Google-Microsoft rivalry comes down to clouds or software

Google-Microsoft rivalry comes down to clouds or software

Summary: Google doesn't need to be evil. It wins wherever the playing field is level. As the volume of online computing goes up, costs tell.

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Microsoft's release of Office 2010, and its free online version, has a lot of people comparing Google Docs to Office, and then Google's cloud to Microsoft's.

(Image from the Radical Marketing Blog, via Matt Asay at CNET.)

Well, Docs is not  Office. Switching costs for old files are still too high for most businesses to consider leaving.

If they're not leaving for a free Open Office.org that supports Microsoft's file formats (and so far they're not) then they're not going online to do it the Google way, either.

But office suites aside (why doesn't Google take over sponsorship of OpenOffice from Oracle's Sun division and put that in its cloud) what some are calling Google's cloud bravado is not that at all.

It's not bragging if you can back it up. In terms of the basic mechanics of running a cloud, of delivering compute services at the lowest possible cost, Google is light years ahead of Microsoft and everyone else.

Because Google invested in dark fiber early last decade, because Google emphasized low-cost PCs on its server farms, because Google takes energy costs seriously, Google now has a better Internet core than AT&T and Verizon, than Microsoft, IBM or anyone else.

I don't know what the exact figures are, but I suspect Google can deliver any computer-related transaction -- file creation, collaboration, search, connectivity -- for an order of magnitude less than any rival pays.

No one seems to get this. No one seems to understand that there is a big difference between .000001 cent and .0000001 cent, that the second figure is one-tenth the first, even though both numbers are really, really small.

That's why Google doesn't need to be evil. It wins wherever the playing field is level. As the volume of online computing goes up, costs tell.

It's true Microsoft retains an advantage in office software, built over 25 years, the habits of many career lifetimes.

By extending Office from basic functions like word processing and spreadsheets into more esoteric areas, starting with PowerPoint but moving then into SharePoint, ActiveX, Dot NET, COM add-ons, and Visual Basic applications (among others) Microsoft has developed as wide a lead in its area as Google has in its.

The question is which is more powerful, the computing environment or the cloud itself. That's the state of play. It's not "who has the best cloud." Google does. It's not "who has the best applications." Microsoft does.

It's which is more important, software or infrastructure. My view is that software is the shorter-term edge.

Topics: Google, Collaboration, Microsoft, Software

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23 comments
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  • Great points, Dana

    For Microsoft, the problem is that there are fewer and fewer hooks to retain its customer ties to its platform. Without fully expanding to open documents -- even the simplest W3C/HTML ones -- Microsoft must rely on spending tens of millions for marketing each year.
    zaine_ridling
    • And Google's is seeing that they have to spend the same amount

      if they're going to grow beyond search.

      How much money did they spend advertising the Nexus One? Not much I would guess, and it shows in poor sales of the phone.

      As for Google "winning whenever the playing fireld is level" is just a BS excuse. The thing I think people like Dana don't get is that "cloud computing" is at it's best when the browser is removed, and replaced by software.

      Having access to your data wortldwide is great, but whats important is what I can do with it at my end, using the software of my choosing that best fits the my needs and use of the data itself.
      John Zern
      • RE: Google-Microsoft rivalry comes down to clouds or software

        @John Zern <br><br>I think you are missing the point. <br><br>In the MS paradigm, you have 30 users collaborating on a document using a bloated "type setting" tool called Word, 30 copies of it to be exact, plus SharePoint and Web Office.<br><br>In the Google paradigm, you have 30 users collaborating on a document using a much simpler tool, Google Docs. It is designed especially for collaboration and not for elaborate formatting and type setting. In the Google paradigm, the content of the document is more important than the way it looks. Once the document is completed, it can be downloaded and re-formatted using Word, and only one Word license is needed instead of 30.
        prof123
      • RE: Google-Microsoft rivalry comes down to clouds or software

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        gorians
    • RE: Google-Microsoft rivalry comes down to clouds or software

