Google competes for the future; Microsoft, the past

Google was born on the Web and is increasingly giving Microsoft fits by forcing the decades-old software giant to compete on Google's terms. Like open source. Like cloud computing.

Microsoft may shore up its fortunes in the short term with a successful Windows 7 launch. But in the long term, its very success with outdated "desktop" products threaten to cede the market to Google.

We'll have all of it, please

It's not really fair to Microsoft. Microsoft is a victim of its own success, needing to cater to its existing clientele with each new release, in true "Innovator's Dilemma" fashion. Hence, Microsoft continues to make a lot of money, but its last two quarters have seen traditional strengths like Windows become a drag on earnings as enterprises spend more money with Google, Red Hat, and others.

Google's lack of legacy frees it to innovate rapidly and broadly, as Genentench CIO Todd Pierce, a Google Apps customer, suggests:

The rate of innovation at Google is - well I mean, the Oracle, SAP and Microsoft product cycle is five years; Google's product cycle is five days. It's incremental. In five days you're not going to be able to cancel your Microsoft Office license, but in five years, you won't have Microsoft Office.

Microsoft, for its part, is so concerned with "backward compatibility"--"Is this product/feature compatible with our ability to continue to monetize our 1980s-style desktop monopoly?"--that it continues to struggle to embrace the Web. CNET blogger Dave Rosenberg points out that Windows 7 should have been Microsoft's launchpad to cloud computing, but isn't.

There are a lot of "should have beens" for Microsoft when it comes to the Web.

Meanwhile, no one is slowing down for Microsoft. Let's stick with cloud computing for a minute. VMware dominates virtualization and has a strong claim on cloud computing, though open-source rivalry from Eucalyptus and VMops threatens to challenge both VMware and Microsoft as they seek to dominate cloud computing.

And then there's Google, which provides an increasingly wide array of cloud-based services to enterprises looking to untether themselves from the desktop. In an interview with CNET News, Google CEO Eric Schmidt argues that "The browser can be both enterprise- and consumer-capable. The architecture is driven from the browser. That is the story of enterprise IT today."

In other words, the desktop is simply the means by which a user loads a browser. It's a gateway. The value is not in the desktop anymore. It's in the browser, which is the new desktop, in terms of real functionality delivered.

Microsoft's big opportunity to stymie the threat from Google and others is SharePoint. Microsoft CEO Steve Ballmer has described it as Microsoft's new operating system, but it's in a recent interview with Forrester that he makes this meaningful:

In my own mind I compare (SharePoint) to the PC, the PC started off life as a spreadsheet machine, then became a programming machine, a word processing machine, (SharePoint is) a general purpose infrastructure that connects people to people and people to information....

I think SharePoint is considered a very serious development platform for rapid application development (by IT architects and developers).

SharePoint is Microsoft's best attempt to connect desktop applications like Office with centralized, cloud/cloud-like collaboration and storage. Yes, Microsoft has other initiatives like online Office, but none marries so well its legacy profit centers with future innovation. And, given that SharePoint is already a $1 billion and frenetically growing business, it has momentum that other initiatives don't.

SharePoint, then, may be Microsoft's best hope for marrying its legacy to the future of Web-based computing.

The browser can be both enterprise- and consumer-capable. The architecture is driven from the browser. That is the story of enterprise IT today.

--Google CEO Eric Schmidt

Microsoft needs something like this. It is losing in mobile, and not simply to Apple. Google's Android momentum is almost astounding, with AdMob data pegging Android smartphone penetration in the U.K. at 10 percent, as but one example.

If we assume that mobile will increasingly be the client platform of choice, then we see Google squeezing Microsoft from the top (cloud) and the bottom (client).

In both areas, open source is Google's weapon of choice, and it's one that Microsoft is going to have to figure out quickly if it wants to be a player on the Web. The Web is too big for Microsoft to control it, and the Web is overwhelmingly open source, as Lotus founder Mitch Kapor states:

The accomplishment of open source is that it is the back end of the Web, the invisible part, the part that you don't see as a user.

