Google's search business to be bigger than Windows
alleyinsider.comJust because something is bigger than Windows doesn't mean MS should compete. The automotive industry is probably bigger than Windows. Maybe they should start making cars?
The difference is that the automative industry won't undermine Microsofts businessmodel , but Google might.
If they look a few years down the line they should definitely compete against Google.
That too seems to be mere speculation with no evidence or even sound reasoning supporting it. Nobody has yet presented a compelling picture of how search will stop MS from selling copies of Windows. It's no more accurate to say Google could compete in the OS space than it is to say MS could in search.
And don't even get me started on Office.
I think the reasoning is pretty sound.
Microsoft know that in the long term the role of the operating system might dwindle since a lot of the stuff people do is moving onto the web. Salesforce, zoho and google apps are examples of this. This is extremely threatening to them since their main competitive adantage lies in their desktop dominance. So they obviously want to dominate whatever they think might be the next big thing, and one of these happens to be search. And the 500 pound gorilla in that market happens to be Google. And the fact that Google is also trying their hand at an online suite that might replace offfice one day makes them an even bigger threat.
Note that I'm not saying that the desktop is obsolete, or that the one that controls search controls the world. I'm merely saying that Microsoft is looking at current trends which point towards a lot of data and functionality moving to the web, and are hedging their bets accordingly. As they should.
I agree. Especially about Office. I can't believe Alley Insider called GoogleDocs a direct competitor to Office. I see how Google Docs competes with Microsoft for the market of people that prefer to make spreadsheets and documents with 90's era tools, but for users who care about their work Office is much more powerful. The only cool thing about Google Docs is that it allows you to easily share lousy documents and spreadsheets with your friends.
There is a book you might find illuminating: http://www.amazon.com/Innovators-Dilemma-Revolutionary-Busin... also, the essay "worse is better".
I understand your point, but I think it is much easier for Microsoft to add better online collaboration to Office than for Google to add the extremely robust and powerful features of Excel to GoogleDocs. I think there is a market for GoogleDocs, but I don't think it's going to cut into Office's $$. GoogleDocs doesn't offer anything that Office '98 did besides online collaboration. I don't think many people would give up the office suite for GD, and as I said before--Microsoft has the hard part done--online collab is a lot easier.
okay, the main point in what you are saying is true.
if a company is working in a market that is reaching maturity or decline, it should look for a new market where it can invest its effort
but the trick is simple, MS have certain competencies (skills) the new market must be a market where its competencies would be relevant ... the even trickier part is, the relevence must not be so obvious, the product can be completly different, but the needed skills could be same
for example, Dell is good at complex assemblies, so maybe dell, can start assembling cars, instead of PCs, because a car can be customized in ways comparable to a PC
of course this is just an example, but you get the idea
If Microsoft made cars...
1. For no reason whatsoever your car would crash twice a day.
2. Every time they repainted the lines on the road you would have to buy a new car.
... http://www.netscrap.com/netscrap_detail.cfm?scrap_id=689
Google's search business might be bigger than Windows, but let's not forget that the way we access the internet could change as well. A new protocol for accessing/finding information (no webservers anymore) could put google out of business and they would have to start at 0 as others would also.
How is search a natural monopoly? Switching search engines is much easier than switching operating systems. I do it all the time. In fact, every day I type queries into many search boxes besides Google's.
is it google's search business that's bigger, or the ad portion?
just how is bigger really defined?
the search business per se, doesn't really generate revenue in the same category as the ad portion.
if we're really talking about the revenue from the ad portion, then you need to consider what might throw a wrench in the advertising model being run by google. i can easily imagine a few that could have serious implications of the cash cow that's the google ad engine..
so just what is meant by "being bigger than microsoft"???
peace
Microsoft doesn't want to make the same mistake IBM did.
IBM enjoyed 70% market share in the enterprise for 30 years. They thought it would last forever. Until the PC came along. But they didn't take it seriously and look what happened.
Microsoft knows as well as anyone that the days of thick clients and proprietary software are numbered. So they'll milk that cow as long as they can.
No one knows for sure what's going to happen, but with thick pipes, thin clients, open source software, and the upheaval of the "enterprise", I'd be planting new seeds, too.