      @zaine_ridling,<br>I don't think you get the point that Dana was making. Google has the advantage, infrastructure-wise. With the Microsoft office suite, they enable their customers to make those applications "their own", by allowing their customers to customize and extend those products. The interoperability between different members of the Microsoft platform family...(Office, SharePoint, SQL Server and Exchange) , gives Microsoft a competitive advantage. It's not just marketing. Dana did say that the software edge is a shorter-term advantage. However, Microsoft has been exploiting that advantage for over a decade.
      bmonster
      • RE: Google-Microsoft rivalry comes down to clouds or software

        @bmonster
        I'm not convinced that google has the better cloud. A better cloud to me is not just infrastructure but also software offerings and the main core of that would be database offerings and software services. Google could win the software service but I'm not convince of that either. But MS definitely wins with sql server offering to an enterprise audience. google doesn't have an enterprise DB for the cloud.
        I attended a seminar on MS azure. They are in the process of building 10 data centers for the cloud at a price tag of $500 million per data center. That puts their cloud structure in a pretty good place. Not to mention, its MS's business strategy to always come from behind and take the market away from those who innovated it. They have branding on their side and that always counts for a lot.
        rengek
      • RE: Google-Microsoft rivalry comes down to clouds or software

        The question is which is more powerful, the computing environment or the cloud itself. Thats the state of play. Its not who has the best cloud. Google does. Its not who has the best applications. Microsoft does.<a href="http://www.edra41.org/"><font color="LightGrey"> a</font></a><a href="http://www.actioniseloquence.net/"><font color="LightGrey"> b</font></a><a href="http://www.funds-china.com/"><font color="LightGrey"> c</font></a><a href="http://www.isupportbridgewater.com/"><font color="LightGrey"> d</font></a><a href="http://www.cca64.org/"><font color="LightGrey"> e</font></a><a href="http://www.nexumbogazici.com/"><font color="LightGrey"> f</font></a><a href="http://www.h4nholdings.com/"><font color="LightGrey"> g</font></a><a href="http://www.dataseek.info/"><font color="LightGrey"> h</font></a><a href="http://www.pcloshwdb.com/"><font color="LightGrey"> i</font></a><a href="http://www.santaibisnes.com/"><font color="LightGrey"> j</font></a><a href="http://ipadbagblog.com/"><font color="LightGrey"> k</font></a>
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  • Cloud = Mainframe

    Despite delivery costs, I think many will not want to go back to centralized computing. even if it has a new name. Sure, there are good candidates for decentralized apps, but I don't like the pricing model or the security and reliability implications for office apps.
    batpox
    • RE: Google-Microsoft rivalry comes down to clouds or software

      @batpox
      It won't be dictated by individuals but by corporations. Companies will save a lot with clouds and they will do it just like outsourcing. In fact, its a great behind the scenes outsourcing technique.

      Computer environments have always been like mainframe anyway. We went from mainframes to client server but was that really all that different. You still needed to buy big database servers and heavy clients. So then we went with web applications. Back to thin clients but now we need robust application servers and database servers. Cloud just takes those 2 things and relocates them. Its a lot of moving things around. If it saves the company a lot of money, they'll spin the security concerns to a favorable argument.
      rengek
  • RE: Google-Microsoft rivalry comes down to clouds or software

    Software is going to win over the cloud. Businesses aren't trusting of the cloud, especially in the financial and healthcare industries. Google isn't a trusted company as well with their recent data breeches and major privacy concerns.
    Loverock Davidson
  • Dana do you have any supporting data for these claims?

    If so please link to it as I'd be very interested in reading it. I find it very hard to believe that google is an order of magnitude, let alone "light years" more cost effective in running/managing it's data centers. I would bet that MS also cares about low cost per work load for it's servers and takes energy, bandwidth, and maintenence costs just as very seriously. I would love to see a comparison of these costs for the most recent datacenters they've each opened for equivalent requests/transactions per second, GB stored, etc. Not retail user charge but operating costs. The most recent numbers for both should be pretty indicative of how far apart they currently are now, since how much lead google may or may not have had at some time in the past is now irrelevent.
    Johnny Vegas
    • Supporting claims?

