Perspective: Can Microsoft pull one more rabbit out of its hat?

Did Steve Ballmer really blow a gasket when an underling told him he was joining Google? Microsoft says it's bunk, but I kind of hope it's true.

The story was revealed in sworn testimony from Mark Lucovsky, a former senior engineer at Microsoft. After informing Ballmer that he was leaving for Google, Lucovsky claims, Microsoft's CEO went into a rage, tossing chairs and vowing to "kill" Google.

After watching the big galoot do his monkeyboy dance, one suspects that it's entirely possible that Ballmer temporarily went mental. You so rarely find technology executives of any stature revealing themselves as human beings. Ballmer's different. Microsoft's CEO wears his heart on his considerable sleeve and is not shy about demonstrating his passion--even if that means occasionally losing it.

I'm sure some of that take-no-prisoners mentality factored into Microsoft's decision to block former employee, Kai-Fu Lee, from defecting to Google. Microsoft can't allow this sort of thing to become a habit. Especially not now, with Google replacing Microsoft as the company that most inspires fear and fascination in Silicon Valley.

It's hard to overstate the enormity of Microsoft's predicament. Google is the first challenger in memory with the wherewithal to put major hurt on Microsoft. Last week, Google added another $4.1 billion to its coffers with a secondary offering (on top of the $1.67 billion it raised during its IPO). And considering that it accounts for more than half the search market, Google can bankroll experiments with any number of new services.

But when Ballmer looks in the mirror, does he see Eric Schmidt's reflection?

Microsoft employed a similar strategy with great success. Throughout the 1980s and 1990s, the company's Windows and Office businesses were veritable money machines. Microsoft could keep hacking away on other projects until they were ready for prime time because it enjoyed a lucrative operating-system monopoly.

Along the way, there were pretenders to the throne, like Novell and Netscape--and we all know how they ended up. But Google won't depart so quietly into the night. When Ballmer looks in the mirror, he sees Eric Schmidt's reflection. Google has become the living embodiment of the much-ballyhooed concept of software as a service, with the constant flow of new products onto its Web page as beta projects.

What's more, this isn't the old Microsoft that Silicon Valley once dreaded. Behind the company's sweeping reorganization this week is the recognition that the current system is in need of a major lube job. Above all, products must get to market faster.

When I toured the company's labs last year, one Microsoft engineer bemoaned how a pet photo display project wouldn't be implemented until the next major version of Windows was ready. His frustration was compounded by the knowledge that Apple Computer already had a similar offering on the market.

Google's chances also depend on the PC losing its primacy. Oracle's Larry Ellison argued as much when he was out pushing his idea of a network computer. So did Sun Microsystems' Scott McNealy with his mantra that "the network is the computer."

Ellison and McNealy made little headway. But they were just too early. The Internet has scrambled old assumptions by becoming the new platform. How long before everything resides in the "Internet cloud" rather than terrestrial PCs and servers? Maybe not this year or next--but five years hence isn't a stretch.

At the same time, there are now lots of alternative ways to access the Web besides a Windows-based PC. That spells trouble for Microsoft's monopoly franchise, which depends on maintaining the status quo.

Try imagining a future where developers will write to Web platforms without thinking about an individual computer or operating system. That once was Netscape's dream. If this does come to pass, Google could build an ecosystem around itself in much the same way Microsoft did with Windows. If Microsoft's latest moves can't clear out its corporate arteries, the future could be all Google, all the time.

And at that point, you'll really see Ballmer pitch a monkey dance fit.

Biography
Charles Cooper is CNET News.com's executive editor of commentary.

More Perspectives

[tbeckner]

Maybe in a Decade?

Maybe in a decade, but five years is too soon. Personally and professionally, I only use Google as my search engine, otherwise it does not exist in my universe. That doesn't mean Google couldn't become a force, but five years is at least five years too soon. And Microsoft has to stumble more than it already has.

[Peej2K]

Long way to go yet

Google Talk is great, but where are the Linux and Mac OS Clients?
Google Earth is great, but where are the Linux and Mac OS Clients?
Picasa is great, but where are the Linux and Mac OS Clients?
Its fine to say Google could overtake Microsoft, but until they
service the other market sectors, and stop nestling and the
Microsoft teet, then they won't be overtaking anyone.

[Hlafordlaes]

So Who Boots My PC? Or Will Google Boot My Phone?

PCs will still be around for some time, at least for company computing. Forecasters at the bleeding edge seem to ignore the lag time in the real world, which is at least 5 years behind. Heck, there are still people running Win98 and quite happy to do so.

