are taking different approaches to search in an effort to increase user traffic.
Google is creating products that can be searched, Lanzone said. Microsoft is putting search on its existing products.
At the end of the day, both companies may look a lot alike, Lanzone said.