From the project
Google vs Microsoft: what's in a name?
Microsoft is a trainwreck. I used to abhor the desktop monpolist as an evil threat to standards-based open source innovation. But in the last decade they've been screwing up so badly I almost feel sorry for them. As much as you can feel sorry for a massive corporation that is.
One thing that puzzles me in particular is how Microsoft fails to grasp that their efforts to compete with Google in the search space are a pointless waste of countless billions and a lethal distraction that has allowed Apple to wipe the floor with them in the post-PC era.
Why? Because you can copy technology, but you can't copy a brand, and the brand dramatically skews how people evaluate the quality of your search results. Just like Coca Cola, Google tastes better when you know it's Google. It doesn't really matter if you can crack the secret recipe or not.
For technology oriented people like me, I admit it was a bit hard to wrap my head around this notion. That, yes, a big and maybe the most important part of Google's massive valuation has nothing to do with the impressive technology working behind the scenes, but something as ephemeral as branding and good will. It's true though. The Google brand, a distributed asset that manifests itself as patterns of neural associations in the minds of billions of Google users is nearly priceless because it makes Google nearly impossible to compete with (in the search space) regardless of how many billions a competitor like Microsoft pours into competing at the technology level.
Google's brand is based on the perception that Google is one of the good guys. Do no evil and all that. The clean default search page (e.g., compared with the portal pages of yore). Unobtrusive text ads (e.g., compared with flashing banner ads). Those playful festive doodles.
Most users perceive Google as a friendly, trusted benefactor working to promote them, not itself. Many users (read - my Mom) don't even understand how Google makes money, but all of them enjoy the free service it provides them - the gateway to almost infinite supply of information for free every day.
Google, by enriching its users "selflessly" has courted the love and trust of billions and turned them into its most powerful allies against would-be competitors.
Compare that with Microsoft, a company that up until recently was widely perceived as a ruthless abusive bully willing to screw over just about anybody (its paying customers included) if it served their interests.
Google users reaffirm their choice to use Google every day. The monopoly's network effects basically forces them to pay through the nose for an operating system despite the existence of technically superior, free open source alternatives.
With that kind of baggage it's very unlikely that Microsoft will ever be able to compete with Google on a level playing field in the search space. It kind of makes me wonder why they even bother to try.
Comments (5)
Thanks for sharing Tim
Reply 1The scorpian & the frog...it's in their nature
Reply 2For those that don't know the fable...http://en.wikipedia.org/wiki/The_Scorpion_and_the_Frog. That's large multi-nationals :-)
If you wonder about why Microsoft continues to go after search, Microsoft has NEVER led in any market it leads in today...networks (they killed Netware), Office (they killed Lotus Notes), PC Operating Systems (they killed IBM). There is no reason to believe they can't clean up in search...even if they get to number two after Google they'll still make a killing. And since Microsoft succeeds on acquisitions...they just need to spend their way to that position.
If you think they are alone in tilting at windmills...think of the money Lotus, IBM, and others pumped into MS-Office killer "wanna-be"s.
The only error I have ever seen in Microsoft's past was their lack of monetisation of their loan to Microsoft in 1997 when they put Apple on life support. But then who could have predicted the meteoric rise of Apple...a proprietary software company...who is also looking to eat at the advertising buffet.
If interested take a look at their respective revenue splits.
You're probably right...
Reply 3I recall years ago when I first started using the internet Alta Vista was the search engine of choice... I don't even recall hearing of Google until early 2000s. And Microsoft was pretty cool in the late 90s. Windows was pretty ground breaking a that time (or at least it seemed so to me... At the end of the day, the fact that MS still survive and remain (at least somewhat) relevant is definitely a testament to them.
Google are certainly in the box seat to continue on as the 'winning' company. And unless something radical changes I think that MS will continue it's slide into oblivion... Who will be the 'big' company of the 2020s I guess we'll have to wait and see how the chips fall! :)
I couldn't have said it better myself :-)
Reply 4Nice elaboration Joey. All true. I was just too lazy to fill in the details...a little exercise for the readers :-)
I remember in the 90s working at Nortel/BNR when the key-systems division decided to move from its in-house real-time O/S (QNX) to either OS/2, Unix or NT (needed more diverse driver support). Unix was just too unwieldy, NT at that time was too new and not reliable enough so we went with OS/2. Great O/S at the time. Small, fast, robust and lots of driver support (lots of banks were using it). The problem was IBM were spending all their money trying to make OS/2 into a desktop O/S to surplant Microsoft. OS/2 as a server was the lower priority investment. Additionally IBM as a service company was selling NT. We couldn't get a straight answer out of IBM. The OS/2 guys said all was good but the service guys were saying that IBM was moving to NT! So, once NT was robust enough...we moved to NT. We would have stayed with OS/2...imagine how great it would have been if IBM had invested the "desktop" money into OS/2 as "the" server. They would have kicked NT's ass...but IBM was so large they were in competition with themselves...seriously confusing for the customers!
That's where Microsoft's strength has always been. They decide to be in a business and then keep plugging away until they succeed usually through acquistions.
History has shown that monopolistic players lose their monopoly because they feel they are the best and don't have the humility to admit that their solution leadership is transient. With short-term compensation models they just aren't paid to think long term. Yahoo could have bought Google for $1m but passed. Then at $3B...they passed again! Why...because they already had a search engine and were #1 in search. They couldn't see that Google was a better mousetrap. AT&T was offered the Internet to run and they turned it down ( http://psleaders.com/publicsafetyleadership/cognitive-bias-att-owned-internet/ )...the list is endless.
Only time will tell where these companies will all end up. Microsoft, Apple and Google have been powerhouses through their strong leadership (benign dictatorships!) with no committee decisions to mess them up (Apple almost went broke after they got rid of Jobs). But Jobs is gone, Gates is semi-retired...Page/Brin team still going strong though. Bodes well for Google I would expect :-)
Interesting tangential note about Yahoo...one of their most noteable successes over the past 5 years was not innovation but just plain old business horse sense on the part of Jerry Yang...a $1B investment in Alibaba now worth $40B to the company...which Yahoo is spinning out leaving behind a pretty anemic company we'll call YaWho...remember when Yahoo was #1...another one bites the dust :-)
The destiny of the monopolists...
Reply 5Hi eric...I agree with your observation that Yahoo is going down the road to oblivion. My point is that this has been the destiny of most companies that were once #1. You seem to be under the misapprehension that I was a proponent of the Yahoo Alibaba acquisition. I was simply commenting on the fact that a company that used to be #1 in search can only seem to make money anymore through lucky business acquisitions...and even that acquisition was made by the ex-ceo and founder Jerry Yang. Large companies homogenise what makes them great. Add short-term bonuses into the equation and it takes less than a decade to kill a market leader from the inside out.
Just an observation :-)
Your perspective fills in a few gaps for me. Also I followed your links and had a read, which bought up a few things...
Firstly I was completely unaware of Microsoft's "lifeline" to Apple. They would have certainly ben much better off to monitise that better... But I guess that's easy to suggest in retrospect.
On the revenue split article someone suggested that if Microsoft wanted to disrupt Google then they could play Google's game but from the other side. Google has sought to disrupt Microsoft by essentially saying that the OS should be free and/or is irrelevant (Android and ChomeOS). They have also essentially said that software should be more-or-less free for consumers (e.g. Google Apps). These are MS's big breadwinners. Google's big breadwinner is advertising.
So what if MS started 'giving away' ads on Bing? It might be tricky to scale (If they weren't careful they'd end up with nothing but ads and no customers) but I think that it's still an interesting thought...