The looming battle between old economy (Microsoft) and new economy (Google)

For those who have spent years wringing their hands over Microsoft's desktop dominance, have no fear: competition is on its way. It's called Google, and it promises to dramatically shake up the computing market by shifting the battle to the Internet, as an article in The New York Times insightfully states.

We should have seen this coming. The cause of Microsoft's weakness is its overreliance on its strengths, a classic "innovator's dilemma." In other words, Microsoft's fetish for the desktop metaphor threatens to leave it with dominance of yesterday's kingdom just as the world has moved on to a new one.

The growing confrontation between Google and Microsoft promises to be an epic business battle. It is likely to shape the prosperity and progress of both companies, and also inform how consumers and corporations work, shop, communicate, and go about their digital lives. Google sees all of this happening on remote servers in faraway data centers, accessible over the Web by an array of wired and wireless devices - a setup known as cloud computing. Microsoft sees a Web future as well, but one whose center of gravity remains firmly tethered to its desktop PC software. Therein lies the conflict.

Both companies believe that the desktop is important, but how important is critical. For Google, 90 percent can be done "in the cloud." For Microsoft? Well, let's just say it has a financial interest in ensuring that number is much, much lower.

What's interesting is that this battle is forever changing (and raising) the barriers to entry. If it's a battle of the "cloud-based computers" then, as Nick Carr notes, it will be harder and harder for new entrants to compete. According to Yahoo, there are only five "computers" or competitors left: Microsoft, Google, Yahoo, IBM, and Amazon.com.

This last one is particularly important because it enables a potential army of new startups, each building on the Amazon cloud, as Dave Winer writes:

Today, when a company raises VC, it's probably because their app has achieved a certain amount of success and to get to the next level of users they need to spend serious money on infrastruture. There's a serious economic and human wall here. You need to buy hardware and find the people who know how to make a database scale. The latter is the hard problem, the people are scarce and the big companies are bidding up the price for their time. Now Amazon is willing to sell you that, to turn this scarce thing into a commodity, at what likely is a very reasonable price. (Haven't had time to analyze this yet, but the other services are.) Key point, the wall is gone, replaced with a ramp. If you coded your database in Amazon to begin with you will never see the wall. As you need more capacity you have to do nothing, other than pay your bill.

In sum, the walls are falling even as they rise. Google and Microsoft will be locked in a death match over the fate of the desktop. Perhaps this will leave them exposed to new entrants building on top of Amazon?

We'll see...

[simplelifer]

I'm starting my own project on Amazon AWS, and let me tell ya, it's great!
Amazon should be the role model for Microsoft---from selling books online to selling virtual on-demand computing and database solutions for people with great ideas. This is what I called "progress".
I remember Bill Gates once said something like "you've to kill your own products before others do". Well, what happened to that motto?
Microsoft is still the giant today, but for how long?

[markrob35]

Asay's anti-Microsoft stand on everything is hardly surprising, but in my view, this has way less to do with Microsoft vs. Google (or other petty battles like closed source vs. open source), and way more to do how much I trust my personal information, business secrets, bank account numbers, and other stuff being stored inside mysterious, faraway servers owned by some business with little real motivation to protect my interests. Do I trust Google to do that? (No.) Do I trust Microsoft to do that? (No.) Do I trust some upstart 23 year old dot-commer with some novel new idea (e.g., Facebook and their privacy fiasco) to do that? (No.)

And lest anyone suggest it, I don't trust them with my data ephemerally, either. Some random remote application in a faraway place accessed over the Internet reading and writing locally-stored data is no more trustworthy than storing it remotely with the same applications.

Whether your desktop is Windows or Mac OS or Linux or some other platform, there's nothing like direct oversight and control over one's own computing domain, with at least some ability to monitor what's happening, and to control (via software or hardware firewalls) what connections are permitted, to whom, and when (or to at least worst case cut the Ethernet cord to prevent anything from leaving).

Pardon me for being a curmudgeon, but the entire notion of outsourced "cloud computing" is about as enticing as the notion of media convergence, device convergence, and all the other "convergences" zealots have been touting for years. It happens to some degree, sure, but with questionable success, and it's never some revolutionary change in mindset and behavior it's made out to be.

[jspencer09]

Amen! I fully Agree with your comments -- I don't trust my data on some remote company's servers -- just too easy for them to abuse, regardless of whatever "privacy policy" they may have.
I could potentially see this happening in a closed environment, like say a corporate network running thin clients -- which is really just a throwback to the mainframe days -- there are benefits and drawbacks to this approach. But for an individual user this will never happen, for all the excellent reasons outlined above. And another thing Asay doesn't seem to understand is if cloud computing were to somehow take off, it wouldn't only kill Microsoft, but also Linux and the MacOS. Remember they are both desktop OSs as well.

[plee9]

wow. how can you call Microsoft an old economy and Google a new economy? does this make IBM a dinasaur? the writer's wording is so biased and favorable to Google that it summarizes the typical stereotype that general public has. look. you can't call companies names based on public opinions. this article simply lacks taste or new ideas. why would you call desktop software an old economy? do you think apple is an old economy too? why would you call web software a new economy? because google does it? please fix the title and rewrite the article.

[DoughboyNJ]

here here well written

[Matt Asay]

Apple's future is New Economy. Look at the applications the company is building. Everything is tied into the cloud, though still somewhat weakly.

As for me being pro-Google, I guess you've never read this blog before? :-)

[mjhillman]

I have been developing software for 20+ years and have bounced back and forth between Web Clients and Windows Clients. I favor Windows Clients for speed of development, security, and robust interface. The interface quality and speed can not be matched by a Web Client (even using AJAX). While the ASP model has it benefits, most professional organizations will prefer professional Windows Client tools.

[lst2001]

Does anyone remember "Network Computers (NC)?" seem a rose by any other name is a rose.

[ethana2]

Software can't really be a product anymore, you must sell services.

I don't use a single piece of proprietary software in my day to day life, but I'm on the hook for ISP bills as far into the future as I can see.
Ubuntu Linux + Blender + the GIMP + inkscape + Qcad...

[unixbiz]

I am not a supporter of any parties. The reality is the web is the future. The desktop PC applications days are numbered. All around the world, people can get info on the web via non-PC devices. More new applications are written to replace old desktop computers apps. It makes sense. The world is in the internet age. This is when MS Windows product will be on its way to be the old economy. Apple is not old economy because it keeps coming up with new & cool gadgets besides laptop & desktop computers. Microsoft cannot compete with Apple in the gadget market. Why do we need the new Windows Vista OS when Windows XP is doing a fine job ? Beside, the new Linux desktop OS are as easy to use as Windows & they are available for free ! Microsoft has to spend billion of dollars to produce the new Windows Vista because they do not have other ways to lock the users in their Windows product family. Hello Microsoft ! spend the money to build web apps not the old economy desktop Windows products. Let me clarify. Windows Desktop apps are old economy, open architecture web apps are new economy.

[oyunlarr]

oyun
Software can't really be a product anymore, you must sell services. I don't use a single piece of proprietary software in my day to day life, but I'm on the hook for ISP bills as far into the future as I can see. Ubuntu Linux + Blender + the GIMP + inkscape + Qcad...
kiz oyunlari