Google's high-speed battle with Microsoft

Google's high-speed battle with Microsoft

Summary: Google's high-speed battle with Microsoft.

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TOPICS: Google
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Bill Gates has indicated he is fed up with Google being seen as the ‘thought leader’ of the Internet Age. Steve Ballmer believes "We have the birthright to lead the pack. We've got more technology. We've got more experience."

Is that enough in the Microsoft vs. Google saga? After all, Google’s got “cool,” as in Fortune magazine’s best company to work for Googley cool. 

William H. Gates III, Co-Founder and Chairman, $268 billion market cap veteran Microsoft Corporation, shared the Davos World Economic Forum stage in January with Chad Hurley, Co-Founder and CEO, start-up $1.65 billion Google stock buy-out YouTube.

“The Impact of Web 2.0” was the theme, and Hurley, not Gates, had the opening honors. Gates patiently waited to be called upon and he eventually was, asked to weigh in number three, after Caterina Fake, Founder, Flickr. 

Hurley on Web 2.0: “it’s leveraging the power of the people, sharing videos with each other.” Fake on Web 2.0: “a return to the roots of the Web, when people were publishing pictures of their pets.”

When moderator Peter Schwartz, Chairman, Global Business Network, did get to “mature” Gates, the dialogue matured as well.

“Mr. Gates, You are one of the main architects of the software that all of this rides on, where is this taking us?”

Every year we move to more of a digital environment and we take away the older approaches…We will have communication systems using your Internet network with far richer, more flexible software-driven systems…The user interface gets more natural, finally speech, ink, vision, are coming in to complement the keyboard-mouse we’ve been using.

Gates was the elder business statesman, and still the richest man in the world, but the adoring World Economic Forum crowds clamored for Chad. 

WHY? 

In 1980, Gates set his mind to putting a computer on every desk in every home, and he did. In 2005, Hurley wanted to be able to share his “friends and family” videos on the Internet, with friends and family, and he did.

Is Hurley really the one with the more valuable business words of wisdom to “share,” rather than Gates? 

Steve Ballmer, Microsoft CEO, has some “business advice” for Hurley’s boss, Google CEO Eric Schmidt, and he “shared” it with fellow Stanford Graduate School of Business alumnus last week.

Microsoft is chronologically a more mature company than Google. Ballmer also views Microsoft as the more mature "entrepreneur."

Ballmer engaged the audience of Stanford students with colorful, pointed quips about the Microsoft Internet nemesis:

"Google’s built one very good business…but they only have one thing that they do, everything else they do is sort of cute."

"I don’t really know that anyone has proven that a random collection of people doing their own thing actually creates value."

"Right now, Google is the part of the cycle where they are milking, its the fun part of business…you’ve got something good going, you follow your customers, you do all of the innovator dilemma stuff, you follow your customers, collecting money, la la la, its twenty percent, twenty percent, we don’t have to do anything new, we just have to do it twenty percent more next year."

(photo taken at the NRF Convention in January, 2007, see "Microsoft: Steve Ballmer sells to retail in NYC")

Despite Ballmer’s Google chiding, he nevertheless put forth a solid, although concise, mini entrepreneurship case study on “Growth Theory,” The four stages to business. 

1) Invent something, it may or may never take off,

2) Get something to critical mass,

3) Milk it like heck when it is at critical mass,

4) Create culture to start the loop again.

Entrepreneurship is about all four parts of the cycle, especially stages 1, 2 and 4, Ballmer emphasized: “Great companies wind up having to be all four."

Some companies can’t regenerate themselves, however, he underscored, pointing out in particular that Google is solidly in the “milking” stage.

Ballmer affectionately called Microsoft a “two-trick pony,” saying that's “rare in the history of business”: 

Desktop was a trick and Server was a trick. The third trick, we’re trying to do online, the fourth trick, we’re trying to do consumer electronics.

 

Entrepreneurship is about being able to do the second, and third, and fourth trick, in Ballmer’s business book.

 

Ballmer doubts Google has any successful non-search “tricks” looming, calling the Google diversification efforts “cute.” Microsoft does a lot of cute things too, Ballmer offered: “I’ll tell you about our robotics effort, but its not paying for me to come down to Stanford Business School.” 

Rather than “cute,” I would characterize the Google non-search development efforts as wishful, and wistful, thinking.