All of the servers, pretty much, they run Linux as the operating system; they run Apache as the basic Web server on top of which everything else is built. The main languages out of which Web applications are built - whether it's Perl or Python or PHP or any of the other languages - those are all open source languages. So the infrastructure of the Web is open source ... the Web as we know it is completely dependent on open source.

Kapor further suggests that Microsoft's war with open source is over, or should be over: open source has won. It's essential infrastructure now, and hence something that Microsoft needs to embrace, not fight. This isn't about open-source religion. It's about pragmatism. Pragmatism that Microsoft, like anyone else, can embrace.

Google is using the future (open source, cloud) to compete for the future, and its tactics threaten to hit Microsoft in its profit centers like Windows.

Microsoft, however, appears to be mired in its past. Windows 7 looks to be a serious upgrade over its Vista predecessor, but in 10 years time, will we care? Or will we have moved on, forgetting about those quaint days when we used to care about the operating system and applications like Office?

Follow me on Twitter @mjasay.

[AppleSuxLeo]

ASay is a tool...Azure is doing quite well .

[ddelor]

Maybe I missed it, but did he even say the word Azure? Seems like it's kind of an important platform in an article about cloud computing. SharePoint is just one service on this platform and all together I'd say that Microsoft has much more to offer in the future of cloud computing than Google. Google's developments could largely be implemented overnight by Microsoft, if and when they see a vaible business model for them, hence the online Office. However, I will concede that Microsoft needs to start looking more towards open source development. Perhaps a more open mobile platform would be just the thing to jumpstart Windows Mobile 7 or 8 in the eyes of consumers.

[halfNakedPappy]

Azure is doing quite well? I have yet to see it being used, first hand, in the wild.

[Random_Walk]

Azure is half vapor, half beta, and fully unused by anyone outside of Microsoft, at least for enterprise or commercial needs.

Unless/until Microsoft can show some growth with it, they're not going to get much mileage out of it... much like Commodore, which got zero mileage out of having a 512k memory module that plugged into the back of its C-64 console.

@ddelor: SharePoint's 'charm' is that it initially costs not much of anything.

It's only after your company is fully invested in it that you learn how much the damned thing is going to cost you if you really want to use it. Average price is three servers, licesencing aplenty, and most like an FTE SharePoint developer (or at least a consultant on retainer) - just to get the same functionality that you can get from even the smallest PHP/Python-based CMS/wiki suites, plus that office integration thingy. By then it's too late to back out of it, and the costs only go up as you scale up.

I suspect that once the true impact is known, SharePoint/Azure will be slowly abandoned, or at least minimized.

[kojacked]

"I suspect that once the true impact is known" that Random will be left eating his own FUD. SharePoint business is booming. You can dream of a Microsoft free world all you want. It's just not gonna happen anytime soon just like the minority have been saying for years and years and years.

Now where'd I put my Sun/Oracle NetComputer... Oh wait...

[Random_Walk]

"SharePoint business is booming."

It is for now - where did you get the idea that I said otherwise?

Oh, wait - you made that up.

[kojacked]

Oh sorry Random I forgot you like to spin things to death.

So you're basically saying all of these business buying into SharePoint are filled with stupid people because they don't understand the cost. I'm so glad you are here to save them from themselves with your infinite wisdom. Let's see your words vs. the folks that voiced their opinion with a billion dollars in purchasing...

[Matt Asay]

Azure is a poor example. It's a nice aspiration, but it as of now it's still just a hope. Maybe it will do well, maybe it won't. The reality is that SharePoint is already doing amazingly well. That's why I talked about it, not Azure.

[OfficerNelson]

I love Google Docs because of its portability - all of your documents are always with you no matter where you accidentally save them. Too bad our campus blocks it. Thanks, Websense, yet another reason you're the #1 workplace annoyance. (Snow Leopard Network is blocked as Sex. I need to access the site for a term paper. Thanks for the F.)

