Google keeps tripping over Microsoft's grave

Some have described Google as an advertising company. This might have been accurate at one time, but given the sheer breadth of Google's ambition and product mix, it's far too limiting a description.

Google is a search company. It's a cloud company. It's a subscription services company. And, as is becoming increasingly obvious, Google is the world's largest open-source company.

Tim O'Reilly has been telling us this for years, but it wasn't until I read this brilliant Keir Thomas article that I appreciated the clarity of O'Reilly's vision.

As Thomas writes, Google is the antithesis of Microsoft. Where Microsoft is closed, Google is open. Where Microsoft is limiting, Google is expansive. Where Microsoft is desktop, Google is the Web.

Microsoft has a problem, and it's this: Its entire business model is built around discrete computers running discrete applications....

The key thing about online applications [like Google] is that they are platform agnostic....Open source doesn't require licensing fees, and is like a double-jointed Russian gymnast: It's flexible. Really flexible. This puts it in a far better position to provide a platform for the new platform agnostic online world.

Chrome (technically Google Chromium) is open source because it makes no sense for Google to lock-down software to one hardware platform or architecture. The platform no longer matters in the Google universe, and this perhaps is the biggest difference between the Microsoft and Google philosophies. Microsoft needs you to keep you using Windows and an x86 platform.

Google [doesn't] care what computer or platform you use, and is actively encouraging you to be eclectic in your choice. Microsoft's approach is all about restriction. Google's approach is all about freedom.

In short, Google can afford to give away everything that makes Microsoft valuable. Everything. How can Microsoft hope to compete, except by trying to tether the online experience to its legacy desktop?

This is a good strategy...for now. It takes a lot of time for industries to change, and it's very possible that not all enterprise applications will successfully migrate to the cloud, as Dan Woods posits.

As such, enterprises will stick with Microsoft and on-premise deployment of software for many years to come.

But that phase in our industry's history will end. Already, as Chris Nuttall notes in the Financial Times, "the inevitable primacy of the browser and web applications is becoming clear."

Google, creator of some of the best of such Web applications, is the quintessential open-source company. It can afford to open all of its code, even if today it does not, because Google isn't selling code, and it can derive significant benefit from extensions to its online services through open-source development. Open platforms, as venture capitalist Fred Wilson suggests, are the future.

Google, in short, is what open source wants to be when it grows up. It illustrates what a true services company looks like: not support and other old-world services, but instead Web services. Most open-source companies only strive toward this goal. Google has fulfilled it.

The writing is on the wall, and that writing says that Microsoft and its model is dead. Google has killed it. Unless we're careful, however, Microsoft won't be the only casualty. Anyone hoping to monetize software directly is at risk.

Follow me on Twitter @mjasay.

[jrepenning]

You keep searching for something for open source to be "when it grows up," and it always seems to come out "open standards for closed products." That's a very good thing, but it's not "open source." We had open standards for closed products in the 80's UNIX market, and we nearly strangled ourselves with it. Linux came into existence just exactly to fill the gap left by the heat-death of open standards. We had open standards for closed products in the 80's, and we turned it into "faux standards as tools of proprietary warfare," and that's pretty much what fueled GNU and "free software" (which is not entirely the same thing as "open software").

Maybe we can do the standards thing better this time. I'd like that. It's a kind of openness. But it's not "open source."

[CTO_Dude]

The conundrum is that Google squashes its partner community developer ecosystem whereby Microsoft encourages and promotes it. Having been a partner that grew and continues to grow based on MS technologies, I dont understand how Google has killed Microsoft. Analysts have been bullish on MSFT stock these last two weeks and openly claim that Windows 7, Office and its search solution are anticipated to keep growing. This article seems to be wishful thinking and not based on reality.

[empirestatebuddy]

I agree. Matt Asay, like so many other journalists, are all Googly-eyed. They eat Google. They sleep Google. They dream Google. Honestly, I just don't see what all the fuss is about. I mean, yeah, Google makes a nice search engine, but their other products aren't all that impressive, in my opinion. Personally, if I had to bet who'd still be around in ten years... Google or Microsoft? I'd bet on Microsoft. Google, so far, is a one-trick pony. If everyone suddenly switched to a new search engine tomorrow, Google would be finished. It would take much, much more to take down Microsoft.

[Random_Walk]

"The conundrum is that Google squashes its partner community developer ecosystem whereby Microsoft encourages and promotes it."

