Why Microsoft Fears Google Sort of Revealed
July 7, 2008
My trusty news reader delivered this knowledge dumpling to me on July 5, 2008. I scanned it between pitches at the Louisville Bats baseball game. Like most commercial business writing, the essay is good, well-reasoned, and shaped to put major events into an understandable context. You can read “Why Microsoft Will Win Yahoo” here. by David Kirkpatrick, senior editor of Fortune, writing on CNN.com. This business essay has an A at Wharton written all over it: primary research in the form of quotes from a personal discussion with Microsoft’s Steve Ballmer, humor in the form of a left-handed description of Google as owner of the “world’s most powerful and profitable marketplace” with Google technology described as not “the best”, and an analysis pegged to Microsoft’s need to get its transmission in gear in terms of online advertising.
With Mr. Kirkpatrick, I agree on most points, but one passage nibbled at me during the thrill-lacking Louisville Bats’s game:
Google (GOOG, Fortune 500) drives Microsoft crazy for two fundamental reasons. One, Google has developed the fastest-growing new pool of profit in technology with its ad-supported search business. And secondly, it has taken the mantle of “greatest and most powerful tech company” away from Microsoft, with all the associated benefits that go along with that, most notably a very high stock-market valuation.
Here’s why.
Recall that Google is a decade old. It is no start up, but some journalists fall for the crazy college guys charade with astounding consistency.
Today, the company is without a doubt the leader in search. With some inspired me-too borrowing, Google jumped into online advertising and now, after facing minimal competition is these areas controls somewhere between 65 percent and 75 percent of the market for search in North America and Europe. Russia is lagging because of Yandex.
And Google’s search and ad platform was accidentally discovered by Google as able to support a range of applications, services, and functions. Some of these are definitely not-searchy. For about nine years, Google’s engineers have built more than 80 services, created a Google Search Appliance, moved into mapping, probed online database technology, and offered products and services to the education market, commercial enterprises, and government agencies. The telecommunications industry discovered how annoying Google could be with its New Age approach to mobile communications. The video industry is relying on Viacom to put Google in a straight jacket. All told, Google is exploring six or seven industry sectors with products and services. Some of these are only variations of search technology; other thrusts such as online payments just run on the Google super computer.
Microsoft is now trying to “close the gap”, “catch up”, or more colloquially “kill Google” by taking these actions:
- Creating Live.com, expanding cloud or network solutions, and making Google a focal point much as Inquisition worker bees focused on folks who did not follow the desired line of thought
- Announcing investments in data centers and research labs. Both of these initiatives look quite a bit like Google’s approach to data centers and research labs, but Google got its ideas from AltaVista.com engineers and Bell Labs. The problem is that it takes time to get data centers up and running, particularly when you are using systems that require name brand hardware and technical baby sitting.
- Buying search technology.
The leader in collecting search technology is Yahoo. So, Microsoft will buy that company and get licenses and technicians familiar with these search systems: {a} AllTheWeb.com which was originally based on Fast Search & Transfer technology now owned by Microsoft; [b] AltaVista.com, the company whose engineers provided Google with a turbo boost in the the 1999 to 2002 period with some residual kick continuing even now; [c] Inktomi, one of the original Web indexing systems; [d] the Flickr search system; [e] Stata Labs, the email search system in use in Yahoo mail; [f] InQuira, the natural language search system used for Yahoo Help; [g] the various research search engines that range from the moth balled Mindset to the newer and somewhat flaky semantic Microsearch; [h] the moth balled Delicious.com search system; and a handful of others lost in the jumble room of my 64 year old memory.
Add to this collection, the SQL Server search technology, two types of SharePoint search, the search functions in Dynamics CRM, Fast Search & Transfer’s Web search and ESP (enterprise search platform), a couple of flavors of desktop search, the mind boggling awful search in Outlook and Outlook Express, and the search function in the Xbox which at one time was provided by Mondosoft (now part of SurfRay in Denmark). The Powerset search system built on Xerox PARC technology and partially running on Amazon’s Web services platform. Of course, I’m probably forgetting a few.
What I am driving at is that if and when Microsoft buys Yahoo’s search business, the Yahoo.com site really should be part of the bargain. Despite its many flaws and weird America Online approach to information, Yahoo.com gets traffic. And traffic is what Microsoft needs, not more wacky search technology.
Consider this statement by Mr. Kirkpatrick:
So even though Microsoft has with painstaking and expensive effort come near to par with Google on search technology, it still shows little likelihood of competing successfully with it as a search business.
