Sep 8

Tim O'Reilly

Tim O'Reilly

Why Microsoft can't best Google

James Governor wrote in email: "Don't know if you saw Phil Waineright on google vs MS. But he has done a neat job of boiling down some issues that talk quite well to web 1.0 to web 2.0 diffs. Neatest insight, imho:

Microsoft's business model depends on everyone upgrading their computing environment every two to three years. Google's depends on everyone exploring what's new in their computing environment every day.
I agree completely. Phil's observation quoted above goes right to the heart of one of the principles that I've been calling out in my "Web 2.0 Design Patterns" talks, "the perpetual beta." In the Web 2.0 era, software isn't an artifact that someone buys, it's a relationship between a customer and the provider of a service. All of the leading web application providers introduce new features in a daily dance with their users, who act as co-developers by trying out massively instrumented beta applications, and voting with their actions about what works and what doesn't.

Elsewhere in the same entry, Phil nails one of my other talking points, "software above the level of a single device." He says:

Most of the analysis of Google's announcements this week of its upgraded desktop tool and its pilot instant-messaging client has seen it in terms of Google encroaching on Microsoft's turf.

That's looking at it from the wrong perspective. Google's turf is the Internet. It's not interested in devices that don't connect to it -- Microsoft is welcome to that market. It simply wants to extend its reach to any device that does go online.

Meanwhile, Microsoft's focus on desktop capability is the crux of why it can't possibly succeed against Google (or any future Google equivalent). It's focusing on yesterday's market. Microsoft's dominance of the desktop is as relevant to the future of computing as Union Pacific's dominance of the railroads was to the future of transportation in the twentieth century.

I'm not sure that Phil's entirely right on the last point. To the extent that the desktop and desktop-based applications give Microsoft control of access to the internet, they still have a lot of powerful weapons. But their power is immensely diluted by the flood of new internet access devices, not to mention the resurgence of Mozilla/Firefox as an alternate browser. (And it's no accident that Mozilla is now receiving major support from Google.) But note how some government agencies are "standardizing" on IE. That kind of lock-in is extremely foolish from a consumer point of view, but really helpful to whatever company gets the lock in.

(To return to the railroad analogy, there are instructive parallels in the way that the auto is "baked in" to our economy by government sanction in ways that railroads are not. Gasoline taxes "fund" highway maintenance and development while any investment in railroads is a "subsidy." I don't know the history, but it's clear that the auto industry managed to finagle a situation where the government collects taxes to fund its infrastructure requirements!)

But I digress. Go read Phil's blog. He's absolutely right on about the new rules of engagement.

tags: web 2.0  | comments: 12   | Sphere It

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Comments: 12

  Raymond Brigleb [09.09.05 07:49 AM]

So when are you going to release your "Web 2.0 Design Patterns?" Would love to read them...

  jbelkin [09.09.05 12:54 PM]

I think the analogy is apt. The rails still play an important part in the tansportation of goods around the country but the perception is that railing is early 20th century if not 19th century so even though the rail links are vital, our perception is that of a dinosaur industry and that affects MS not just in its stock but also as a company culture and the people willing to go work for them ... and of course, their innovation and prowess down the line. Just as PC's will always be part of the business-internet industries, the perception is that it's like cooper wiring, yes, it's there and yes, it's important but it's not the future and once you grab that mindshare, as long as you follow through as Google has, MS is hard to folow along since it's already being perceived as "anchored" to the desk (in having failed to establish their OS in phones, portable devices, cars, the homes, etc ...). As I've advocated before, I think the 1990's were to MS what the 1950s' were to GM and while they're still a heavyweight, that's all they are - just a giant block that's not easy to move but easy to get around.

  Kevin the Magnificent, Microsoft's and Bill Gate's #1 fan [11.07.05 05:42 PM]

You suck man.

Microsoft is THE BEST at everything they do, hands down.

I may be just 14, but your article is crap. Microsoft will someday rule the world, and I will be there cheering on their monopolization the whole way.

  pippy longstocking [02.13.06 10:12 PM]

that last one was an AMAZING display of ignorance, wow. wait till you get to college and learn about macroeconomics, toughie.

