During the Google-Sun press conference [Stephen Shankland's coverage here] [video clip here], Eric Schmidt was asked about Google’s plans to take on Microsoft in the applications space. He basically responded that Google is a search company that sells ads. In response to another question about developing productivity applications, he remarked about how the lines are blurring between Web services and more traditional kinds of applications--OpenOffice, for example. He didn’t say that Google would do a browser-based, or even downloadable, MS Office competitor (the elusive Goffice or Gopenoffice), but didn't seem to rule it out either.
The Google CEO is being transparently coy, and possibly even disingenuous, about the intentions of his company. From a revenue perspective, search/ads is the business, but that's not even close to the whole story. I wouldn’t classify Wi-Fi, VoIP, Earth mapping, e-mail, calendaring, photo editing, blogging, instant messaging, content distribution, and potentially productivity apps as search. Rather than embrace direct confrontation with Microsoft, Google's modus operandi is to just crank out services and let others, like the press, analysts and assorted conspiracy theorists, determine the intricate nature of Google's plans for challenging Microsoft and world domination.
Google is engaging in some misdirection, clearly aimed at Microsoft. I believe the Google folks are smart enough to recognize that when Microsoft fixates on a competitor the corporate personality becomes obsession. There is no question that Microsoft is obsessed with Google and its products. So, Google can lead Microsoft all over the place, with the software giant chasing the search/information company like a dog being led after a bone. Google can't be everywhere, even if information might seem to be everywhere. But the company can appear to be interested in everything and cause Microsoft to waste resources, be distracted chasing Google, while the rival executes brilliantly where the Redmond folks aren't looking.
My advice to Microsoft: Stop following Google. When Microsoft obsesses, it makes reactionary decisions and releases reactionary products that mimic its competitor. That's not how Microsoft can succeed here.
Editor's note: See ZDNet's special report for additional news and views on the Sun-Google partnerhsip.