Microsoft vs Google: Game on

Microsoft vs Google: Game on

Summary: Both global giants aspire to provide the complete underpinnings of your digital social and work life, and that lifestyle is changing very fast indeed

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Where does a document based work environment fit into the ever more connected world we are accelerating into? This is the larger question around Microsoft's unveiling of their Office 15 suite, which, as was widely expected, rolls up into suite features some of the innovative ideas their competitors have created over the last few years. 

The other big question is whether Microsoft is just skating to where the puck was, to paraphrase Wayne Gretzky, and where is it aiming for in the future?  Bing is a terrific search engine but Redmond's efforts to emulate Google's spectacular, foundational success as an advertising powerhouse by buying aQuantive, Inc in 2007 for $6.3 billion ended in failure earlier in this month, with Microsoft's $6.2 billion write-down of aQuantive's goodwill beyond its tangible assets - they may even completely exit the digital advertising market. This charge is widely predicted to wipe out most Microsoft's profits for their fiscal fourth quarter which ended on June 30 - results will be announced later this week on July 19. (AQuantive was the parent company of a group of three web 1.0 originated digital marketing service and technology companies: Avenue A/Razorfish, Atlas Solutions, and DRIVE Performance Solutions).
 
While Google continues as the heavyweight champion of Web advertising distribution, Microsoft's cash cow continues to be their Office division, which delivers the biggest chunk of revenue and profits to the company. For the nine months ended March 31, the division generated operating profit of $11.6 billion, or more than half of the company's total operating profit for the period, according to the Wall Street Journal.

Where Google's war chest is powered by global advertising revenue, Microsoft's heart is powered by perpetuating the document based working culture, with document creation (Office) digital postage (they own around 80% of corporate email by most reckonings) and digital filing (Sharepoint). Today's announcements, widely covered on ZDNet, do a terrific job of keeping the core Office user base cosy and warm while adding some now familiar (thanks to their competition) new functionality. Box.Net ceo Aaron Levie cheekily tweeted "Microsoft hasn't had to compete this hard in years. It's like watching a bear emerge from a decade-long hibernation" this morning.

Steve Jobs announced the Apple iPhone in January 9, 2007 at the same venue as Steve Balmer unveiled Office 15 today: the Moscone West in San Francisco. Across the street Microsoft's first experiment with a branded retail store was born in the late 90's when the company was riding high. Called microsoftSF,  it was located within the Sony Retail Entertainment owned and operated Metreon shopping mall in San Francisco and ran from 1999 to 2001, the year Apple stores first appeared. Microsoft reentered the stores business, probably based on the success of the Apple Store model, in 2009 and currently have 26 stores worldwide. My point is that unlike Apple unlocking vast new mobile territories to build on with their brilliant 2007 iPhone launch, Microsoft are playing catch up, and not igniting new markets. 

Google are seen as a serious threat to Microsoft's Office division with their enterprise applications business which has been making steady inroads into document oriented work patterns, as the Wall Street Journal also noted. Google Apps charges $50 per user each year, though some business customers may pay less if they sign on through a reseller.  Microsoft's  Chief Operating Officer Kevin Turner said Office 365 "is our collective future. And make no mistake, Google is out there pitching our customers."
 
There's a bigger picture to this battle of course: Google are on the march, transforming from a search engine to a service that lets people merge the internet seamlessly into their social lives in ways that are just coming into focus to end users. 
Stephen Shankland's excellent piece over on CNet 'How Google is becoming an extension of your mind' does a good job of defining that statement. 

Google is becoming ...an omnipresent digital assistant that figures out what you need and supplies it before you even realize you need it….Google is thinking about a lot more than just keeping Microsoft's Bing at bay, countering Facebook, and finding a foothold to take on the iPad. 

Google are arguably one of a very few companies equipped and with the reach to engender the much envisioned, grand 'boil the ocean' future of a connected society foundationed on cloud services, mobile and the provision of networks for sophisticated human social interactions. The latter is split between our personal social lives and the much more complicated world of work, where hierarchies, reporting structures and collaboration are under enormous social pressures from the new ways we can choose to interact. Add in-memory real time  'fast data' with big data crunching and the stakes are enormous. (Old line ERP companies are also salivating at the prospect of helping companies manage 'data deluges'). 

Google's current business structure, which generated $2.9 billion in profits in the first quarter of 2012, is almost all about advertising. Of Google's $10.6 billion in revenue, only $420 million came from something besides advertising.  This is the polar financial opposite of Microsoft, whose Office division alone currently generates more than all of Google, as this chart from Horace Dediu of Asymco illustrates. 

The stakes are not least about continued relevance in the future, and Microsoft and Google both aspire to provide the complete underpinnings of your digital social life.  We are gradually leaving the document, operating system and portal era behind - 'the future is here, it's just not evenly distributed yet', to quote William Gibson. For Microsoft the transition from documents to more collaborative environments can be a slow leisurely evolution, and they have done a masterful job today of signaling future intents to conservative customers, while steadying their disquiet about the world evolving faster than the tech giant. 

The bigger question though is whether the document based work environment is the buggy whip of our era, and Microsoft's understandable reluctance to disrupt the great revenue the Office division yields may prove to be short sighted. The alternatives to Office are much easier to migrate to and start using than they were in the Microsoft monopoly era when they first dabbled in consumer retail stores in 1999; much has changed and seat pricing is very sensitive in our fragile economy. This battle has taken on a new urgency as more is expected from technology companies with less expenditure and commitment from end users. 