Google claims to be on track to “organize” not only ALL the world’s information, but ALL the world’s advertising, to boot. Despite Google CEO Eric Schmidt’s “fantasy” of being a one-stop advertising shop for the world’s marketers, and years of trying, Google remains very much a one-trick pony nevertheless, as Ballmer said. 

In Ballmer “Growth Theory” terms, Google has not been able to invent a second “something” that has “taken off” for a meaningful impact on the Google bottom line.

WHY NOT? 

Ballmer called the pace of Google’s staffing ambitions “insane” and juxtaposed it to the Microsoft steady, incremental approach:

Trying to double in a year…we’ve been digesting a certain percent growth over many years, what that has allowed us to do is to build up a base of capable people who can take on more capable people…

Just as Google privileges rapid personnel growth over rational team optimization, the company introduces new products and acquires new technology seemingly almost willy nilly, favoring non-stop apparent “innovation” rather than successful, long-term development. 

CEO Schmidt, in fact, proudly reported to Wall Street in his Q2 earnings call that “the new products are coming at a fast and furious rate.” In his Q3 call, he touted “the blizzard of new product launches.”

Google also reels in assets at a fevered pace, from high-profile, high cost acquisitions—dMarc Broadcasting, YouTube—to absorption of two-person, university entrepreneurial projects, such as Dodgeball.

As “everyone’s favorite garage band,” and a rich one at that, Google has an almost carte blanche to add any technology or any company to its Googley inventory.

The acquisition, however, is the easy part. The integration is the “Rub,” the Google "BackRub," that is.

(Google lore: By January of 1996, Larry and Sergey had begun collaboration on a search engine called BackRub, named for its unique ability to analyze the "back links" pointing to a given website.) 

Where do Dodgeball, YouTube and dMarc stand, from months to years out of the Google gate?

Dodgeball: Google seems to be dodging it,
YouTube: $1 billion copyright infringement business model risk,
dMarc Broadcasting: No product launch, founders bailed.

What is Google doing wrong?

"Slow down, you move to fast, you've got to make the (acquisitions) last," in the revised "Feelin' Groovy" words of Simon and Garfunkel.

What can Google do to make its growth strategy fit better into a long term Googley development "groove"?

Google ought to focus on seeking to realize targeted fruits of what it has already set in motion, rather than aiming to continue driving a growth “blizzard.”

Not only do blizzards blind, they leave much financial damage in their wake.

ALSO:  YouTube: Why Google fears $1 billion Unsafe Harbor and Google battles Microsoft and Google warns of Microsoft, Yahoo competition and Microsoft to battle Google in online healthcare

Topic: Google

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19 comments
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  • Well quit talking about it and create cool. Not rocket surgery

    [B]Bill Gates has indicated he is fed up with Google being seen as the ?thought leader? of the Internet Age. Steve Ballmer believes "We have the birthright to lead the pack. We've got more technology. We've got more experience."[/B]

    You know, when I get fed up with something, I generally do something about it, not whine about it.

    Here's some advice, if you create something cool, innovative, earth shattering, you might get the recognition of innovating something cool.

    Office and Vista, sorry, these are tools, no cool factor.
    Zune, playing catch up with Ipod.
    XBox, great, but the third player into the field.

    You get the idea. When you spend most of your time copying Google (Google Earth, search, etc), you don't give yourself much of a chance to come first.

    TripleII
    TripleII-21189418044173169409978279405827
  • It's tough to lead by following everyone else

    NT
    mrlinux
  • The sycophantic tone of this article is nauseating

    The worshipful, cloying way in which you worship Gates, Ballmer and the rest of the heirophants of That Which Dwells In Redmond is sickening. Bill Gates has nothing to do with anything more creative than contract writing and judge suborning. Microsoft has no heritage in this industry that anybody should honor. If Tim Paterson, Alan Kay and Steve Jobs had never been born, Bill Gates would be just another Harvard dropout living on daddy's trust funds.
    orangemike
    • Not judge suborning

      He only had to suborn the Attorney General,one John Ashcroft.
      epcraig
  • "start-up $1.65 billion Google stock buy-out"

    I had to read that phrase 3 times to figure out exactly to whom it applied and how it was signigicant

    That may be the longest, most awkward adjectival phrase I've ever seen. Maybe if you threw in a comma or two, or maybe even a preposition or a conjunction, it might be easier to read: "Start-up and $1.65 billion Google stock buy-out." And is the word "stock" really necessary? Do we need to know how Google paid for YouTube in this particular post?