[lifelonglego]

Maybe next time you should learn how to use "desktop" software. Ever heard of it? its this nifty thing where you actually control your data, and you always know its there and its going to work. And if you are using Google Docs for a term paper, you should expect to get an F, because Google Docs has horrible formatting tools that even WordPad can beat. Maybe you should just accept responsibility and not blame Google Docs' shortfalls for you failing your term paper.

[solitare_pax]

Face it - newcomers to any field have advantages over the 'dominant' technology, if they can execute it correctly. That's why cars took over from railroads and horses, telephone lines took over from the telegraph, and so on.

The Windows-killing OS of the future may even be on the drawing board of some obscure college dropout right now. Sound familiar?

[Chao_Sama]

Google is a beast

[BelkyB]

Google is going to own the mortgages on our homes next!

Die Google die!!!

[jackdaniels08]

I'm loving the Google Android Explosion. The adoption is truly astounding. Watch out for Verizon's Droid next week using Android OS.

[lifelonglego]

Android is pretty cool, and as a traditionally Microsoft person that is still open to change(I seriously considered mac and tried using linux), Android looked pretty cool. The dealbreaker is that it requires google's software, calendar, email, etc. I don't like gmail, or gcalendar, or google search, and its impairments, at least for me, have made Droid a no-go. Its the whole reason I didn't switch to safari, whitch is superior in many ways to the other browsers except that you can't change the search engine to anything other than yahoo or google.

[krypter]

I'm pretty sure 20 years from now we'll still be using operating systems on our PCs and desktop applications to go with them. Those applications will be more connected to the net, but the unreliability and insecurity of the cloud/browser space will ensure the survival of classic desktop apps well into the future.

[Chapmaniac]

I agree completely! We'll all be using computers for the rest of humanity (barring unforseen catastrophies, that is!). These systems will require a layer of hardware/software support so we can use them... the most basic definition of an operating system right there. Now, the question we should be asking is, who will make that (possible embeded) operating system? Will Microsoft successfully adapt to these changes as they occur or will they stagnate and refuse to bend to the coming trends? Obviously, they will adapt - but so will others. You may eventually even see a computer running a Nokia or a Palm operating system in the future. Expect things to get even more fragmented as the OS matters less than the tools it runs in the future. At the moment, MS tailors and controls the tools we think we need and want so they require Windows. I'm not so certain they will always enjoy that monopoly. We're coming to a day when even the likes of Facebook may incorporate an online office suite. The times are a-changing, folks!

[Super2online]

I have to laugh at these constant claims over the years that Microsoft is right around the corner from calapse and it will come at the hands of Google, Open Source, Apple, Palm, Oracle, insert any company or organization you want.. Keep hoping, keep dreaming, keep writing. As much as you want that to make a difference, it won't.

[Bummmmer]

Been a longtime CNET reader. But never really felt the need to post.

But here's my 2 cents.

I've been hearing this doomsday scenario since around mid-90's when Sun, Netscape, AOL, Novell are suppose to drive Microsoft to extinction. Companies that compete with MS should have learned by now that MS is a version 3 company. They are never known to do well on the first release but most often than not, they deliver on the 3rd iteration of a particular product.

[rtripathi]

@Bummmmer

Windows Mobile is version 6 now and not doing well. Why? Microsoft does well as long as it's monopoly not competition.

[Random_Walk]

I have to laugh at the folks who think Microsoft will be around forever...

I defy anyone to point out where Microsoft was credibly predicted to collapse in short order.

After all, it took Rome about 300-400 years to die, in spite of the best collective efforts of various emperors over that time.

similarly, Microsoft is indeed losing out, and many predictions about it are coming to pass - it is demonstrably losing income, growth, relevancy, mindshare, attention, and loyalty, among many other things. The best that analysts can say about it these days, is that at least Microsoft didn't screw up as much (or as badly) as everyone thought it would - by any given prediction point in recent time.

Me, in 2007 I gave them about 10 years before they find themselves either obviously dying (a'la Commodore) or driven to irrelevancy (a'la Unisys). Barring some drastic miracle, a change in leadership, new ideology, and/or a more open philosophy, this is where I see them heading.