For Google to storm Windows in the short term, it would need to acquire or partner with a Linux implementation... or buy Apple and drive the Intel platform distribution.

Only other poss is a VoIP phone with a large screen for full web page viewing, skipping the major-OS scenario altogether. I fit can connect to my monitor and sit next to my office PC, then the takeover can commence with AJAX-style web apps.

Sure, Google can dominate the PDA and alternate web access formats, but most people still access the web via something with a large screen attached.

[Peej2K]

Google would need an OS

Without a doubt, Google will need an OS if they really want to take
the market Microsoft currently have.

I've said it before, and I'll say it again. Ubuntu should be Google's
target.

You are missing the point

Yes, PC's will be around for a long time. But they are becoming commodities, or perhaps have already reached that point. Making lots of $ on commodities is difficult, unless you are an oil company and oil is at historic high levels.

Microsoft depends on PCs not being commodities; that they are still "cool" and that people will still shell out lots of $ to keep with the "cool" thing.

Also, MS has lost lots of mindshare. Much of what Google does is not yet practical. But it is cool and generates mindshare. There's a feedback around mindshare. The more of it you have, the more you generate, and also the more money you generate.

MS is in serious decline. The signs are all around. *BUT*, being in serious decline does not mean that they are about to collapse -- they can free fall a long way before the decline becomes terminal.

MS may pull out of the decline, and their response to Google may indicate the possibility of success.

Final example, for what its worth. Six years ago, I was heavily invested in MS technologies. Then, I began to find out the extent of the troubles caused by the predatory monopolist. No, not the fact that they made so much money, but the fact that they seriously impaired innovation.

Any serious innovation in the past six years has occurred in the realm of open source, not in the realm of MS.

If MS had instead grappled with open source, by out-innovating it, I would still be in MS-land, along with many other developers.

This is the real point of the article.

Google?

Am I the only one who sees an operating system coming from Google?
Mark

The scary thing...

...is that Mr. Ballmer heads up a corporation with more resources than a lot of countries. Anybody remember Howard Dean?

Google has little to offer profit wise

Think about it. MS supplies the OS, office utilities, servers and database systems for most operations in the country with a few arguments on the details. Google can search better than anyone. It's obvious that MS can make money while Google just looks for stuff. So, your title is bogus.

Are you sure about that?

Intel is the real king behind the servers. The software could be swapped out for Linux or Solaris. But did you know Google is already making boxes for the enterprise? I'm not so sure Microsoft is as safe as you think it is.

http://www.google.com/enterprise/

[seankirk]

Hyperbole As Usual

There seems to be some company or technology that will be the death of Microsoft every year or so. Google sells ads, give me a break. If google were to go away tomorrow ,noboby would miss them or care, can't say the same for Microsoft. Google has to show me more than just search and ads.

[stjones911]

Five years? Probably never

The "Internet cloud" is outside the firewall. Everything that matters will contnue to live inside the firewall. But maybe I'm just not hip; I don't store my stuff on the sidewalk either.

[albrown]

Think out of the box

Good article Charlie.

In reading the posts prior to mine I just couldn't help but think that most people just don't get it. I make no claim that I do completely but I will claim that the signs that things are changing are obvious to the casual observer.

The future operating system (OS) is a Bring Your Own party. Google most likely will never align with any particular OS. It isn?t in their interest. The OS will simply no longer matter.

This is what M$ is more afraid of than anything else that can happen. They will no longer be able to charge us for ?Upgrades? that fix problems that were really bugs, provide insecure products and overcharge us for the privilege of maintaining their monopoly for them. Their ride on the gravy train comes to an end and it will be their turn to shovel coal. They will be required to actually do some of this innovating that they claim instead of just talk about it while using someone else?s ideas.

If the OS doesn't matter then it doesn't matter if you run Apple, Linux, Windows or whatever else comes available.

I work with several of small businesses that can no longer afford to or are no longer willing to continue paying the Microsoft taxes. Microsoft adds no value to their business.

If for a business reason running windows makes business sense (the application/s you must run to do your business only is available for windows) then they will do it but given any other reasonable choice they are choosing not to.

Any business that ignores cost savings that are obvious places itself at a significant disadvantage in not just today's market but any market. Tomorrow?s market will only be more aggressive. The Microsoft bite is getting harder and harder to justify. Small businesses see this and that is one reason that you see so many of them running pirate versions of software, they simply cannot afford to pay and remain profitable. Bigger businesses are seeing this as well and most "smart" large businesses already have Linux running in production on something (usually servers) and are experimenting and evaluating it on desktops.