Topics: Collaboration, Google, Microsoft, Social Enterprise

About

Oliver Marks leads the Global Digital Enterprise Team at HP, having previously provided seasoned independent consulting guidance to companies on effective planning of business strategy, tactics, technology decisions, roll out and enduring use models that make best use of modern collaborative and social networking tools to achieve their business goals.

These are Oliver's views and not those of his employer HP.

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24 comments
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  • it's an amazing game

    ..what Google and Microsoft are playing. They are trying to be anywhere in our digital life product after product taking the quality of these to the top. Other big players such as Apple, Amazon, Facebook, IBM or VMWare are each of them more focused on certain fields while Big G and Big M are leaving practically anything behind: from social to services, from os's to hardware, from mobile to the office to the living room. It's really impressive.
    sgamao
    • I can't agree with that.

      They are all trying to diversify. Amazon, and maybe facebook, are going to launch smartphones. Apple is going into TV business.
      Jean-Pierre-
  • Ummmmmm

    This article appears to be sponsored by a company wanting to get into the news. It just happens to be Microsoft moment, Google should wait for its turn.....
    davidtayo
  • Ummmmmm

    This article appears to be sponsored by a company wanting to get into the news. It just happens to be Microsoft moment, Google should wait for its turn.....
    davidtayo
    • Little spastic there, ummmmm...

      Two duplicate posts in one hour. What a record for you!

      DOH

      lol...
      CaviarBlack
  • Google's boring business model

    "Google's current business structure, which generated $2.9 billion in profits in the first quarter of 2012, is almost all about advertising."

    Sad, but true.
    Tim Acheson
    • I don't get it

      What is sad about that? It's like saying that walmart got almost all their profit from retailing. Or ford from selling cars.
      Jean-Pierre-
      • Not quite! Think again....

        Ford sells a variety vehicle types, including trucks and suvs and automobiles. And, within each type, it has a variety of models, which would mean, a whole slew of products to offer and sell.

        Walmart sells many thousands of products, from a huge number of manufacturers and distributors, and even their own brands.

        Google has a few services, and their profits come from, mostly, one service. Ford and Walmart could easily afford to have one of their products fail, while to Google, it would mean that, only their search engine is worth anything.
        adornoe
    • thats just it ! monopoly, anti-trust !

      apple got its first real success from ipods. They were able to sell them for outrageous prices and with ensuing profits, go to a phone. Phenomenal success there helped them move into other markets. Apple carefully remained a niche market in PCs so as to not attract the wrath of m$, until ipads.

      Google, well, they had to rely on ad revenue to fund other forays.
      GrabBoyd
      • Nope

        Apple's had plenty of hits:

        1. Apple I - the computer that put them on the map and was a success
        2. Apple II - the most popular PC of its time and was relevent well after its past due date.
        3. Mac - Argue all you want but it did make the GUI pupular. It launched Microsoft Office (Word and Excel made their debuts on the Mac).

        Apple did have its share of missteps but the iPod helped but was not the reason for their success.
        itguy10
        • Nope

          Apple was nearly done in terms of relevance before the iPod. That Launched the iPhone and iPad and ultimately led Macs to being relevant again. Apple I and II were great in THE 80'S, and the iMac was trendy but irrelevant in the early/mid 90's. Word and Excel may have launched on Mac, but the took off on PC's, especially in enterprises. iPod was the reason for their SURVIVAL!
          ePoch270
  • google is not there yet !

    Google presence in enterprise in practically zero....they have this crappy google docs...and basically thats it...
    owllnet
  • Google

    Red rag moment for MS trolls. Say Google and they come in their dozens out of the wood work.
    Van Der
  • Today's 'PR' was about soft landing

    m$ hastily concocted this dog and pony show to soften the landing for a bad quarter and for informing of more to come. Of course, the rags are in on it hence the hype and whitewashing of "news" everywhere.
    GrabBoyd
  • None of the experts question

    why organizations spent billions of $ on s/w that is available free and support that is cheap. Instead, they appear bent on protecting m$'s ill gotten loot even more vehemently than m$ itself.
    GrabBoyd
    • Why even bother posting such nonsense? Go back to school and learn

      a little bit about why businesses do what they do.

      Nobody tosses money away in business, otherwise, they wouldn't even get started. Nobody makes a business decision without considering alternatives to everything they purchase, or alternatives to everything they get into, or to alternatives to every relationship they build. Free is not always the best solution, and only someone with no understanding of how businesses operate would think that.
      adornoe
  • Microsoft vs Google: Game on

    I choose Microsoft.
    Loverock Davidson-
    • My Condolences

      On picking the looser. The future will be less and less Microsoft and that's a good thing.
      itguy10
      • No need to feel sorry

        He's been saying that since he came out of Bill Gate's womb some 20 odd years ago.
        CaviarBlack
  • Come On!

    If techies are going to use Sports analogies, they should at least do it right:

    "The other big question is whether Microsoft is just skating to where the puck was, to paraphrase Wayne Gretsky,"

    Who the he double hockey sticks is Wayne GRETSKY? I know who Wayne GretZky is. With a Z. Maybe Oliver should have Googled it. Even Bing got that right!
    ePoch270