Saturday, August 15, 2009

Google v. Microsoft: Battle of the Behemoths

In one corner we have the global leader in operating systems and in the other the undisputed champion of Internet search. Both companies dominate their respective markets with sketchy outcomes in forays into other markets.

Google and Microsoft are companies with deep pockets for research and product development and eye each other constantly from across the economic boxing ring. The areas of potential competition between the companies makes the Apple-Microsoft rivalry look like nothing more than an entertaining carnival sideshow.

What's noteworthy about this battle of the tech titans isn't so much the two companies are natural adversaries but the points of engagement are quickly moving beyond a well-defined or contained area of conflict. As both companies come out swinging at each other, the field of battle is not only expanding, it may take on the look of trench warfare with Google and Microsoft lobbing economic grenades and mortar fire at each other from both near and distant points of skirmish.

The recent Microsoft-Yahoo! deal is aimed squarely at battling Google in its core market (search) while Google's plan to release the Chrome OS is a shot across the bow of the flagship in Microsoft's revenue armada.

Apple, for its part, is drawn into this spreading conflict as an ally or antagonist to both companies as the combat between Google and Microsoft becomes a global conflagration between the two digital superpowers. Microsoft remains one of biggest Mac developers on the planet with products such as Office while Google moves the battle of productivity solutions from shrink-wrapped boxes to the cloud. For now Apple needs cooperation from Microsoft to continue Mac versions of Office and Apple product compatibility with Exchange. At the same time Apple remains a natural ally of Google in its efforts to diminish the influence of Microsoft at every point on the planet.

The recent flaps over scrutiny of close ties between Apple and Google and Apple's decision to remove certain Google products from the iTunes app store illustrate Apple's quirky involvement on both sides of the fight.

Microsoft needs the volume of Windows sales that netbooks provide. It's needed to protect Microsoft's overwhelming leverage in the global OS market. Microsoft also needs to provide Windows OEMs with higher margins on netbooks sales to make Windows licensing fees more economically acceptable to the hardware makers. Google sees the netbook market as a prime target for the release an OS to further entrench users in the use of the company's expanding array of solutions. The Chrome OS will be an attractive OS alternative to netbook makers seeking to raise margins on their own by eliminating the Windows licensing fee.

My personal view: Advantage Google.

Moving the analogy back to the boxing ring, Google has the corporate strength and depth of resources to deploy a Rope-A-Dope strategy in battling Microsoft's swings at the search and Internet advertising markets and the body blows that will come as Google moves into the OS market.

Like a fighter rather than a boxer, Microsoft has the strength to take on all comers and land blows that would fell all but the fittest of competitors. But in defending its "command and control" OS paradigm, the company is tethered to an outdated market model, reducing its reach to many areas of the economic ring. Microsoft is big and strong, but deftness is necessarily lacking as the company seeks to protect its revenue fortress from attack by the search and Internet advertising heavyweight.

Google will jab, poke and counter with right hooks, damaging the opponent while maintaining movement around the ring. Neither competitor will land an early knockout punch and the outcome will be determined by the scorecard following each round of the bout.

Apple's best position during this bout is a ringside seat watching Google fight what might have been some of Apple's biggest battles. Any crack in the foundation of Microsoft's overwhelming OS advantage is a win for Apple and provides an opening for Apple to further fracture Microsoft's control of the PC market. While Google prepares for its ring bout with Microsoft, Apple will continue its development of the iPhone eco-system unabated no matter claims Google's Android-based solutions pose a competitive threat.

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