I have one customer that could dump all of their windows desktops except two for Linux. The two that they kept weren't Windows they were Apple. If I can see this out in the trenches then I have no doubt that there are already alarm bells ringing in Redmond. If you can?t see it in your own companies then you need to get out more.

Google will continue to put other applications online. They will extend their reach to encompass the desktop without worrying about the OS. They will provide a storage space that isn't on the local computer so that you can connect to it (securely) from any connected computer. When you connect you will be able to do access your data, your mail, your calendar, and maybe much more. If you have to use some particular application to do something task specific you may have a special machine but then again your company may very well have decided to make that application accessible as a web service or AJAX application.

As that happens the days of paying a premium for an operating system, any operating system and perhaps even a fully loaded desktop are numbered.

I won't take 10 years and it won't take 5. Parts of it are already in place and we will see more so quickly that it will make the adoption period for the internet seem like it took forever.

[Megustan Salchichas]

wow, let's serve up the hype

Boy, I can only point to one concrete bit of analysis in this story -Microsoft DID have a cash cow in its windows/office products that allowed it to develop new products and enter new markets. But has it dominated these new markets? NO. Microsoft STILL gets most of its revenue from Windows/Office. If Google followed the same path, 10 years from now it would STILL get most of its revenue from advertising. Sure it might be the portal of choice, and even serve as the repository for files in the internet 'cloud' but can I see it developing a better spreadsheet than Excel and serving it up over the web -you can bet your * that MS will never let it come to that. This is like saying the water company will overtake the electricity company and we'll all be running our hairdryers on water pressure. Does CNET do any sort of REAL analysis or is this site supposed to be just for opinion? Because in that case, I can speculate just as well as this guy.

[bodacious99]

Content-free critique

umm, no. i think the column quite adequately points up the issues that are at the forefront. if you -- and is that handle really legit? -- think otherwise, fine. but supply at least some semblance of a rebuttal analysis. all i see are empty musings.

Google's Revenue Model?

Google's revenue model is focused on advertising - I bet the free apps (which are mostly in beta stage) would lose users once they start charging for them. A lot of talk on Microsoft's demise focused on what individuals would do with their apps etc but corporate CIOs bet their lives on products from Microsoft, IBM and Oracle - so that's not going to change for a while as long as most of the CIOs are into risk management.

[R. U. Sirius]

Ever hear of a little site called Salesforce.com?

Corporate CIO's don't seem to have a problem with that virtual model.

More ranting......

Many good points were made about the future of the PC market. The ideal goal for small business and large corporations alike.

However, I have 2 things i would like to say. First can we please stop the age old "uuber nerd" talk on how "Evil" microsoft is. Take a second and look at how the "monopoly" of one good OS has allowed all other areas of the computer industry to develop because they dont have to deal with multiple OS issues.

Secondly, you are leaving out many aspects of the computer industry that needs this "single OS monopoly" in order to thrive. These aspects are also going to be what help preserve this monopoly. First, the Gaming industry. A 40 billion dollar a year (and growing) industry that is driven by people who dont care or want the complication of trying to decide a different OS. Secondly, these large corporations "experimenting" with trying to go to Linux, Unix or any other "free" alternative are all realizing that only about 10% of the software they need to run their company runs on these OS's. So the "experiments" die very quickly.

Linxu, Unix, Soliris will always have a place in the server market. But until they can meet the demands of the gaming indusry and profesional industry they will never expand beyond that. Which means your "Evil nemisis" microsoft will continue to maintain thier "Monopoly".

[cyber_rigger]

Anti-Virus industry

"one good OS has allowed all other areas of the computer industry to develop"


OK, Microsoft has allowed the creation of the anti-virus industry, Norton, Mcafee, etc.

Good Theory butt...

Java requires an OS. The Java Virtual machine that everything runs through is only an interpreter. It takes everything at runtime and translates it to machine code. So, java is not the solution your looking for. Your looking for an OS that doesnt quite exist.

Although it would be nice to change your speed constraints from the hardware under your desk, to the connection speed you have to your "server". Although, I have some question on how this would work in the world of the game market. What would then determine the quality of display? Would you have to put "some" display processing on your "thin client"? If that was the case, how is that really better from where we are now?

I think this model has far to many questions to be implemented anytime soon.

This is supposed to be a replay to Earl Bensar 's Why? Post

Didnt realize I clicked on reply to story instead of reply to comment.