    Anyway, just passing through, spreading my 2 cents around.
    Cyraxote
    • Yep

      LOL, I must agree, I had to look at that a few times myself. I find myself both amused and saddened by this lady's rabid hate.

      Some of the comments, though, are hilarious.
      Foxwolfen
  • "start-up $1.65 billion Google stock buy-out"

    I had to read that phrase 3 times to figure out exactly to whom it applied and how it was significant

    That may be the longest, most awkward adjectival phrase I've ever seen. Maybe if you threw in a comma or two, or maybe even a preposition or a conjunction, it might be easier to read: "Start-up and $1.65 billion Google stock buy-out." And is the word "stock" really necessary? Do we need to know how Google paid for YouTube in this particular post?

    Anyway, just passing through, spreading my 2 cents around.
    Cyraxote
  • Haven't we been milked enough?

    Gates and Ballmer live in thier own worlds and can not understand how anyone can
    see it differently. One upon a time we had choices!

    http://blogs.business2.com/apple/2007/03/gates_claims_vi.html
    LittleGuy
  • The cry of the dinosaur on its way to extinction

    Microsoft innovation, since the year dot, began and ended with Microsoft finding new ways to copy or steal other people's ideas, and integrate them into Windows. Failing theft or copy, Microsoft simply bought their "innovations" intact, in the form of company buy outs. Without something to copy or catch up to, Microsoft are dead in the water.

    When this is apparent even to the former MS party faithful, it helps put the sycophantic twaddle of this ZDnet infomercial firmly into context ...

    http://business.timesonline.co.uk/tol/business/industry_sectors/technology/article1529988.ece
    In the past, Scoble has tended to be sympathetic about Microsoft?s failings. However, he was provoked into stinging criticism last week after a series of triumphalist remarks, including some disparaging comments about Google made by Steve Ballmer, Microsoft?s chief executive.

    At a ?global summit? of its most-valued software developers, Microsoft repeatedly declared that it would ?win? in search and other parts of its Windows Live internet strategy.

    ?The words are empty,? Scoble responded. ?Microsoft?s internet execution sucks (on the whole). Its search sucks. Its advertising sucks. If that?s ?in it to win?, then I don?t get it.?

    He continued: ?Microsoft isn?t going away. Don?t get me wrong. They have record profits, record sales, all that. But on the inter-net? Come on.

    ?Microsoft: stop the talk. Ship a better search, a better advertising system than Google, a better hosting service than Amazon, a better cross-platform web development ecosystem than Adobe, and get some services out there that are innovative.?
    whisperycat
    • Google the dinosaur?

      Remember when [i]Dinosaurs[/i] where the in thing, you had Dino-boy, dino-Riders, dinosaur tours, dinosaur displays, the Jurasic Park movies.

      Kinda faded off, much of what the article reads like about Google. Sure they're the in thing, but what exactlly have they done to garner all the positive press? They make money off of search, yet made more off of stock. The only reason people talk them up is to keep the stock up, which at the price it cost to buy on in, it had better not drop too much or everyone (except the founders) are out quite a bit of money.

      Many companies have done things that Google could never hope to do, and yet they get passed over in news and tech collums as "Hey look: Google just gave out free email accounts!"

      So yes, like the dinosaur fad of years past, or everyone jumping on the Mars rover bandwagon, Google will, in time (12 months?) be relagated to the heap along with the afore mentioned fads...
      John Zern
  • history though Gate's rose-tinted spectacles

    "In 1980, Gates set his mind to putting a computer on every desk in every home, and he did"

    Ridiculous! Nobody had this idea.

    Gates simply made it big because his mother Mary Gates was on the board of IBM when they was looking for an o.s. for a pc and Microsoft were lucky enough to but MS-DOS cheap from Seattle Computing.
    sj_z
    • Revisionist History

      "Gates simply made it big because his mother Mary Gates was on the board of IBM when they was looking for an o.s. for a pc..."

      Having known Mary Gates, I can assure you she NEVER served on the board of IBM. For the life of me I do not see why people have to make up information and pass it off as reality. She served on the boards of numerous local and national charities, the board of regents of the University of Washington, as well as several other corporate boards.