IBM is a sleeper company, which is what microsoft is becoming, which is where the majority of the wealth in this nation is at. I have read the old articles from the 80's and 90's that said that Microsoft would supplant IBM. It is now 2008, and Microsoft generates about US$12B a quarter where IBM is doing right around US$24B a quarter. In other words we are still waiting. IBM made a decision to GIVE microsoft a market. The decision was all the more easy as Mrs. Gates, mom to Bill, was EDIT:(a high level executive at IBM) - on the same boards as the CEO and other board members of IBM - at the time.
My point in all this is that companies, the large ones, the ones that write the US$250M per annum IT checks, buy what IBM tells them to buy. IBM told them to buy Microsoft for a while, because writing that software themselves was a pain. Now IBM will look around for a cloud vendor to be their go to guy for cloud deployments. It is too early to say what this relationship will look like, but it is a certainty that whoever gets the IBM guys out pushing them, will be the enterprise monopoly in the future.
This is a SLIGHT oversimplification of the enterprise purchasing process for large organizations, but it gets at the fundamentals. And in any case, the negation is likely and sufficient to cause GOOG and MSFT trouble. That is, if IBM says NOT to buy Google or Microsoft cloud services, then they are non starters.
If you want to bet on a company that will ride the next enterprise upgrade wave, put your money on IBM. This is the only constant in the global enterprise IT market.
It is way to difficult to figure out whether Google can come up with a product that any large enterprise would want to use. That is, can they really innovate? I think open minded analysts agree that the jury is still out on that one. Equally vexing is the question of whether Microsoft can get their heads out of their butts long enough to create a product that conforms to the next computing paradigm? The only certainty is that whatever happens IBM will be supporting it, and THAT is where the money is. All US$100B a year worth!
And that is only likely to grow!
Mary Maxwell Gates was never an IBM employee. She was on United Way's executive committee at the same time as then IBM CEO John Akers. Their casual conversation led to IBM's introduction to Microsoft.
IBM never meant to give anything to anyone. They were as ruthless then as Microsoft is now. IBM, along with most of the rest of the enterprise world, never imagined the microcomputer as anything but a toy. They didn't even enter the market until 6 years after Apple.
In 1980, IBM was a hardware company. Today they are a service company. The makeovers in between were not painless and were not by choice. Just for not taking the PC seriously.
In 1980, you were as likely to find a job in a Fortune 500 company as anywhere else. Not anymore. New jobs are being created at a much faster rate by smaller, more nimble companies. After all, economies of scale don't mean as much in service economies. These smaller companies don't have the same decision making matrix as the enterprises and will use SaaS. Look at Salesforce.com.
Good point on Mary Gates, though my material point was that only Bill Gates was going to get the contract. Any one else would have faced significant challenges. Also, given the fact that Bill was in his early twenties at the time, I suspect, and I think you do too, that those conversations were anything but casual.
Additionally, IBM has been a services company for over a hundred years. With the greatest service rendered at the Nuremberg trials in my opinion. Hardware has been a way for them to sell services for quite some time. That said, a review of their historical financials, will bear out the fact that they have made far more money on service and support than hardware. That is true if you zoom in per year as well by the way. The computer industry emerged around the 1950s, and IBM was the guy selling the most of them, it's true. But, take a look into their training, service and support contracts if you want to see some serious revenue growth charts.
As to your last point, it is the same point made by Microsoft fanboys in the 80s. It is, in a way, the original 'long tail' argument. It has merit, in that companies that can monopolize the long tail, as Microsoft has done, will make a lot of money. But the fact remains that even with its 'long tail' monopolization, Microsoft still generates less revenue than IBM. FAR less. Why? Because the smaller companies are not willing to pay as much as larger organizations. Which is why they choose Microsoft, it is cheaper, and it is good enough.
Now your assertion is that they will choose Google in the future, because it will be cheaper still, and good enough.
Consider, however, what happens as these customers get more and more frugal. Suppose everyone on the long tail thinks that your product should not cost as much as Microsoft's. Or let's suppose that they believe that everything you get over the internet should be ... say ... free. The amount of money that the monopolizer can generate goes down. But IBM's service and support contracts stay the same price for the big guys! That's the beauty of being IBM. You always win in the end.