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Thursday, December 16, 2004a very detailed article about the future of google and the emerging google vs microsoft war. In PartI , published recently, we assessed the current state of maturity of google and where the threats could come from. In this part, we shall expand on those ideas and discuss mitigation options for google. Excerpts(with edits and my views added):
In all of Microsoft’s successful battles, it has used the same strategies. It undercuts its competitors in pricing, unifies previously separate markets, provides open but proprietary APIs, and bundles new functions into platforms it already dominates. Once it has acquired control over an industry standard, it invades neighboring markets.In contrast, the losers in these contests have usually made one or more common mistakes. They fail to deliver architectures that cover the entire market, to provide products that work on multiple platforms from multiple companies, to release well-engineered products, or to create barriers against cloning. For example, IBM failed to retain proprietary control over its PC architecture and then, in belatedly attempting to recover it, fatally broke with established industry standards. Apple and Sun restricted their operating systems to their own hardware, alienating other hardware vendors. Netscape declined to create proprietary APIs because it thought Microsoft would never catch up. Google—and Yahoo—would do well to take note.
What will Microsoft do? Publicly, it doesn’t care about building a broad search architecture reaching across many platforms. “There will be a lot of innovation and competition around search by a broad number of vendors, but it is wishful thinking to believe it is a platform tidal wave like the initial emergence of the browser and the Web,” says Charles Fitzgerald, Microsoft’s general manager of platform strategy. And indeed, Microsoft has begun innocently enough: a decent though unspectacular search site, some software, no bundling—nothing, you know, violent. But the company will provide APIs to its Web search engine, and its long-term strategy could be brutal. If it acts logically, it will bundle better search facilities into Internet Explorer and Office; it will build advanced indexing and searching tools into both its PC and server operating systems; and it will alter its own products to make searches of many kinds more fruitful. Search tools could tailor results to a user’s interests, based upon data collected by the operating system. Microsoft could even deliberately cause failures in Google’s products—for example, altering its file formats so that Google’s crawlers could not properly index Word or Excel files. Microsoft has been accused of such conduct repeatedly in the past, notably in its battles against the DR-DOS operating system (an attempted clone of MS-DOS) and Lotus spreadsheet software.
If it acts logically, Microsoft would also perform a “cashectomy” on Google—just as it did in the browser wars when it gave away Internet Explorer. Even with nearly $2 billion in cash, Google is vulnerable to this tactic. For instance, Microsoft could offer free wholesale access to its search engine. Then it could attack Google’s advertising networks by offering free or subsidized advertising placement. These businesses are based primarily upon agreements with third-party websites, most of which have no long-term allegiance to Google. (Google’s forthcoming advertising APIs could, however, change this.) Finally, Microsoft will try to play competitors off against each other, as is its custom. Microsoft thrives when its opponents are fragmented and possess no alternative common standard.
So what should Google do? Given Microsoft’s ferocity in the past, panic might be a productive first step. Google should understand that it faces an architecture war and act accordingly. Its most urgent task must be to turn its website into a major platform, as some other firms have already done. Amazon, as we have noted, does not merely operate a retail website. It has developed proprietary but open APIs that have made it the capital of an electronic economy . Other merchants set up stores under the Amazon umbrella, and other websites can offer direct links to Amazon’s product pages. Recently, Amazon has gone even further, creating ways for consumers to search and find products without visiting Amazon at all.
- Thus, Google should first create APIs for Web search services and make sure they become the industry standard. It should do everything it can to achieve that end—including, if necessary, merging with Yahoo.
- Second, it should spread those standards and APIs, through some combination of technology licensing, alliances, and software products, over all of the major server software platforms, in order to cover the dark Web and the enterprise market.
- Third, Google should develop services, software, and standards for search functions on platforms that Microsoft does not control, such as the new consumer devices.
- Fourth, it must use PC software like Google Desktop to its advantage: the program should be a beachhead on the desktop, integrated with Google’s broader architecture, APIs, and services. And finally, Google shouldn’t compete with Microsoft in browsers, except for developing toolbars based upon public APIs. Remember Netscape.
Whether Google or Microsoft wins, the implications of a single firm’s controlling an enormous, unified search industry are troubling. First, this firm would have access to an unparalleled quantity of personal information, which could represent a major erosion of privacy. Already, one can learn a surprising amount about people simply by “googling” them. A decade from now, search providers and users (not to mention those armed with subpoenas) will be able to gather far more personal information than even financial institutions and intelligence agencies can collect today. Second, the emergence of a dominant firm in the search market would aggravate the ongoing concentration of media ownership in a global oligopoly of firms such as Time Warner, Bertelsmann, and Rupert Murdoch’s News Corporation. If the firm dominating the search industry turned out to be Microsoft, the implications might be more disturbing still. The company that supplies a substantial fraction of the world’s software would then become the same company that sorts and filters most of the world’s news and information, including the news about software, antitrust policy, and intellectual property. Moreover, Microsoft could reach a stage at which its grip on the market remains strong, but its productivity falls prey to complacency and internal politics. Dominant firms sometimes do more damage through incompetence than through predation.
Indeed, as so many have noted, much of Microsoft’s software is just plain bad. In contrast, Google’s work is often beautiful. One of the best reasons to hope that Google survives is simply that quality improves more reliably when markets are competitive. If Google dominated the search industry, Microsoft would still be a disciplining presence; whereas if Microsoft dominated everything, there would be fewer checks upon its mediocrity An excellent article - Must read for all IT consultants and those related to IT in some manner. |
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