Google's strategy

Very few commenters seem to be able to look out of the box during discussions. If you follow the news about google's activities on CNET, you will see how things add up. History repeats itself, they say, and here'show
1> Microsft is floundering today just like IBM was in the 1980's PC market
2> Google seems to be coming up with all the path breaking ideas just like MS did (basically MS fulfilled the need for cheap personal OSes).

Now here is how google is going to break the stranglehold of MS. Google is buying up a lot of dark fiber across the US. Speculations are on as to whether this will be used for transferring data across it's giant data banks. None of that actually. Google has to remove it's users from dependency of Windows OS in order for people to use more stuff on the web. So here is the formula:
1> Create a custom version of Linux, lets call it, gOS, so that lay man users can use it to check email, surf the web, include some office s/ware, a generic media player etc. This sums up about 90% of the features required by the typical OS user. This would be very similar to the Linspire model of selling. So you would have Google selling prepackaged super cheap machines in the range of 200-300 $ from walmart.
2> Next give very cheap DSL/broadband/wireless access to users. The way i see it, DSL and cable companies are simply ripping off users charging exorbitant costs. Say google charges a 'reasonable' $15 to $20 a month for internet access (this where their dark fiber comes into play). Imagine all your traffic exposed to google so they can better target users with ads. So the catch may be something like gmail, where you get great service as long as you are willing to watch a few rich media ads.
3> This will finally pave way to remove MS windows as a necessary component. The basic features required by a lay user like browser, office , email and media are pretty much commodity items available in all OSes. Windows monopoly exists simply because they are not packaged together as well on other OSes like linux, and also because of inertia.
4> Google will eat up market share by targeting buyers of new computers mainly. These will people who are starting off on computers and do not need to carry legacy data or s/ware. If priced in the $200-$300 range this will empower a lot of the poorer people who are still not able to afford computers and the internet connections costs.

So the good news is (for those of us who hate MS !) that MS will sink/fade in a decade. The bad news is that Google will be the new Microsoft (read monopoly), may be in 20 years from now.

Adieu

Forget Googe; just one of a hundred threats

List of the biggest threats, by order of serverity:

1. Supercomputers change the paridigm of computing.
2. The communists of 'open source' capture the pocketbook of government organizations.
3. The Networked Operating System gets a foothold.
4. Portable computing sans Microsoft.
5. Artificial Intelligence 'interfaces' start to replace mouse and keyboard.
6. The 'golddiggers' continue to confuse Microsoft's staffing choices.
7. Microsoft's native aggresivity gets it into big trouble with the U.S. Government.
8. Bill Gates stays in retirement. The George Lucas of software must lead, not give advice.
9. Microsoft continues to ignore the Bay area's ascendency in Computing.
10. Listening to insiders. Egad, Microsoft has acquired the most aggressive stupid people in history.

[Mendz]

Microsoft vs. Google?

Actually, it's MSN vs. Google.

Microsoft is still primarily a platform company. Most of the efforts of Microsoft on Windows, server products and developer tools are targetted towards enabling both OS and web service-oriented projects.

The web as a platform still needs the OS infrastructure-wise. In reality, the software frameworks and the foundations built on the OS will define the development of the web as a platform for web-based services and applications.

These new Microsoft technologies can be used by MSN. Google's ahead with their own set of technologies, yes. That's a big plus. Sometimes the first to market has its merits. However, Microsoft's re-org shows that MSN can be prepared to compete...

[polax81]

Survival of the fittest

It is all a question of adaptation.

Remember how Microsoft re-engineered its entire effort around the Internet smoothly and transitioned to a Web-driven company. The problems facing the company are still the same.

The sooner it adapts to the changes, identifies the cause of problems within and takes corrective action - the sooner it will bounce back.

Take a Look at EPIC

You'll see a thought-provoking Flash video about Google's impact at http://www.albinoblacksheep.com/flash/epic . It was originally produced for showing to a group of media managers. Cool piece.

Remember Borland...

How tables get turned... remember how active Microsoft was in recruiting people from Borland in the days when Borland was a serious contender? so much so that Borland had to get the lawyers on to Microsoft to stop.

[t8]

Buy this software in a box

That is the MS Mantra. They are so 90s.
Google is the digital music of services and MS are the awkward old style CD music of computer sevices.

They are a slow bloated giant selling bloatware, the new IBM. Ballmer even looks like his company.

[geo11101]

Eric Schmidt is the biggest Mafia puppet in the US. He is bad news for apple users. http://endmafia.com