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.
The Reality
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
Beyond Search’s Search Function Back On Track
August 10, 2008
I have had many positive comments about the search function for my Web log “Beyond Search”. Last week, we had reports of current postings not appearing in the index. Our hosting company had in place a method to block certain clickstreams when certain conditions were detected by the hosting company’s automated systems. The increasing demand for access to the site and the additional content indexed by the Blossom search system caused a slow down in “Beyond Search.” The hosting company, Blossom.com, and my engineering team have resolved the problem. Thank for your patience. Blossom.com’s Web log indexing system continues to delight me. If you are looking for a search system for a Web site or a Web log, please navigate to http://www.blossom.com and check the company. Feel free to mention that Beyond Search is happy. I’m sufficiently happy to award the Blossom.com team three happy quacks. We’re back to normal, but my normal may be different from your normal. Anyway you can search for posts about SearchCloud, Sprylogics, and of course my favorite SharePoint. Enjoy.
Stephen Arnold, August 10, 2008
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
Microsoft to ‘Innovate and Disrupt in Search’–Again
May 19, 2008
My newsreader popped this info tart in front of me this morning: “Kevin Johnson’s Memo On Yahoo & Their Strategy”. The focus of Gigaom’s Web log post is a memo, allegedly by Kevin Johnson. By the time you read this, my pathetic posting will be very old news. You need to read the memo and determine for yourself it it’s the real deal.
I’m commenting because of a series of emails I exchanged this morning about Microsoft’s search strategy. Among the points I made to the eager journalist who was, as my mother used to say, an empty vessel:
- Microsoft is implementing reactions, not a strategy. The cause of these knee-jerk reactions: mostly the Google and a business model challenge. Cloud services are coming round the mountain, and Microsoft can hear the whistle blowing.
- Yahoo has some sharp people and a truck load of search systems–Inktomi, Stata Labs, AllTheWeb.com (provided by Fast Search & Transfer), Flickr’s system, Overture’s search, and more). I’ve been told the company is rushing to be more like Google, which is not perfect, obviously. But Yahoo is grossly heterogeneous, and Google is more homogeneous in architecture.
- Google keeps on grinding forward. In Israel a day ago, Mr. Brin referenced Google’s multi dimensional database progress. My sources tell me that it is not progress; it is a leap frog play.
So “innovate and disrupt in search” is going to boil down to tackling these problems, forcefully, squarely, and well.
First, how many search platforms will Microsoft support? SharePoint, whizzy technology from Microsoft Research, Fast Search & Transfer’s ESP, and the legacy systems that just won’t die. Each search platform is a money hog. Get too many of these critters chomping on the cash, and you will be one poor data farmer.
Second, if–and this is a big if–Microsoft cuts a deal with Yahoo, exactly how will two shot up World War I biplanes contend with Google’s F-35? Time is running out because the GOOG keeps gobbling market and mind share. It is the number one site on the Internet and the world’s top brand. Quite a one-two punch for piston powered aircraft to shoot down.
Third, Google’s business model is based on advertising. Google wants to diversify, and Mr. Brin’s comments in Israel a day ago suggest that he wants to put a rocket booster on Google Apps. Interest in cloud-based services continues to creep up, and Google is in a good position to innovate and disrupt in that sector. The company already is innovating and disrupting in search.
We’re watching a clash of cultures and business models. When Microsoft swizzled IBM in the 1980s, it was clever. Google’s not just clever; Google has the technical platform to redefine search and enterprise applications.
Mr. Johnson’s memo does little to convince me that Microsoft–with or without Yahoo–can do much to stop Googzilla from doing Googzilla-type things.
Stephen Arnold, May 19, 2008
Semantra and Conversational Analytics
May 15, 2008
Semantra asserts that it is a “pioneering developer of conversational analystics software”, or so it says in the news release a helpful person sent me.
The companies “conversational analytics” application pushes “beyond key word search” because a user can use “common language commands to retrieve specific information from back end databases”. You can read the Semantra announcement here: www.semantra.com/library/Semantra%202.0%20GA%20FINAL.pdf
The lingo “common language commands” means natural language processing or NLP. A number of vendors have embraced this approach in order to [a] eliminate the need for a specialist to intermediate between an enduser with a question and the database with the answers and [b] allow faster interaction with a database. After all, in business intelligence, the idea is to get the information quickly. Calling up an SAS or SPSS analyst, having that person understand what’s needed, creating the queries, pulling down the data cube, and providing that chunk of info to a manager on a deadline is generally viewed as a problem.
What’s interesting about the Semantra approach is that its tool is designed for Microsoft Dynamics CRM. Microsoft’s push into CRM or customer relationship management has been erratic. To make the situation more interesting, Microsoft is working to move Dynamics (an unhappy amalgam of several products) into the Live.com or “cloud” environment. Semantra is hoping that Microsoft’s CRM offerings will generate even greater demand for third-party tools that tame the Dynamics’ beastie.
ArnoldIT.com analyzed the Dynamics product and technology late in 2007 and found that it was even more complex than Microsoft SharePoint Search. Given the multiple products that make up SharePoint Search, we were surprised to find that the Dynamics team had bested the SharePoint team on this important yardstick. The Dynamics product line up consists of Microsoft’s own technology, Axapta, Great Plains, Navision, and Solomon components. These are mixed-and-matched into a somewhat complex suite of products.
