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Google vs Microsoft

An interesting article in The Economist got me thinking about this ongoing debate. The article wisely points out that in a sense Google is the new Microsoft, but not completely, and it is these differences that are fundamental to the debate.

The computer market has been overshadowed by giants for most of its 20 year life. At the beginning, IBM dominated the scene, and with the rise of PCs, Microsoft followed. Microsoft’s aim was to have a PC in every home, and every PC running Windows software. While this has not happened, they’ve still done well squashing the opposition so that most PCs do in fact run Windows.

However, it was the opposition, which seemed to have no chance at all, that has eventually succeeded. Although Microsoft bought up, or sued out, nearly all software firms that it saw as opposition, it could never stop open source software. Although Google is not open source, I believe it is built on those principals (despite the fact they don’t release their search algorithm). I hold this view because as a company, they aim to satisfy the consumer’s demand as their first priority, and make profits afterwards (however true may be is not under debate here!).

The speed with which they rose to power is somewhat mind-blowing, but just shows the position of the market today. It is the mere fact that a major competitor to Google and Microsoft could just as quickly rise out of a garage, which keeps Google on their toes, and keeps them innovating new products everyday. While they still assert their global corporate dominance by snapping up smaller firms by the barrelful, they have no real sustainable competitive advantage – other than loyal users.

This is somewhat similar to Microsoft. Yes, everyone uses Windows and Office – but free alternatives are available. In my opinion, by the time these free alternatives become more widely known, and by the time software reaches what I like to think of as a global compatibility threshold (when a compatibility standard will have to implemented in all software for it to be competitive in the market), Microsoft will lose its crown forever. This is already beginning to happen with Apple announcing their move to Intel processors and the support of Windows, Google launching citywide free WiFi in San Francisco, smart-phones and PDAs becoming more popular and the internet becoming more widespread everyday. China and India’s booming economies are bringing thousands and millions of new users in the very near future.

Microsoft is already falling in many fields, and fails to show any kind of large scale innovation in its primary market – Windows. The success of small time firms like Google and open source software like Linux or Firefox clearly shows that users are becoming more educated on the use of PCs and their demands for better products will be met – either by software companies, or by the users themselves. This is the key change that will keep Google from ever being able to assert the destructive dominance that Microsoft once had. It will never be able to control the market as alternatives will always exist to do the same job for free (e.g. anonymous Google search is offered by Scroogle (new window)). All of Google’s products currently have worthwhile substitutes, yet it hangs on to its top spot through innovation and a good image – the loss of these will see the giant fall back to its humble beginnings (with a few extra billion dollars to cushion the landing!).

Google may indeed be the new Microsoft, though despite it barking and snapping at all opposition, it will most certainly lack the bite to keep a commanding control on any of its markets.

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