      @Johnny Vegas : "I find it very hard to believe that google is an order of magnitude..", me too but definitely Google can do it cheaper not just because they started earlier, are larger and planned it longer but what and how they use their platforms. Compared to simplified Linux / Unix systems Windows is way behind because of the complexity and unnecessarily heavy processing. And of course, cloud means more for processing, server side than desktop and Microsoft still has a long way to go, sometimes it almost seems that they are not even trying?
      tuomo1
      • Data my friend

        @tuomoSupport your claims with DATA. What type of systems are you talking about. Web applications? Compare apples to apples. If Google has a better office suite performance-wise, explain how documents load faster, how Google Docs performs better than MS Office. If you're talking about collaboration software, tell us how Google does better than Sharepoint. If it's a DBMS, tell us which one. Give specific metrics. There is more to application architecture than just the OS. And this general statement, "Linux is faster than Windows" is tiresome. In what context? If the OS is efficient, but the application is written poorly...it doesn't matter.
        bmonster
      • Okay thats moving from unsupported claims to what sounds like pure FUD

        The myth about Windows being heavy/complex is BS. It's highly optimized. Look at TPC for SQL vs nix/Oracle/DB2. Look at IIS vs nix/Appache or ASP.NET vs nix/any java app server for req/sec and users/box. Look at dedicated video encoders or whatever you want. Windows Server compares very favorably in all those scenarios.

        Then think that azure uses a very highly cloud optimized verison of windows. It has very advanced management built in for not just auto updating the core os but all deployed apps and all their library/app server/db/etc dependencies for complete management automation. It also has advanced monitoring and virtualization.

        Both companies have no shortage of very bright people with very long histories of experience with os's, servers, networking, distributed processing, caching, load balancing, fail over, etc., etc. That's why I'm very skeptical that there's "light years" or "an order of magnitude" of difference between them. There may have indeed been a difference of infrastructure build up but I bet that's not still the current situation. That's why I'd love to see the current stats from their latest data center offerings of each to see if googles really got an operation cost advantage and if so in which aspects.
        Johnny Vegas
  • Short-term edge to software?

    Dana you never defined what you are calling "short-term". Moore's law is now being applied across every aspect of Internet and that includes communications. Infrastructure will win out in a very short period of time and I would say 2-5 years the winner will obviously be Google.

    We are entering a new phase in computing that is based on communications between, people, software and services. Google's is ever expanding with the Android operating system being the latest infrastructure piece delivering more eyes to the Internet which Google is a dominate force. The software era of Microsoft is over.
    TJGodel
  • I think the desktop has the greater potential

    Overall I think what MS is doing with Office 2010 is great. The issue I have with MS, is that it seems to be playing defense when it comes to the browser, rather than offense by adapting its Windows and other platforms to our current environment. First of all, the web or browser is kind of like Open Source Software (OSS): it is hard to make money from it - specifically when used as a front end to services. MS has been trying to make money from the browser for about 15 years, and havent been able to do so. Most companies make relatively little or no money as well. Google is the only company I know which does. It only makes sense to me that MS restructures its platforms as gravity wells for services, so that they can be best monetized (with rich front ends - very similar to what Apple is doing with its own platforms) so that the businesses can make more money than what they are able to do on the web today. E.g. rather than dumping a lot its great assets onto the web for free in the form of MSN services (and incurring hundreds of millions of dollars in losses year after year for it) I think MS should use its web sites to primarily drive users into breathtaking Windows client experiences, and charge tiered pricing to better monetize it. The same thing could be said about Myspace (particularly as a great experience for artists and celebrities), Facebook, and many other services. Not only would the above better monetize MS current online services, MS could gain a significant amount of new revenue from an app store, and the infusion of new Windows apps would in turn significantly restore the value of Windows. <br><br>A Windows app store built on Windows client technology (similar to iTunes) seems crucial to me! This one Windows application could significantly turn the tide of preferred application platform away from the browser, and back to Windows. The impact of this application on the PC ecosystem could be huge! Not only could it substantially add to Windows revenue, it could re-vitalize Windows application development; centralize the location of Windows apps; increase confidence in the quality of downloaded Windows apps; ensure downloaded apps arent infected with malware, etc. A Windows client app store could also significantly skew online ad revenue from the browser to Windows (as MS could start its own ad network for Windows apps like what Apple has done for its own platforms), etc.
    P. Douglas
    • Continued ...