  AndyN1974 [02.15.06 12:23 PM]

How does this argument hold up now that MS have announced their biggest drive in the future will be the provision of software as a service, blending the thick client current approach with a distributed thin client future to create a true hybrid approach designed to serve users of all disparate needs? If you are going to bury Microsoft you better first get some visibility into what they have going on in their research labs. IPTV, a recently piloted MS product, started development over 8 years ago and is only now coming to market. Suggesting that MS will be brought to their knees by a company without a single other profit generating, viable product line beyond online search is both premature and ill-informed.

  Tim O'Reilly [02.15.06 03:22 PM]

AndyN1974 --

I never count Microsoft out. I think they are a very smart company, and one of the best at the "fast follower" strategy that the business world has ever seen. And you'll see if you read my comments (rather than the piece I linked to and quoted from), I acknowledge that Microsoft has many weapons.

But I do think that the nature of the challenge from Google is profoundly different from the challenge from companies like Lotus, WordPerfect, or Netscape. They were ultimately in the same business as Microsoft, and Microsoft was just better at that business. Google has a completely different business model, and it's often changes in business model that lead to a change in who leads the industry.

For more on this subject, see my piece What is Web 2.0?

  Zawar Qayyum [09.06.06 07:16 PM]

When Netscape came out with their web browser, a lot of people were predicting Microsoft's eventual demise as a result of the rapid change in computing landscape. We all now know how totally wrong that was. Regarding Tim's perception that Microsoft cannot beat Google because of a fundamental difference in business models, Microsoft isn't really in a single business to have a single model. One can rather say that Microsoft is a bit behind in the technology areas which form core business for Google. Personally I am a bit disappointed that MS's search engine still isn't nearly as good as Google Search. But knowing MS history, sooner or later they are going to get as good as or better than google. They did it with Novell Netware and Sun Microsystems in server OS technology; with Borland in software development tools; with Oracle in DB technology; with Sony and Nintendo in gaming consoles; with Palm in Hand helds...

Google is just a new competitor which, despite its considerable revenues and market capitalization, doesn't come anywhere near Microsoft's technological muscle. I expect MS share in the search market to eventually arrive at some sort of equilibrium with Google, with Microsoft in the leading position.

  Tim O'Reilly [09.06.06 07:59 PM]

Zawar -- you seem to have missed the point. It isn't just technological muscle that differentiates google. It's driven by a fundamentally different economic engine than Microsoft. I'm not saying that Microsoft can't learn to compete. But every other one of the companies you listed was in the same business as Microsoft, and Microsoft was just better at that business. Google is not in the same business. The competition is asymmetric.

It will be interesting to see how things play out.

  Richard Brandt [09.14.06 10:35 AM]

Hey, Tim, all your points are good. This is an enormous change for microsoft, on a par with nothing the company has ever faced.

However, you also need to consider the fact Google is moving away from its core competency when it moves into desktop-style applications. I love gmail, but most people don't seem to use it.

I'm also interested in your opinion on whether Google has enough tenacity. One of Microsoft's strengths is that it keeps working on a product until it gets it right, coming from behind to take over. I hear a lot of talk about Google leaving products as orphans after their birth. If it doesn't continually improve its products, rather than just cranking out new ones, Microsoft has a chance. I wrote about that idea on my blog, at

  Tim O'Reilly [09.14.06 11:32 AM]

Very good questions and comments, Richard. The jury is definitely out. I don't count Microsoft out at all -- just point out that the NATURE of the competition is different than they've ever faced before.

One factor you don't include is the fact that at least one of Microsoft's arch-competitors (Bill G) is stepping away, so some of that brilliant tenacity and business acumen may be lost to the company.

Your concern about Google's tenacity is one that they should very much share.

  visu [09.25.06 12:24 AM]

common man after all microsoft is a has its windows from macintosh and now is just similar to matter wat heights they reach the credit goes to real inventors....:)

  Gandalf [03.01.07 03:07 AM]

Thats even if Kevin gets to university.

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