“Par with Google on search technology” is not going to deal with the fact that Microsoft finds itself on the defensive not just in search but in these key areas:
- Brand (generally positive)
- Demographic hooks (moving into education where Apple and Microsoft have long ruled the hen house)
- Business models (Advertisers pay, “pull” sales, not “push” sales the way Microsoft earns money, piece of the action, etc.)
- Velocity of innovation (slowing but still pretty zippy)
- Cheaper operating and infrastructure costs (not understood and overlooked as a competitive advantage by Wall Street analysts)
- Time (Google has a head start and is still moving forward).
When I read business articles, I recognize the care that goes into them. I know from my days at Ziff Communications how much it costs to craft prose that flows.
My concern is that after a decade of Google being Google, no one recognizes that Google represents a fundamental change in the software, services, and systems business. Microsoft is now reacting but I think it is too late to buy aging portals, collect odd ball technologies, and try to use money to buy parity with Google.
The Fortune article does not and can not tackle such issues in a short essay. I am looking forward to Fortune and other publications coverage of Google. I do hope to read something more substantive than Microsoft will keep trying to catch Google (pretty much an impossibility in my little Kentucky sphere of understanding), Google making people stupid (a concept I don’t understand because Google manifests a demographic. Google did not create the demographic’s behaviors), and Google is on the ropes in the telco business.
Google drifts above these particulars. The company does face a grave threat but from attorneys, not software companies or venture capitalists’ bets on “Google killers”.
Information on this perspective on Google is available, just hard to find.
Stephen Arnold, July 6, 2008
Comments
4 Responses to “Why Microsoft Fears Google Sort of Revealed”
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A little birdy tells me that del.icio.us actually uses the open-source Xapian search engine. I’m trying to confirm this.
I wouldn’t like to have the job of integrating all these different technologies into one unified whole! Better to take all the clever guys who wrote them and give them enough freedom and money to develop something revolutionary and new.
I found David Kirkpatrick article thoughtful in general and very interesting.
However, I found this sentence in particular
“Microsoft owns a site called Live.com that offers search results that in many cases are just as good as Google’s, and sometimes are better.”
unfortunate to say the least. Which cases David? This is the web. Couldn’t you provide links it to some of your cases? What do you mean by good? When and who says it’s better or worse than? Is it just your personal opinion from a user point of view?
To measure search engine performance so different solutions can be compared, it’s more of an academic/scientific task, than a matter of personal opinion. Actually it’s a quite huge and difficult task, maybe as difficult as the search problem itself.
I’m not an expert on search. I will give you an example on how different google and all other search engines are from my very recent personal experience then.
About a month ago we launched the free web service privnote.com and I needed to track how the community was reacting to it.
For that purpose I tried google.com, Live.com, yahoo.com, and other search engines. I found this fresh and very dynamic reality of privnote evolution in cyberspace only represented at google. Other search engines were not of service to my task at hand.
I do not have any search engine preference, and I tried most of them for what I needed. I’m not trying to prove here that google is better than others in general. I’m aware this is just a particular example. Nevertheless it does show that google is technologically on another league, at least for the task I needed to sort out.
See:
http://blogsearch.google.com/blogsearch?hl=en&ie=UTF-8&q=privnote&as_drrb=q&as_qdr=w
That gives me at the moment of this posting 409 blogs related to privnote generated during the last week only.
Can anyone get anything to compete with this result with other search engines? I could not. However if someone knows it better I’ll be very happy to be helped out.
David, just do the following. Search for “Why Microsoft will win Yahoo” at google.com and at live.com, and you tell me what you think now.
See this:
http://blogsearch.google.com/blogsearch?hl=en&ie=UTF-8&q=%22Why+Microsoft+will+win+Yahoo%22&sa=N&start=0
and then try to come up with something close to that with other search engines can provide you.
GREAT POST!!! I too would love to read anything above the normal tripe of journalism of Fortune magazine and others about Google. It requires some deep thinking. Your concern that “after a decade of Google being Google, no one recognizes that Google represents a fundamental change in the software, services, and systems business.” This is my view of Google
Google is a huge sign post of a paradigm shift that from an economic point of view will reshape every industry and human interactions globally. In scientific term I would characterize Google has a “phase transition” in knowledge and information with it’s use of algorithms to impose order where as before there was disorder of information. Every Institution of every type will either crumble or change based on the Google effect of information and knowledge empowering the individual above the institution.
Just my take.
Hello, TJGodel,
I appreciate your taking the time to post on Beyond Search. Yep, the GOOG is an interesting company. I am probing the key decisions made in 1998 and 1999 by Microsoft and Google. Google went one way. Microsoft went another. The difference today reaches back to DEC engineers. Google used the DEC input one way. Microsoft used the DEC input another. What a difference listening and problem solving approaches make.
Stephen Arnold, July 9, 2008