How did Microsoft encourage and promote the PlaysForSure consortium again?

[sfotoord]

What this author and Tim O'Reilly miss is that Google can afford to give most software and code away for free is because it is all subsidized by advertising. If someone starts to drive these rates down significantly or steal signficant marketshare it will start to cut their profit margin and ability to give all the other stuff away free. I don't think its a threat to Google in the long term, but it is a threat to the number of money losing ventures they have today. No one sees it now, but it is surely coming.

[empirestatebuddy]

Exactly. Or what if a new, "wonder browser" was introduced tomorrow and everyone abandoned Google? Answer: Google would go bankrupt because there's nothing tying people to Google.

[marcmengel]

Initially it was all advertising income, yes. But as they start providing cloud computing services (customized onsite search, coroporate email services, content managment, high volume application hosting) which people pay for, they get other income streams, as well.

[felipillo73]

From a technical standpoint Google is very open and illustrates better than anyone the way software will be built in the future. However, I think Microsoft knows that and although they have a very tricky transition to pull together from their existing model to a new one, they probably realise that they have to join that trend. But let's not forget that this is all about money anyway.

Google is aiming at Microsoft's cash-cows like Office, but Microsoft is aiming at Google's AdWords... and Google is way more dependent on AdWords than Microsoft on Office. Actually Google search is so minimalistic that Google has only optimized its monetization engine, AKA AdWords. Bing has good chances of becoming a serious contender to Google and given the amount of money that is at stake, any percentage of share that it takes away from Google will result in billions of lost revenues. The only way to counter the trend would be to imitate Bing's successful features... but that will likely affect the conversion rates of AdWords which are so optimised that any change will make them go down.

And if you are a web publisher I doubt you believe that Google is very open about it's rates and commissions, or about using other people's content for free to build traffic.

We have yet to see how Google will react when their revenues are under threat. Will openness be their goal or just a tool that has worked pretty well so far?

[empirestatebuddy]

Great points! The comments today are top-notch. Better than the original article, actually. ;)

[jessiethe3rd]

Hehe... I always get a kick out of reading this guys commentary. I find it humerous.... always searching for ways to talk about Microsoft dying. It's funny because besides Microsoft this guy rarely talks about other organizations like Adobe and Oracle - both who have a virtual stranglehold on the market in their respective industries.

The even funnier part is Microsoft's ecosystem vastly over shadows that of Google, Adobe, and Oracle... combined. Not all of Microsoft's partners are happy little campers all the time but the fact is Microsoft tailor to the community - Google has a LONG LONG way to go to tailor to that same community.

Now lets look at some REAL talk. Microsoft is effectively counteracting Googles cloud aspirations by mobilizing it's already industry solutions; Exchange, SharePoint, Office Communication Server. It is also not a hidden fact that Office 2010 will have web applications for each of the individual products (Word, Excel, etc.) Microsoft recognizes the threat and has reacted.

Meanwhile Google is creating new ways of communicating which are actually copies of Microsoft's popular applications - take for instance Google's new application which allows users to consolidate how they communicate... it's an Outlook knock-off (even employing the same layout) with some realtime communication and social networking integration. Do not get me wrong - Google has created some killer apps and some nifty stuff - Google's Phone service is pretty nifty for one.

At the end of the day - you can give away free services until people start buying into your product. The question is - who stands to benefit - Google has all your information - they watch your search and target you with ads - they sell your information to the highest bidder without your approval.

They are a monopoly no matter how they play the "we're good" card. Free is only free when you have revenues else were. If Bing and Microsoft can make a decent dent down goes that house of cards while Google making in roads on the desktop from an dependable, must have end user web app perspective is not 100% today.

I like seeing them battle it out but Microsoft still is the larger market cap with deeper pockets and a whole hell of a lot of locked in paying users.

[Daral0085]

I'll be interested to see Google's search relevancy algorithm. But then again, like everyone has said above, Google isn't open source when it comes to their money. Anything at Google that provides their revenue (read: search and ads) is closed source. Of course they don't mind open sourcing things that aren't part of their revenue stream. However, if they open sourced their search engine, then MSFT can go in and rip out all the good parts, beat Google at their own game, and sudden Google goes bankrupt.

Now admittedly, Google going bankrupt is a very unlikely scenario, but that's in no small part because Google isn't going to open source anything related to their revenue stream. It's kinda like the Coca-Cola formula; you just can't let that secret get out, or else you lose your whole company.

