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Received Wisdom about Microsoft Google Off by 30 Degrees

The dead tree version of the Wall Street Journal arrived this morning (January 16, 2009) and greeted me with Robert Guth’s article “Microsoft Bid to Beat Google Builds on a History of Misses”. You can find an online version here. You can also find a discussion by Larry Dignan here. Both of these write ups set my teeth on edge, actually, my beak. I am an addled goose, as you may know.

The premise of the Wall Street Journal article is that Microsoft had chances to do what Google is doing; to wit: sell ads, build search traffic, and buy Overture.com, among other missteps. The implication in these examples is that “woulda coulda shoulda” argument that characterizes people with a grip on received wisdom or what “everybody” knows and believes.

Mir. Dignan adds some useful points, overlooked by Mr. Guth; namely, Microsoft lacked a coherent Web strategy. Also, had Microsoft moved into ads that alone did not address Google’s focus on search. Mr. Dignan emphasizes that “you can’t count Microsoft out–even now.”

Let me from my hollow in Kentucky where the mine drainage has frozen a nice suphurous yellow this frosty morn offer a different view of the problem Microsoft faces. You can cherish these nuggets of received wisdom. I want to point out where these individual, small Google nuggets fit in the gold mine of online in the 21st century.

Received wisdom is useful but often is incomplete. Filling in the gaps makes a difference when determining what steps to take. Image source: http://www.grahamphillips.net/Ark/Ark_2_files/moses_with_tablets.jpg

What Google Did in 1998

Google looked at search and the problems then dominant companies faced. I can’t run down the numerous technical challenges. (If you want detail, click here.) I can highlight three steps taken by Google when Microsoft and others dabbling in the Internet were on equal footing.

First, Google looked at the bottlenecks in the various subsystems that go together to index digital information and make it findable. These bottlenecks were no surprise in 1998 and they aren’t today. Google identified issues with parallel processing, organizing the systems, and getting data moving the right place at the right time. Google tackled this problem head on by rethinking how the operating system could better coordinate breaking a task into bite sized chunks and then getting each chunk worked on and the results back where they were needed without bringing the computer to its knees. This problem still bedevils quite a few search engine companies, and Google may not have had a perfect solution. But Google correctly identified a problem and set out to solve it by looking for tips and tricks in the research computing literature and by tapping the expertise at AltaVista.com.

Second, Google figured that if it was going to index digital information on any scale, the company needed a way to build capacity without paying for the high end, exotic, and often flakey equipment used by some companies. One example of this type of hardware goof is the AltaVista.com service itself. It used the DEC Alpha chip, which was the equivalent of a Fabergé egg that generated the heat of a gas tungsten arc welding device. Google invested time and effort in cobbling together a commodity hardware solution.

Third, Google looked at what work had to be done when indexing and query processing. The company had enough brain power to realize that the types of read write processes that are part of standard operating systems and database systems would not be suitable for online services. Instead of embracing the traditional approach like every other commercial indexing outfit did in the 1998 to 2000 period (a critical one in Google’s technical development), Google started over. Instead of pulling an idea from the air, Google looked in the technical literature. Google took the bride’s approach to innovation: something borrowed, something new, etc. The result was what is now one of the core competitive advantages of Google–the suite of services that can deliver fast read speeds and still deliver acceptable performance with a Google Apps user saves a file.

Keep in mind that Google has been working on its business for a decade. Google is no start up. Google has a head start measured in years, not months or weeks.

The Epiphany

Google had zero revenue in 2000. One of the venture types made it clear that Google had to make money. I have not been able to figure out who at Google had the bright idea of looking at existing online ad methods (banners, pay for click, etc.). Whoever had this idea deserves a gold star. Google’s engineers took a clean sheet of paper and  like Einstein grabbed what was needed from other mathematicians, physicists, and scientists. The result was an improved version of the Overture.com system. By the time Overture.com figured out what the GOOG had done, Overture.com was in the process of selling itself to Yahoo. Before the Yahoo deal, Overture.com sued Google for borrowing from Overture.com’s method. As it turns out, Google settled the claim, went public, and continued to build around that ad platform. By the time of the IPO, Google had two or three years of effort under its belt.

What Google did remains an advantage; for example:

First, advertising and search run on the Google platform. Since both are services–what would be called Web 2.0  and cloud services in today’s goofy jargon–search and advertising are not just intertwined. Each is an application that can interact as needed with the other. So, ads use search to “find” suitable ads. Search uses ads to do personalization, and so on. These are easily viewed as two different things, but I view them as the two sides of the same coin or in my lingo, two sides of the Google infrastructure. Hooking them together is the plumbing; that is, the commodity hardware, the file system, the data management tools, the code libraries, etc.