Two years on, and my prediction is tracking very nicely to what I expect. Think of a downward curve... a slow depression at first, but gaining speed and steepness as time passes, finally leveling off, but at a very small fraction of its former height. That's where Microsoft is likely headed. Not tomorrow, not "around the corner", but over the next decade.

I will happily admit that I'm very likely off on my timing - it may be sooner, it may be later. After all, they control their destiny, not I.

That said, so far it is moving to expectations.

[kojacked]

Boy Random you sure leave your predictions pretty loose there. I'm sure you'll find a way to spin your version of reallity into a "successful" prediction. I predict in two years we'll all be laughing at you as we do today.... Oh wait...

[Random_Walk]

"Boy Random you sure leave your predictions pretty loose there"

Like I said earlier:

"After all, they control their destiny, not I."

...are you denying that Microsoft's marketshare has dropped? Are you denying that their financial growth has visibly dropped, no matter how they juggle the books? Are you perhaps denying that they have been pretty much lost their mobile division's marketshare, in spite of having a nearly a decade-plus in which to grow it? (or, as a corollary, that the Windows Mobile/CE product went from "serious contender" to "laughingstock"?) Maybe you're denying that there are still more Java developers (and still inexplicably growing) than .NET developers out there, in spite of Microsoft's level-best efforts to kill Java back when it was practically brand new?

It could be you're denying that Microsoft has lost a full quarter of marketshare (and still falling) in the web browser market over the past five to seven years - the very market they loudly staked their future on, and their growth tactics in it nearly got them torn apart for by the US Government... was this it? Or it could be that you're denying that Microsoft, in spite of buying/bribing a bazillion parked domains to put IIS under, is still losing out big-time to Apache for web server marketshare?

Maybe you're denying that where once Microsoft was feared at all costs by the tech industry, they are now routinely ignored or pimp-slapped by anyone who does not directly rely on them for the majority of their sales and/or income. Even those who rely on Microsoft or its products for their livelihood routinely backtalk Redmond these days.

Heck, we don't even have to bring up the massive foibles and very public smackdowns that Microsoft has either received or self-inflicted over the past couple of years: The London Stock Exchange crash, Sidekick, Pink, Vista, BOB...

I don't know how else to say it, but your idol has clay feet, and they're starting to show some rather visible signs of erosion. The only question is, how long will they hold the rest of the statue before everything topples, or before somebody comes along to patch them up?

[eadeguzman]

rtripathi - you seem to forget that Micrsoft was at one time a very small company compared to the mighty IBM.

Windows was far behind the Mac OS before (in GUI - Windows 1 and 2 was not successful)... Word was second to Wordperfect and Excel second to Lotus 123...

Monopoly has little to do with it, especially how they reached "monopoly" in the first place.

Speaking of IBM... Lots of people had been talking about its demise, but look, they're still well and good still with an income of 13Billion...

[kojacked]

Random, just read your own words. Your are just freaking out here. What? Windows 7 has your undies in a bunch? BOB? You can't be serious! Keep spinning...

You just don't get it. I'm not hear to worship Microsoft or any one vendor. I personally think windows mobile sucks. IE is bloated. Apple is doing great and I happy with the innovation they bring to the market. But I do think you and your ilk do people here a disservice with all of your FUD (as Fox News does with...well... all of the news). Microsoft is no where near ending its dominance in the industry no matter how much you try and wish it away.

[lifelonglego]

People tend to forget about Microsoft's tenacity. Think about Microsoft's IIS. As of last month it had nearly 22% of the market share, yet in the past it was seen as terrible software that could never have any respectable amount of marketshare. MSSQL, same things. Exchange has 39% marketshare and continues to experience incredible growth. People need to look at MS in a larger perspective and realize that Microsoft, in general, works at things until they get it right and capture a huge market share. For this reason, Microsoft isn't likely to go away anytime soon.

