Microsoft is a 39-year-old company. Google is about to turn 16.
Both of those ages are major milestones for humans. It turns out they’re pretty interesting for giant tech companies as well.
Microsoft and Google are locked in a struggle for the future of computing. Both companies want to put their flagship operating system on every screen you own and allow developers to write apps that scale from handheld devices all the way to full-size desktop monitors.
This was Microsoft’s vision, as expressed in its 2013 Windows Everywhere ad:
And this is Google’s Android Everywhere vision, as shown off at the recent Google I/O conference:
If you’re a developer or device maker with a stake in mobile technology, and specifically the next billion devices, this isn’t just a friendly wager. Do you bet on the older, experienced competitor? Or do you put your money on the young, aggressive rival?
The numbers are clearly in Google’s favor. Earlier this year, Gartner forecast that more than 1 billion Android devices will be sold in 2014, roughly three times as many as the total number of devices running Windows (360 million) or iOS/OS X (a combined total of 344 million).
Microsoft quietly dropped the Windows Everywhere mantra last year and, under the leadership of new CEO Satya Nadella, has been pursuing a “mobile first, cloud first” strategy that focuses on getting its services onto as many platforms as possible, including Android.
That’s certainly not what Microsoft would have done in its youth. But 39-year-old Microsoft doesn't behave with the same reckless abandon as when it was a teenager. The cutthroat Microsoft of the mid-1990s, the one that perfected the "Embrace, extend, and extinguish" template, has been supplanted by a more mature competitor. (A few billions of dollars and Euros in antitrust fines, along with a decade living under a consent decree, also helped with the transformation.)
The Office team in particular has learned how to enthusiastically embrace alternative platforms. The goal for Office is to become aggressively ecumenical, running on as many platforms as possible. Office on the Mac, for example, is a significant business. The new Office apps on iPad are excellent and appear to have sold a fair number of $99-per-year Office 365 subscriptions.
If Microsoft's goal is to make it possible for you to run Office on as many devices as possible, then building a first-class Android app is mandatory, even if the unintended side-effect is strengthening Google’s hardware position temporarily.
That certainly means delivering Office for Android through the Google Play store, using the same subscriber-only model Microsoft used for its iPad apps. Whether Google will embrace Office as enthusiastically as Apple did is an open question, but it’s a safe bet that Office for Android will be insanely popular.
But the real game is in the Android Open Source Project, the Android code that Google gives away. An army of small Chinese manufacturers are building handsets based on AOSP. As of the end of last year, BI Intelligence reported that 25 percent of all global smartphone shipments were running a forked version of Android, minus Google services.
Amazon’s Kindle Fire is based on AOSP and is similarly Google-free. AOSP is also at the core of those Nokia-branded, Android-powered phones now being sold by Microsoft.
And that’s where things start to get interesting.
If Office becomes the anchor for Microsoft's Android app store, a non-Google version of Android becomes much more attractive for device makers and an easy hedge for developers, who can port their apps to MS-Android with only trivial effort.
Handset makers who are currently shipping Google-certified Android devices could choose to replace that OS with MS-Android instead. For device makers that have signed a patent licensing agreement with Microsoft, the carrot could be a complete waiver of those per-unit licensing fees as long as Office and other core Microsoft services replace their Google counterparts on each device shipped.
If you think Microsoft cares most about the royalty it charges a device maker for the OS license, you’re several years behind. Of course the company would be happy to collect that one-time OS royalty from a device maker, but they’re equally eager, if not more so, to have the buyer of that device paying for international Skype calls, for an Office 365 subscription, and maybe even for an Xbox Live Gold account. Over the life of a phone, the revenue from those services can easily be an order of magnitude greater than that OS royalty.
Microsoft wants its services, along with those of its partner and soon-to-be-subsidiary Nokia, to be front and center on a mobile device. It’s easy to do that with Windows Phone and Windows 8.1 mobile devices, where Microsoft controls the platform. It’s much more difficult to replace Google services on new Google-certified Android phones, where those services are set as defaults, as a condition of acceptance into the Google Play ecosystem.
No, this doesn’t mean Microsoft is going to abandon Windows on mobile devices. When the touch-first version of Office for Windows ships, I expect it to be significantly more powerful and feature-packed than its iOS or Android cousins. That’s the advantage you get when you own the whole operating system and can tap into that OS at a low level in a way that ordinary, sandboxed apps can’t.
That also explains why Office for iOS and, soon, Android are coming ahead of the Windows version.
Meanwhile, Google’s strategy with its services is to build them for Android first, and for iOS because it can’t afford to ignore the 800-pound Apple gorilla. But it has so far steadfastly ignored Windows 8.x, forcing Windows users to use its services through the Chrome browser or not at all.
That’s exactly what Microsoft would have done under Bill Gates’ leadership in the company’s early years. But Microsoft is counting on old age and treachery to overcome Google’s youth and skill.