The day Google open sources their search engine, then I'll call them an open source company. Until then, they are a closed source company that happens to fund a lot of open source projects.

[holyreki]

How much is Apple and/or Google paying you to write all these Microsoft bashing articles? I would think you'd be pro-micorosoft being a great majority of people reading your garbage make their living by working on/with MS products. If they go away, you go away and if MS goes away, what will you write about?

[monkeyfun14]

Only thing i've seen come from open source is trolls.

[marcmengel]

Now there is a pot calling the kettle black if I've ever seen one. Good Troll!

[WhuzYoDaddy]

Hmmm... Mat Asay is praising OSS and declaring the death of Microsoft. Did we expect anything different from him?

[Vegaman_Dan]

What Google has not had to face yet is any sort of support for enterprise class customers. They haven't had to back up any of the service level agreements that other companies have. Cloud computing is a nice idea, but you have to have the resources to back it up and right now Google's answer is just to say that it's all beta and no support.

Open Source is great- until you need to find someone to point to when it breaks and then nobody seems to be around to take responsibility.

[Dalkorian]

I think that sums up M$ customers pretty well Dan. When something breaks at least you can point fingers and blame someone else, right? What else can you do when the source is closed, it's not like you can take charge and fix the problem yourself. All you can do is cry until your master comes to your rescue.

Slaves enjoy being unempowered and not responsible for anything. Do as you're told and when things go wrong blame someone else.

[mskenny]

Wow. This is pretty silly. Yes, Google IS an advertising company. It may persue all sorts of other projects, but they don't make any money. The kind of company you are is determined by what you make money by doing. As for them being open, I don't believe they release the source code for their search engine or their advertising insertion, do they? I wonder why...oh, that's right it's because that's what they make their money on. When they publish that code, they will be "the quintessential open-source company."

The biggest threat to Microsoft is Google's "free" services. And so the question is how do Microsoft compete with Google's offering of similar like services to Office, Outlook, and etc? Anyone who tries to compete with Google's free offering will have only one result and that is death. But there is a way and I believe Microsoft knows it internally. The rest of the world may not have caught on yet. The secret weapon was unveiled recently and it shouldn't be surprising. It is called "Bing". While this is just a revamp of Microsoft's search engine, underneath there is a higher mission at work. Here is the analysis.

Google's broad spectrum of free offerings outside of its Adword service are the greatest threat to Microsoft and also the greatest threat to Google itself. Why? While Google offers their "open" software for free to the consumer, one utlimate rule still holds. The service itself is free, but the technology and manpower to develop and deliver the technology is not free. So where is the money coming from that is powering all of the servers, network infrastructure, developers, and managers? Well, the simple answer is, the Adword search service. Having said that, would it not be logical to also say that "your chain is only as strong as its weakest link?" And hence the Google Adword and the fact it is the only "real" revenue generating service is the weakest link.

So is it far fetched to say that Microsoft sees that Google Adword as a weakness in Google's overall tactical position rather than a strategic strength? Afterall, if Microsoft could shift only 20% of the Adword revenue from Google to Microsoft, what does that mean to Google and its other "free" service offerings. Simple economics would prevail. Cut back on services. Google won't cut back on a revenue generating service like Adword. So it will cut back on developers and capital investment that is powering the "free" service. Or it can start monetizing these "free" services. If so, then the question as a consumer would be, "Why would I pay Google if Microsoft Office is already 100x better and used by 90% of the world?"

Microsoft's strategy is quite simple actually. Standard war strategy from the "Art of War". Microsoft does not have to beat Google Adword. It just has to create an alternative search product that can put a measureable dent into Google Adword that it hits the only revenue stream hard enough that it begins to ripple down to Google's other service offering that it begins to push Google back to strictly a search engine company. At that point, Microsoft will then have only one target to fight instead of 50 or 60 products.

While Microsoft's current business model may die, which I agree, it won't die tomorrow. Everyone agrees with that whether you like Microsoft today or not. On the same front, Google's free service offering today is not enterprise ready nor commercially ready today. That is a fact. So Microsoft has time. So instead of fighting Google on what it will become in the future, Microsoft has decided to fight in the present and win.

And if you analysis the urgency of Mircosoft's pursue of Yahoo Search as well as the recently announced Bing search engine, you should come to the same conclusion as I have, which is to build a good enough alternative search engine to Google to shift users away from Google only source of revenue that it will hurt its top line revenue and ultimately its bottom line. Afterall Google generate revenue from only one source while Microsoft generate substantial revenue from multiple sources.

