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 Post subject: IT News: Tech titans battle on Internet, desktop
PostPosted: Sun Oct 09, 2005 7:00 pm 
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For years, Microsoft has been able to use its money and size to muscle aside its competitors.

Now it’s facing a competitor it can’t push around so easily – Google.

The popular search engine is mounting what may be the most serious challenge yet to Microsoft’s desktop dominance.

While most everyone agrees the battle is shaping up to be epic, the front lines aren’t clear yet. Microsoft traditionally makes desktop software. Google is known for its search engine. But both sides are quickly encroaching on each other’s turf.

Jordan Rohan, an analyst for RBC Capital Markets, said Google has larger ambitions than most people realize. And those ambitions will put it squarely in Microsoft’s path.

“Google has pulled off the greatest obfuscation in the history of Silicon Valley: Everyone thinks they’re a one-trick pony,” he said, referring to the firm’s search engine roots. “They’re going after Microsoft in a big way.”

The two firms are converging on the Internet and on the desktop. Microsoft, which has made most of its money by selling software, is increasingly embracing the Internet by creating its own search engine and online advertising service. As such, it will be competing with Google for people’s attention as well as corporate ad dollars.

Google, which makes its money from Internet advertising, is rolling out new products at a furious pace, many of which would traditionally be viewed as software. Basically, Google aspires to offer many of the same capabilities Microsoft does, except it wants to deliver the software over the Internet rather than sell it on a disk. In many ways, the competition boils down to the old way of selling software and the new way of selling, or more accurately, “distributing,” software. Microsoft sells shrink-wrapped boxes of software. Google delivers it to you over the Internet.

It’s expected to be a classic business brawl that includes personal animosity, evidenced by Microsoft CEO Steve Ballmer’s promise to “bury” Google after the Mountain View firm seduced away one of the Redmond, Wash., firm’s top technologists, according to court documents.

Google’s accelerating growth and widening ambitions were recently in the Bay Area spotlight. First, the firm inked a surprising deal with the NASA Ames Research Center, in which Google will build an enormous corporate campus next to the former military base at Moffett Field. The agreement should help the firm accommodate its hyper-growth while collaboration with the space agency on far-reaching research should help Google take on its nemesis to the north. That was followed by a proposal in which Google offered to blanket the city of San Francisco with free wireless Internet access, called Wi-Fi. San Francisco is reviewing the offer along with more than a dozen others.

What Microsoft is up against is nothing less than a supercomputer, according to Stephen Arnold, author of the new book, “The Google Legacy: How Google’s Internet Search is Transforming Application Software.” He believes that Google, which was founded by former Stanford students Larry Page and Sergey Brin, has up to 170,000 servers to help return results for user queries in a fraction of a second.

The partnership with NASA will give Google access to even more supercomputing expertise from rocket scientists.

Google has used its computer network to introduce a succession of new products this year, including instant messaging, Internet telephone calling, blog search, maps and a video download service. Arnold, a technology consultant, believes that much more is possible.

Google’s ambition, he said, is to have its supercomputer take over an array of jobs now performed on desktops. All users have to do is plug into Google over the Internet to take advantage. The idea, called network computing, isn’t new. At its essence, it dates back to the earliest mainframe computers. More recently, efforts to bring back network computing by companies such as Oracle and Sun Microsystems, have failed to catch fire.

If Google’s strategy succeeds, it will transform how computing is done, Arnold said. Microsoft could be left scrambling because fewer people would need to buy its software.

“I don’t think Microsoft has figured out how to replace the desktop business,” Arnold said.

This year, Google has introduced some software hybrids that mix data from the desktop and the Web, including a search engine that scans computer hard drives. A product called Google Sidebar, a small panel that appears on desktop screens, offers quick access to news, photographs and a scratch pad for making notes.

Arnold argues that Google could ultimately introduce its own, free, Internet version of Microsoft’s Office, used by millions for word processing, among other things. Computer security software could also be on the horizon, he said.

Such products aren’t far-fetched, according to Arnold, who points to other features that he said lay the groundwork.

Google quietly introduced security software for wireless Internet users recently that could be made to work with other kinds of connections, Arnold said. Code that allows users to write on Google’s e-mail offering, G-mail, could be reused for a program similar to Word, he added.

As a policy, Google doesn’t discuss future products.

That Microsoft, along with its founder, Bill Gates, may have finally met its match is a frequent topic of technology executives. Rightfully so or not, Microsoft has carried the stigma of being technology’s “evil empire” for nearly two decades. Google, with its exuberant “Don’t do Evil” corporate motto, is being held up by many as a white knight.

The smart money realizes neither stereotype is true. But many take pleasure in the possibility that Microsoft – a company at the top of the U.S. corporate food chain – is on the defensive.

“For most people, it’s interesting to see Microsoft have a rival,” said Jim Voelker, chief executive of InfoSpace, a Seattle company that licenses an array of online directories, entertainment and search to other companies.

Microsoft shouldn’t be placed in a casket just yet. With $37.8 billion in cash and nearly 14 times Google’s 4,200 employees, it’s still the most powerful technology company.

And, as usual, Microsoft is fighting back against its latest challenger with two fists.

Last month, Microsoft started rolling out a rival to Google’s lucrative search engine advertising business. Executives are also banking on an internal reorganization for help. In an effort to become more nimble, the company recently said that it would streamline its business from seven divisions to three.

Analysts widely believed the move was in response to Google, which is known for pivoting like a startup, identifying hot, new market opportunities, and getting products to market quickly. In contrast, Microsoft is considered a lumbering Goliath that can take years to put out new versions of its products.

Adam Sohn, a Microsoft spokesman, responded to his company’s skeptics by underscoring that it has a huge base of users. He emphasized Google’s inexperience in building online communities and the possibility that it could lose its focus on search.

“The more interesting question is whether Google can compete with MSN (Microsoft’s Web portal) and other industry leaders in communications and information services other than search,” Sohn said.

Irrelevancy for Microsoft is a long way off, if it ever happens at all, analysts said. Microsoft has a stranglehold on the desktop software market, helped by deals that ensure its Windows is bundled with new computers.

Tensions at Microsoft

Microsoft, if court documents can be believed, is especially sensitive to Google’s poaching of Microsoft employees, the subject of a lawsuit currently being litigated by the two companies.

Microsoft’s Ballmer erupted into a tirade after being told by an employee that he was resigning to join Google, according to a sworn declaration. Ballmer, who was said to throw a chair during the exchange, then vowed to “bury” Google’s chief executive, Eric Schmidt.

“I have done it before, and I will do it again,” he said, according to the declaration, referring to Microsoft’s success in surpassing Novell and Sun Microsystems, two of Schmidt’s former employers.

Ballmer called the account a gross exaggeration.

Microsoft executives acknowledge failing to recognize the importance of search early on. Only this year did the company release its own engine instead of using a partner’s.

So far, the new engine has failed to catch on. Microsoft’s share of the U.S. search market has dropped to 15.5 percent in July, down half a percent from January, just before the new engine’s launch, according to comScore Networks, a consumer behavior consulting business.

Google’s market share, in contrast, has edged up over the same period by nearly 1.5 percent to 36.5 percent.

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PostPosted: Thu Oct 13, 2005 9:13 pm 
This is going to be an interesting fight between Microsoft and Google.


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