Microsoft Sees Google as Goliath
October 2, 2008
Imagine my surprise when the $65 billion dollar Microsoft allegedly characterized Google as “Goliath.” By the time I flapped from my nest of reeds and mud, my newsreader refreshed with another 15 stories on this topic. I, quite naturally for an addled goose, dived in. Here’s a quick rundown of the “Goliath” metaphor. I will wrap up with several observations about this wordsmithing. I think the larger issue behind the trope has been overlooked, which says more about how pundits perceive both Google and Microsoft.
The Zero Ambiguity of Goliath
Rory Cellan-Jones, technology correspondent, BBC News wrote “Google Goliath Microsoft Says. You can find the article here. In an interview, Mr. Ballmer allegedly characterized Microsoft as “David” in search. Google, Mr. Cellan-Jones reports, is “Goliath.” Mr. Ballmer, the BBC story reports, said: “We may be the David up against Goliath but we’re working on it…. We probably missed the power of the advertising model, not so much the technology.” My quotes don’t do justice to this excellent article.
The Guardian, a paper that is quite a bit paper than our local weekly Harrod’s Creek shopper, picks up the theme. “Ballmer Says Microsoft is David to Google’s Goliath.” The Guardian piece added for me a useful item of information: “Ballmer says that search is his ‘favourite business’ because when you have nothing the only way is up: ‘Everything is possible, we have nothing to lose. (Of course, you can also just continue along flatlining. But his salesman’s instinct probably won’t let him consider that.)”
Silicon Alley Insider, a Web log I quite like, picks up the theme of Microsoft’s response to Google in its “Ballmer Talks Up Windows Cloud. Don’t Believe It.” You can read Eric Krangel’s article here. Mr. Krangel focuses on the wisp-like Cloud OS, but it’s clear to me that Mr. Ballmer is setting the stage for a major announcement at the upcoming Windows conference on October 27. For me, the most interesting point in the piece was this statement attributed to Mr. Ballmer: “The last thing we want is for somebody else to obsolete us, if we’re gonna get obseleted [sic] we better do it to ourselves.” The somebody else, in my reading, is our pal Goliath.
In my opinion, Google equals Goliath.
What’s with Goliath?
In Kentucky, despite the high rate of illiteracy and the miserable education system, there’s no shortage of opinions about David and Goliath. For example, there’s quite a range of opinions about the David and Goliath clash. These range from Goliath won to there were two Goliaths and David only nailed one of them.
My hunch is that the purpose of the metaphor is to make clear that Microsoft with its control of 90 percent or more of traditional personal computer operating systems and common applications like word processing, its 100 million or so SharePoint licenses, its thousands of resellers, its hundreds of thousands of VisualStudio.Net developers, and its activities in games, mobile software, and consumer audio players is an underdog. David is the under dog, a wimp, a Mr. Peepers. Some of the sources I had to grind through in a required ancient history class said he was a musician. He wasn’t a rapper wearing shades, sporting tats, and wearing FBI sunglasses and prison clothes. David played a harp. He was, as I recall, untrained for war. In short, a wimp.
Goliath, on the other hand, is your classic André the Giant professional wrestler. Slow moving and slow of speech, Goliath was the equivalent of a roid-crazed street fighter. Goliath would have made a good power forward for a pick up game in the Bronx. The key point was that this fellow Golyat (standard Hebrew) was a philistine. Forget Goliath’s size. His real transgression may have been that he was perceived as an invader or intruder with access to hot technology; specifically, iron smithing. Goliath had armor; David wore a cotton tunic. Although cool, cotton does not withstanding a sword thrust too well.
The metaphor, then, operates for me on two levels. The little guy (David) has to fight off the big guy (Goliath or Golyat). And, Goliath was an outsider, at least to David and his pals.
The rest of the story is well known even in Kentucky. David uses a sling and throws a stone at Goliath. The stone knocks Goliath down. Then, depending on your preference for murky sources, chops off Goliath’s head or walks up to the prone Goliath and checks out the prostrate enemy. The sling, the stone, the unexpected victory–that’s the metaphor.
Google’s revenue for 2008 will be in the $20 billion range or close enough for horse shoes. Microsoft’s revenue for 2008 will be north of $65 billion. Google has 19,000 full time equivalents, give or take 2,000. Microsoft has 55,000 full time equivalents, give or take 5,000 happy workers. Microsoft has a de facto monopoly in desktop operating systems, standard office software for word processing and spreadsheets, and the 100 million SharePoint licenses. Other Microsoft businesses are big, but none is in the monopoly category.
Google, on the other hand, has about 70 percent of the Web search market. Google touches more than two-thirds of the Web search related advertising. Google has a modest footprint in several other businesses, but it is a one-trick Goliath in terms of revenue.
The big difference between the two companies is that Microsoft represents the status quo in personal computing. Google represents the next-generation in personal computing. In 2005, I created this diagram for my The Google Legacy study.
© Stephen E. Arnold and Infonortics Ltd., 2005
The conclusion of that analysis was that most of the companies in the software business were blissfully ignorant of Google’s single minded build out of an application infrastructure. Furthermore, most pundits looked at Google as a one trick revenue pony and did not abstract that revenue model into a broader business model; that is, someone pays to get access to Google’s systems and users. As a result, Google was running free with no significant oversight, competition, or technical challenges since 1995. Yes, 1995. The Google kids were fiddling with BackRub in the mid 1990s and learning from the AltaVista.com service. Google’s biggest technical guns have roots in one of three companies: AltaVista (Digital Equipment), Bell Labs (AT&T), and Sun Microsystems. What these clever folks did was take the best from research computing and integrate those insights into a distributed, massively parallel architecture. The Internet was the equivalent of the connections in a desktop PC. The Google infrastructure was the computer just as Scott McNealy (Sun Microsystems) allegedly said.
What’s happening is that Microsoft’s business model, not its technology, is colliding with the Google business model. Furthermore, the collision has nothing to do with David and Goliath. The issue is Darwinian. Dragging metaphors into what is a strategic confrontation after a decade of inattention is misleading and indicative of why Microsoft can’t bridge the gap. Microsoft cannot catch up by following its present 10,000 sailboats going in the same general direction approach. Google is doing what it has done for a decade, and the company is now finding itself pulled into new, potentially lucrative new opportunities. David needs to get a Ph.D. in math, publish a couple of important papers, and apply for work at Google in my opinion.
Stephen Arnold, October 2, 2008