Second, Google shift the work from humans to software from day one. Sure, a Google engineer can log in as an administrator and fiddle with a setting. But Google automated wherever possible and shifted the work from Google to the advertiser, the user, or the partner as it turns out. Google disintermediates as a standard principle. If you need people, keep only the people who can contribute code or a truly unique service. Then automate everything else. With information “going digital”, Google made the right choice for the information environment then and now.

Finally, Google looked at the hook up of search and advertising over time. There period in question is between 2003 and 2006. In this critical period the platform became the foundation of other applications. So when you use Gmail it is automatically able to permit search and display ads. The Gmail team did not have to solve those problems. The applications that are now causing some companies to abandon on premises solutions run on the Google ad and search platform. That’s how search became an application platform.

The Real Challenge to Microsoft and Everyone Else

Since 2006, Google has popped up a conceptual level. Prior to 2007, most of the inventions disclosed in Google’s patent documents and technical papers were like point solutions to specific problems. Example: data management using tokenization or performing search without search via a GPS clue. By the beginning of 2007, Google’s engineers were performing “blue sky” research and converting those big ideas into fundamentally different ways to manipulate data. One quick example: The Guha inventions disclosed in February 2007. If Google does what Dr. Guha invented, Google becomes the semantic Web. Think about that idea because it is a very big one.

So now the challenge Microsoft faces is:

1. Address performance issues at the level of the operating system, data management, and massively parallel, real time multi tenant operations. Trust me when I say SQL Server is not the right tool for petascale data manipulation. Just let me know if you have solid facts that I am off base here. Oh, one caveat: there must be enough money and machines and engineers to make the SQL Server solution practical in a real world data center. Remember the Windows 7 download failure. Remember YouTube.com’s streaming a live concert. One failed; one didn’t.
2. Scale economically and quickly.
3. Disintermediate labor intensive or inefficient operations.
4. Permit a developer to assemble a solution using smart programming tools, compilers that error check, fix, and optimize, and libraries that include smart routines to eliminate programmer grunt work where errors occur.
5. Create a compelling solution in online that whittled down the gap between Google with its 70 percent market share and everyone else fighting for the other 30 percent. (Ask.com is sponsoring NASCAR to build share. Now that’s a great idea which no doubt gives the F1 series an ad opportunity too.)

This list is not exhaustive. More detail about these hurdles may be found here. But Microsoft and Yahoo for that matter have to leapfrog. Buying long in the tooth or computationally inefficient search systems (Fast Search, Powerset, and maybe Yahoo) won’t do much to bridge the gap between Microsoft and Google in my opinion.

Back to Received Wisdom

Please, keep in mind that I am not picking on Mr. Guth or Mr. Dignan. I am focusing on ideas about the challenges Microsoft faces. This is important because if Microsoft does not tackle the types of problems that Google has been attacking for the past decade, there is very little chance that Microsoft can catch up with Google. Google can fail, and there are some very good reasons why I think the GOOG is vulnerable. But these reasons are outside of the conventional wisdom that most Google watches espouse.

The core issues facing Microsoft and IBM, Oracle, SAP, and Yahoo, among others, are these:

1. Brand. Google has a heck of a lot of users who are habituated to the service.
2. Time. Google operates with a strategic view similar to the old five year strategic plan blue chip consulting firms used to flog before the discrediting of the activity decades ago. With each passing month, Google is not just maintaining its lead. Google is pushing into different market sectors, starting different life cycles for the incumbents in those sectors. Those incumbents are clueless about Google’s technical foundation and think that one can “fight” Google by denying that the company is a viable competitor. (Anyone checking out the remote health monitoring capabilities of Android? Might be a good idea if you are in the medical device business.)
3. Cash. Google–despite the dismal economic environment documented by the journalists at the financially challenged Wall Street Journal–has cash and can get more. If it’s stock falls lower, I might be able to buy some, and I think other addled geese will as well. Google also can push more ads per page, increase ad exposure with its new monetization technology, and push harder for Google Apps Premier money. Other outfits may not have the appetite to catch up with Google’s multi-billion investment in technology and infrastructure. Google spent over 10 years. A competitor who must catch Google fast must spend more in a shorter time period. Might be tough even for companies with deep pockets.
4. Market share. With a 70 percent share and a growing footprint in the enterprise, Google is making sales with out the cost burden some of its competitors have.

In short, the challenges Microsoft faces are deeper, more substantive, and more serious than buying a search company and selling ads. By the way, the problems Microsoft faces with Google will presage the problems IBM, Oracle, and SAP will have with Google as well. Of course, smaller firms will be affected by Google in the next year or two, but the real pressure point will be on these blue chip companies who are quick to assert, “Google is no problem. We understand Google.” Maybe? Maybe not? Let me know your views. Facts are helpful. More received wisdom is not. I have been to the mountain and have a set of clay tablets. The world is now digital and somewhat less fixed like the star to every wandering bark.

Stephen Arnold, January 16, 2009

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