[mitrich]

There is no way that the vast majority of large corporate/industrial/financial concerns are going to allow their data off their own premises or servers. Those not needing the scale of IBM or Sun/Oracle will stick with Windows, and so, Windows PC's

Steve Ballmer said on the Today show this week at the announcement of W7 that consumers own 65% of the PC's. I think that was hyperbole. Maybe 20%.

>>RSM
Are You a Cruncher? Please visit
http://boinc.berkeley.edu
http://www.worldcommunitygrid.com

[TexasTWylite]

Basically, "the network is the computer". We've been hearing this for years. That will never be fully the case. The individual computer, whether on a desk or in your pocket, the operating system and its capabilities will always matter a lot. That said, if Windows 7 goes over as good as Vista does, then we can seriously start discussing a post-Microsoft future.

[pdbrickhouse]

There are so many problems with this article! Any incumbent has many challenges to innovate and expand beyond their core strengths. Over time, market share as well as profit ratios always seem to decline. The challenge is how you respond. Telcos have done it with Wireless (i'd hate to be in the copper phone business today ONLY). Apple had a great product and owned the market with Ipods. They did a great job of innovating and improving as that market share was dwindling. Google so far is a one trick revenue pony and will have many of the MSFT haters begging for the good old days pretty soon IMHO.

[terminalblue]

and the award for CNet's Troll article of the days goes to...Matt Asay!!!

Successful troll is Successful.

[incendy]

I don't know, the way we obtain information doesn't really matter that much to me in the end, programming is the key to anything computer related.

The .Net languages "C# especially", SQL, WPF, Silverlight and the .Net Framework are all very quickly evolving. Maybe too quickly right now for them to be widely adopted because of too many changes but I do believe they will pay off in the future.

I also feel that desktop computing isn't going anywhere, as much as I love surfing the web I also love that I have my own recording studio, painting studio and photography studio built into my computer as well. I still want an OS that's primary function is to interact with my devices on my computer, netbooks and phones I don't really care but on my computer I could not live without it.

[committedexpert]

This post is near tall order for google and open source. It looks that for more than three decades Microsoft has faced this kinda criticism and taken in its own stride, I could remember similar comments when Windows 95 was launched, fourteen years back! With due respect and recognition to Google, Open Source, Cloud Computing, VMWare, I take the heading as,
Been a certain past but a doubtful future.
committed expert.

[ewsachse]

"Outdated desktop products"?

HA HA HA HA!

How the heck is someone supposed to get on the web unless they use a browser, which is an "outdated desktop product".

Web apps are fine until you type in a lot of information, hit submit, the server times out, and then you lose all of your data you typed in.

If mention plugins like Flash, Silverlight, Java applets, well they are just mini-"outdated desktop products" that run in the browser.

How did these developers create these web applications? By using an "outdated desktop product".

The "cloud computing" craze is just a new marketing name for something that people have been doing for over 15 years. Just because Google has embraced the word "cloud", that makes "cloud computing" cool and hip?

You know why people care about operating systems? BECAUSE IT IS WHAT YOU NEED TO RUN A COMPUTER YOU NIMROD!

[Random_Walk]

"You know why people care about operating systems? BECAUSE IT IS WHAT YOU NEED TO RUN A COMPUTER YOU NIMROD!"

There comes a time and a place where the OS is irrelevant to the customer, so long as their apps all work as advertised. See also Google. ;)

[kojacked]

"There comes a time and a place where the OS is irrelevant to the customer, so long as their apps all work as advertised. See also Google."

I have Google Chrome installled on my laptop. Sweet!! I can't wait to uninstall MS Office, Photoshop, Visual Studio, Media Center, and what the hell Winblowz as well. I certainly don't need any of those things to do my job. I just Facebook all day long anyway. Thank you Random for freeing us all from these capable apps and OS so we can use half-arsed versions on a not always on Internet! You are a genious!

[superswiss]

Cloud computing is not changing the fact that any device connected to the cloud still needs an OS.

[halfNakedPappy]

Yes, but the OS will continue to become more of a commodity, not something people really relate to or think about. When that happens, it'll be pretty hard to sell an OS for hundreds of dollars.