      Next time you might want to check your facts!
      CTOSea
  • Microsoft Inovation HA HA

    Front runners of the internet I don't think so Gates and microsoft didn't even have any idea how big the web was going to be until Netscape grabbed a huge hunk of peoples attention with Navigator and had Gates and Co scrambling to see who stuff they could rip off this time.The only thing Microsoft has ever done is to stifle innovation not create it!!!
    wizardb9
  • Playground attitude

    Wow! Sounds like Microsoft is used to being king in the playground and now they sound like the little kid who is mad because he is not the most popular any longer and is bashing those who are because they are having "FUN". Shame on you Microsoft! I would rather work for a company who is successful and having fun rather than being "mature" as you say and whining.
    ld358
    • There's truth in the argument

      earlier I had mentioned that

      [i]Many companies have done things that Google could never hope to do, and yet they get passed over in news and tech collums as "Hey look: Google just gave out free email accounts!"[/i]

      So yes, there is the issue that if Google is just hiring all the best with goodies and games, with not much of anything usefull coming from it, just to keep companies like Yahoo or others from competing with them, hey, that's business, but it doesn't really lend much to the industry as a whole, so yeah, it's a waste, a very childish perspective.
      John Zern
  • IT'S THE INTERNET, GET IT!

    iN CASE YOU HAVEN'T NOTICED BUSINESS IS NOT SO GOOD LATELY. PRIMARILY, THE TRADITIONAL BUSINESS CONCEPT OF "BUILD IT AND THEY WILL COME" IS LOSING STEAM - WHETHER IT'S A PHYSICAL STRUCTURE OR A SHOP. THE INTERNET IS FAST BECOMING THE PRIMARY MEASS OF DOING BUSINESS AND WEB SITES ARE GROWING BY LEAPS AND BOUNDS. EVERY HOME SHOULD HAVE ONE.

    THE SEARCH FOR MERCHANDISE AND SERVICES IS EASIER WITH THE COMPUTER, MORE THOROUGH, CONDUCIVE TO BETTER COMPARATIVE SHOPPING INFO, AND THE CUSTOMERS ARE AVAILABLE WORLDWIDE.

    THE EMPHASIS SHOULD BE ON SIMPLIFYING THE USE OF THE COMPUTER AND OF THE INTERNET JUST LIKE IT WAS DONE TO TRANSFORM THE AUTOMOBILE, AIRPLANE, ELECTRICITY, TELEVISION, RADIO, WASHING AND DRYING, HOUSE BUILDING, ETC. ASK THE CONCUMERS WHAT THEY NEED, DON'T USE THESE TREMENDOUS FINANCIAL RESOURCES TO IMPOSE ON THEM SOMETHING THEY DON'T REALLY WANT THROUGH SCADS OF ADVERTISING AND MISLEADING PROMOTIONS. TALK WON'T DO IT.

    THE INTERNET IS NOT BEST WAY, IT'S THE ONLY WAY.
    pdrengr
  • BALLMER IS A PSYCHO!

    If anyone ever doubted this fact it should be clear now!
    Reverend MacFellow
  • Microsoft's real advantage

    Innovation means different things to different people. Dreaming great idea does nothing for the man on the street unless or until someone puts legs on that idea and successfully markets it. So the "marketer" is just as vital to the innovation process as the visionary.

    We instinctively admire the visionary and look down on the "marketer". We deride the latter for making lots of money "on the back of" the former. Yet even one who, in a forum like this, would use words like "obscene" when it comes to Microsoft would think glowingly of himself if that same marketing system enabled him to, say, sell his house for three times the amount he paid 10 years earlier.

    Successfully marketing a new idea (including making a profit) is, therefore, just as important a part of the "innovation cycle" as dreaming up the idea in the first place.

    When it comes to Microsoft and Google, I see Redmond as having two significant advantages: first, it knows how to bring ideas to market; second it has arrived at the place where it has enough resources to fail multiple times over without risk to its overall business model (or financial condition.) Hate Gates and Ballmer for that if you will, but that advantage is critical, because the innovation process always results in more failures than successes.

    Google has not proven itself as a consistent "marketer" across multiple platforms. Maybe someday it will or won't. Either way it has less financial capacity for a sting of repeated failures before its bottom line suffers enough to catch the attention of its financial backers.

    And, for the record, Google Earth is cool, and I use it whenever I track a flight or ferrit out someone's house for a dinner date-- but look at the copyrights when you use it. Seems Google (ahem) has rebranded someone else's "cool." Can it really be "bad" if Microsoft does it, but good if Google does?
    Hobed
  • RE: Google's high-speed battle with Microsoft

    http://www.analogstereo.com/volvo_xc_owners_manual.htm
    us_forums