      I also strongly believe in Windows platform category software. E.g. the Zune desktop software could become a special entertainment platform in which, in addition to the usual selling of music and videos, it supports special (pre-screened) Silverlight apps, that function similarly to HTML apps, which users can browse through and explore. This would allow artists and shows to provide compelling, innovative user experiences on the Zune platform, users could browse through, and optionally install - maybe for fee. Other platform category software could include shopping, brochure (essentially electronic versions of company brochures), ebook, general business publications, light business applications, light consumer applications. E.g. with the general business publications platform, MS could allow companies to develop / extend super rich viewing and manipulation experiences of various versions of various Office files against Sharepoint, and have them freely distribute customized versions of the platform - which could incorporate third party tools. MS could allow companies to provide access to the platforms (from non-MS platforms) via virtualization.

      I believe MS should be greatly preoccupied with making the app store work - including making the downloading and management of applications through the store be as quick and painless as possible. An app store with platform software (like an Xbox platform) could help revitalize Windows applications (including gaming), and open up new opportunities for MS and developers.
      P. Douglas
  • RE: Google-Microsoft rivalry comes down to clouds or software

    You are thinking like a computer scientist thinks about algorithmic complexity. It's the order of magitude that matters when N is larger.

    Guess we'll see what happens, at this point I see that in the long run who ever gets to a lower cost at a granular level wins in the cloud game. Seems like Google is ahead, they are doing some new things with both commodity hardware and replication of computing processsing. I don't see MS doing this, though that doesn't mean they aren't looking into it. Could be somone else that sneaks in here to over time. Like IBM :-)

    Another point I will make is that word processing, spreadsheets, and presentations are a commodity technology. No real need for anything new, nor arguably has there been for 10 years or so. If it took 25 years for MS to get everyone using Word, what will happen in the next 25 years? Clearly Google is betting that over the long run, lower costs for commodity software will win. Guess we'll see.
    krid007
    • If the rules of a game put you at a disadvantage ...

      ... why would you want to play it? It seems to me that it is best that you simply change the rules. Why should MS be caught up in a race with Google to produce a fully cloud business model? MS merely needs to demonstrate to the computer industry, that a hybrid model results in most everyone making more money, more innovation taking place, and customers being happier - and that this model has a long, long future.
      P. Douglas
  • Search is one thing, but trusting Google with my data is quite another...

    When people just need to look up things, a search engine might be quite adequate, but the user might still be giving too much information to the search engines which can use those searches to determine habits and preferences, and will develop search histories of those users.<br><br>When it comes to trusting any one company, or any number of companies with one's information, that's where Google and any other cloud service loses.<br><br>Google, rightly or wrongly, has been identified as invasive and intrusive when it comes to handling any type of information they can get their grabby cloud or grabby search engines on. Can anyone identify any information at all that Google doesn't save and use for datamining or "researching" on? <br><br>As long as the perception is out there that Google (or any other search engine or cloud service), will use your information for their enrichment, then people are either going to stop using those services or will never start.<br><br>There are still too many problems with the cloud, including security, invasion of privacy, availability, and ownership of the data. <br><br>The cloud novelty has been building up the last several years, but once people begin to realize that they've been divulging too much to those cloud services and search engines, then the cloud will turn out to have been just another bubble that had to burst. <br><br>So, the ultimate winner will be the user at home, with his/her data "safely" in his own computer, and his/her "own" software handling it, and the data available whenever he needs to access it. When the cloud and search engines become too invasive and remain insecure, neither Google nor Microsoft nor any other cloud service will win.<br><br>The only reason Google is delving into the cloud and other services is because it's feeling too insecure as a one trick pony with it's search engine. Google might become successful in other areas, but as a distant competitor in any field they play in. They will remain the #1 search engine for some time to come, but, the more people continue to perceive them as being too invasive and too consuming of people's information, then even the search engine will start to suffer to the point where it could eventually become an also-ran. So, perhaps Google needs to concentrate all or most of its efforts in making their search engine better and friendlier towards consumers. As far as being a competitor to Microsoft in the software business, fuggetaboutit. As far as the cloud is concerned, if it ever does become a business that people will use, then Microsoft is better positioned for that than Google. The cloud depends upon data, but the one with the best software to manage it will win the battle. Microsoft is a much better software company than Google and it's that software, both the cloud and the PC based type, that plays in Microsoft's favor.
    adornoe