[Chris_Duffy]

You're discounting the approach of Opera and the Unite browser/home server. Software is important. Be it in the cloud or on your machine/ device. Microsoft is falling all over themselves. They're not innovating. Software is not dead. It's just on the web. Opera's gambit brings the user into the cloud which is really, really, cool.

[getonline33]

Google open? Their ad platform is a blackbox. Look at Microsoft's recent click fraud filing - if they feel the fraudsters did damage of $750K, and Google has 10x volume/marketshare, what is the damage they did on Google search? Why isn't Google protecting its advertisers by going after these guys?

Because a chunk of their revenue comes from these sketchy advertisers, and if they were to open the kimono even a little, and get rid of 10% of that fraudulent spend, the impact to Google's earnings would be material. Google is a black box - they can't turn the ship now, their course if fixed.

Microsoft needs to focus on creating a network that focuses on keeping the bad out, and giving advertisers a marketplace that is transparent. Also, give publishers tools to improve their traffic (Google just kicks out publishers if their traffic quality is poor).

Ironically, Google could be brought down by the same problem that has plagued Microsoft, and MS could rise from the ashes with an open advertising platform. Boy, what story that might be.

[NorthwestTech]

Google only gives away things that it doesn't need to make revenue. The reason they can do lots of little free apps is because they're all subsidized by the gigantic ad machine, which, I can assure you from personal experience, is not even close to free.

Regarding Microsoft, rest assured that they understand that the era of the boxed product is coming to an end. Entire suites of products have been, or are being, webified. They might not have been the first kids on the block to see the change coming, but they've figured it out and changing the company's direction.

[foldingkayaker]

So does Matt Asay suggest that in 10 years time Google will be what Microsoft is today - dominating the market, bullying everyone and using its position to dictate what we are to have on our clouds? Or does he think that Google will continue to 'do no evil' and be a benevolent master and we will all live in the software world's equivalent of the socialist workers paradise?

[nsmoly]

I am getting tired of articles about Google's bright future and Microsoft's demise (well may be Google keeps paying for these articles, so they re-appear).

The world is not as simple as "cloud writers" try to paint it and software is not going anywhere, simply because it is software that runs in the cloud and on the client. Delivery methods may change (in the box, via the web browser, via rich internet apps, etc.), but software is still the same. The notion of "only cloud based software" is nonsense since you must have at least - OS, web browser, 2D/3D rendering engine, etc, etc. running right on your desktop. Otherwise, your desktop/netbook/iPod/iPhone is a useless piece of metal. So please stop writing this nonsense. You make everyone laughing...

[Pala98]

And how does Apple compare to Google in the same contexts?

[qquidd]

Reminds me of a painting by Dali: (Note the title)
http://web2.infoguard.net/lubo/vision/gallery/dali/paint.php?pid=405&w=640&h=900

[vomichairman-2009]

I see a little bit of truth in just about every comment listed so far.

However, that being said, from a virtual organization standpoint, Google seems to sense the direction in which the world is headed and, slowly but surely, is steadily gaining ground with its Google Apps platform which promises to be a "killer app", a la adwords style, once they get are able to get their head out of the sand when it comes to "listening AND acting upon" the feedback they keep requesting from their users-customers.

On the other hand, Microsoft has been toying around with a component similar to the Google Docs portion of the Google Apps platform, the much more superior Microsoft Office Live, for quite a number of years, however, it just cannot really figure out "where do you go from here?"

If I were Microsoft, I would buy the Google Apps platform from Google, replace their stinking Google Docs with Microsoft Office Live, and market the hell out of the new platform and basically dominate a market with a very bright future over the next 15-20 years. Or better yet, imitate the Google Apps platform in almost its entirety; the only exception being the replacement of Google Docs with their own Microsoft Office Live platform.

Or if I were Google, I would buy the Microsoft Office Live platform from Microsoft, dump that crappy Google Docs, and integrate the new Office Live platform into their Google Apps platform and basically dominate a market with a very bright future over the next 15-20 years. For the life of me, I can't understand why they are so stupid when it comes to fixing Google Docs and why their development team just can't seem to get it.

Prof. Pierre Coupet
Founder, CEO & Doctor of Virtual Organization Management
Virtual Organization Management Institute