[superswiss]

Frankly, an OS is quite a commodity already. The only people that get attached to it or emotional about it are the fanboys. Regular Joe is just using what they are used to.

[mcolt12]

So does that leave Apple out the picture also..

[jspencer09]

Excellent point that Asay loves to gloss over. He's so hard for MSFT to die that what he doesn't see is that if cloud computing does become the dominant platform, it kills ALL desktop OSs, not just MSFT. If Microsoft, with a dominant share of the desktop OS market is going to die off, how in the world are Apple and the Linux variants going to survive? It doesn't how matter how elegant, smooth, well designed that horse-drawn carriage is, when the world's moved on to horseless carriages....

[msjonker]

Apparently everything can be done on the web and nothing needs to be done on the desktop anymore... I see so many of these articles and they assume Office-like applications are the only reason people use computers.

Not everything can be done over the web and not everyone has fast/reliable/always available internet connections, which is the problem with your story. Would you like to do video editing over the web? Maybe play a couple 3D games? What if you would like to type up a document, but have no internet access?

So given this, I fail to see how Windows 7 really missed out on anything. It includes a browser, so you can use your desired Web applications to your heart's content.

[superswiss]

I'm a big supporter of cloud computing, but these cloud visionaries are too quick to point out the demise of the traditional desktop OS. We have bigger issues to solve before this can even start to happen. We are at least a decade away from having fast, reliable, cheap and universal broadband, especially here in the US. Who read the FCC study from the other day, which said 96% or so of US households have access to broadband, but only 30% of those households subscribe to broadband. They are now going to conduct a survey to find out why 70% choose not to subscribe to broadband. That will be interesting. Do you think the 70% who don't even subscribe to broadband have the slightest interest in all their apps moving to the could? I don't think so.

[chocota]

superswiss . Do you think the 70% who don't even subscribe to broadband have the slightest interest in all their apps moving to the could? I don't think so
they will when people realize about the advantages of Cloud Computing-Open Source-Mobility products and services start popping out

[aquaadverse]

Been in the trenches in a variety of positions in IT since 1980 and the only OS that had a real clean shot at knocking Microsoft down decided as a community to blow off the server market and go Ubuntu crazy and fight with Apple for the scraps of the desktop.

I have a grudging affection for the naive MacHeads who are totally convinced it isn't infrastructure and decades of built up entire ecosystems of software and service driving IT that keeps Microsoft in front. Unlike their commercials, the reality is Microsoft doesn't build computers, a position Apple has to hope works after thinking different turned the hardware into a nice clone. It's the IT people who are desperate to keep buggy and BSODed and ready to fall apart hardware to keep their jobs and head count. They have difficultly with the concept corporate and enterprise IT is far more than the desktop universe they inhabit.

I run Linux personally, but I get paid to solve business problems not to wage a holy war. Imagine the huge damage had enough people with the expertise showed all those CFOs and Controllers the savings on seat licenses and annual contracts for software support? //Shakes head and walks away//

[Random_Walk]

"...decided as a community to blow off the server market."

Err, you may want to look up Red Hat Enterprise Linux. It's a server. Its parent company, Red Hat, grew in profit by some triple-digit percentage this year (so far). Their growth and spread overall has been strong enough to attract Oracle and Cisco into the game. Not entirely sure about Linux blowing off the server market - just that you don't hear much about how well they have been doing.

"It's the IT people who are desperate to keep buggy and BSODed and ready to fall apart hardware to keep their jobs and head count. They have difficultly with the concept corporate and enterprise IT is far more than the desktop universe they inhabit"

I agree. But then, I'm a sysadmin who prefers to muck around in infrastructure and services, as opposed to desktops. That's what the help desk is for. :)

[sparrowhyperion]

Personally, I would never trust online computing of any kind to be my main source for my applications, OS, Data, or anything else. I prefer to keep my data and apps at home, where I have full control over them, and I don't have to worry about service outages, hackers, and other issues. I seriously can't believe anyone would be dumb enought to put all of their critical business software and data into the hands of some Network Admin that they have never met...