We wish Semantra great success with their system. There will be strong demand for a product that can simplify the Microsoft CRM system. You can get more information about Semantra at wwwsemantra.com. The splash page for Microsoft Dynamics is at www.microsoft.com/dynamics. If you are interested in the ArnoldIT.com analysis of the Dynamics suite, contact seaky2000 at Yahoo dot com. The report costs US$125 via online payment for a password protected PDF.
Stephen Arnold, May 15, 2008
Enterprise Search and Train Wrecks
May 7, 2008
After I completed my interview with the Intelligenx executives, I thought about one of their comments. Iqbal Talib said, “We have many clients who want a point solution, not an enterprise solution”. An executive at Avalon Consulting wrote me today and echoed the Intelligenx comment.
Enterprise search may be a train wreck for more than half of the people who use today’s most popular systems. The Big Name vendors can grouse, stomp, and sneer at this assertion. Reality: Most of these systems disappoint their licensees. When a search system “goes off the rails”, the consequences can be unexpected.
When an enterprise system goes off the rails, the damage is considerable. Even worse, moving the wreckage out of the way is real work. But even more difficult is earning back the confidence of the passengers.
A Case Example
A major European news organization licensed a Big Name system. The company ponied up a down payment and asked for a fast-cycle installation. After six months of dithering, the Big Name admitted that it did not have an engineer available who could perform the installation and customization the paying customer wanted.
The news organization pulled the plug. The company then licensed one of the up-and-coming systems profiled in Beyond Search. The revamped system was available in less than three weeks at a fraction of the cost for the Big Name system.
The new system works, and it has become a showcase for the news organization. For the Big Name, the loss of the account eroded already shaky finances and became the talk of cocktail parties at industry functions.
Ever wonder how much churn Big Name enterprise search vendors experience in a year? You can get a good idea by comparing the customer lists of the best-known enterprise search vendors. The overlap is remarkable because large companies work their way through the systems. Now more are turning to up-and-coming vendors’ systems. The Big Names are facing some sales push back. Take a look at the financials for publicly traded search vendors. Look for days-sales-outstanding data. Look at the cash reserves. Look at the footnotes about restating financials.
What you may find is that fancy dancing is endemic.
How Many Search Systems Does One Company Need?
What haunts me is the overlap among vendors. Early in 2003, I conducted a poll of Fortune 1000 companies. The methodology was simple: I sent an email with several basic questions to people whom I knew at 150 different large organizations. I received a response rate of about 70 percent, which was remarkable. One question I asked five years ago was, “How many enterprise search systems do you have?”
Microsoft Chomps and Swallows Fast
April 26, 2008
It’s official. On April 24, 2008, Fast Search & Transfer became part of the Microsoft operation. You can read the details at Digital Trends here, the InfoWorld version here, or Examiner.com’s take here.
John Lervik, the Fast Search CEO, will become a corporate vice president at Microsoft. He will report to Jeff Teper, the corporate vice president for the Office Business Platform at Microsoft. The idea–based on my understanding of the set up–is that Dr. Lervik will develop a comprehensive group of search products and services. The offerings will involve Microsoft Search Sever 2008 Express, search for the Microsoft Office SharePoint Server 2007, and the Fast Enterprise Search Platform. Despite my age, I think the idea is to create a single enterprise search platform. Lucky licensees of Fast Search’s technology prior to the buy out will not be orphaned. Good news indeed, assuming the transition verbiage sets like hydrated lime, pozzolana, and aggregate. Some Roman concrete has been solid for two thousand years.
This is an example of Roman concrete. The idea of “set in stone” means that change is difficult. Microsoft has some management procedures that resist change.
A Big Job
The job is going to be a complicated one for Microsoft’s and Fast Search’s wizards.
First, Microsoft has encouraged partners to develop search solutions for its operating system, servers, and applications. The effort has been wildly successful. For example, if you are one of the more than 80 million SharePoint users, you can use search solutions from specialists like Interse in Denmark to add zip to the metadata functions of SharePoint, dtSearch to deliver lightning-fast performance with a natural language procession option, Coveo for clustering and seamless integration. You can dial into SurfRay’s snap in replacement for the native SharePoint search. You can turn to the ISYS Search System which delivers fast performance, entity extraction, and other other “beyond search” features. In short, there are dozens of companies who have developed solutions to address some of the native search weaknesses in SharePoint. So, one job will be handling the increased competition as the Fast Search team digs in while keeping “certified gold partners” reasonably happy.
This is a ceramic rendering of two of the “10,000 Immortals”. The idea is that when one Immortal is killed, another one takes his place. Microsoft’s certified gold partners–if shut out of the lucrative SharePoint aftermarket for search–may fight to keep their customers like the “10,000 Immortals”. The competitors will just keep coming until Microsoft emerges victorious.
Traditional Publishers: Patricians under Siege
April 19, 2008
This is an abbreviated version of Stephen Arnold’s key note at the Buying and Selling eContent Conference on April 15, 2008. A full text of the remarks is here.
Roman generals like Caesar relied on towers spaced about 3000 feet apart. Torch signals allowed messages to be passed. Routine communications used a Roman version of the “pony express”, based on innovations in Persia centuries before Rome took to the battlefield.
Today, you rely on email and your mobile phones. Those in the teens and tweens Twitter and use “instant” social messaging systems like those in Facebook and Google Mail. Try to Imagine how difficult it would be for Caesar to understand the technology behind Twitter. but how many of you think Caesar would have hit upon a tactical use of this “faster that flares” technology?
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