Why Google IS afraid of Microsoft, big time

Is Google celebrating the "death" of Microsoft?Paul Graham believes so, proclaiming Microsoft (rich but) dead.
Written by Donna Bogatin, Contributor

Is Google celebrating the "death" of Microsoft?

Paul Graham believes so, proclaiming Microsoft (rich but) dead.

But are Eric Schmidt and company really “not afraid of Microsoft anymore”?

Hardly. Google does indeed fear Microsoft, big time, and rightly so.

Below are just a few billion dollar reasons why, in rebuttal to Graham.

Graham: I know when we started Y Combinator we didn't worry about Microsoft as competition for the startups we funded. In fact, we've never even invited them to the demo days we organize for startups to present to investors. We invite Yahoo and Google and some other Internet companies, but we've never bothered to invite Microsoft. Nor has anyone there ever even sent us an email. They're in a different world.

Different, yes, by design.

Google vs. Microsoft, in two key, sought after market opportunites: In-Game Advertising and Voice Activated Local Directory Assistance.

In-Game Advertising

Google: Recent acquisition of AdScape, described as a San Francisco-based “small in-game advertising company” offering technology to dynamically deliver advertising with plot and storyline integration.

Business Outlook: Does Google already have deals signed with game developers?

Google in announcing the acquisition: “We have been in discussions with many in the game development community and hope to partner with both large and small game publishing companies."

Price tag? Rumored at $25 million.

Microsoft: Acquisition of Massive a year ago, described as a “world-leading network for video game advertising” to help deliver dynamic, relevant ads across Microsoft’s online services, starting with Xbox Live and MSN Games.

Headquartered in New York with offices in London, Los Angeles, Chicago, San Francisco, Paris, Sydney, Cologne and Toronto.

Business outlook: Katherine Hays, Senior Director of Operations at Microsoft, and a co-founder of Massive, reporting to Microsoft investors last month:

Massive is the leading in-game advertising company.  Our experience to date spans over 200 advertiser campaigns which we have aired across the network for more than 100 blue chip advertisers.  Robust technology and operations, the Massive Network has been live and serving campaigns to the gaming audience for over two years, and a large network of game publisher and partners.  Massive has over 50 game titles live in the network today. 

Massive aggregates the gaming audience to enable advertisers to, for the first time, broadcast real-time advertising simultaneously across multiple video games, whether played on the console or PC.  This is made possible through our technology, and back end operations which were built from day one to be platform agnostic, and therefore have the capability to aggregate the single largest gaming audience worldwide.  

Massive is a thought leader in the industry, driving measurement standards and accountability, and working with industry players, such as the IAB to help set standards and grow the end game advertising market overall, for example, by working towards providing third party audited data in the coming year.

Connectivity is driving, for example, Xbox 360 has six times the connectivity rate of prior platforms, which drives a very sticky experience for audiences.  As of March 2007 there were more than 6 million users connected through Xbox, representing over 2.3 billion hours of game play. 

Price tag? Rumored at $300 million. 

Voice Activated Local Directory Assistance

Google: Announcement of “experimental” service “to make local-business search accessible over the phone,” Google Voice Local Search, disclaimed as “still in its experimental stage. It may not be available at all times and may not work for all users. We’re fine-tuning the service to get better at recognizing your requests.”

Business Outlook: “It's free. Google doesn’t charge you a thing for the call or for connecting you to the business.”

Price tag? “Voice recognition systems are changing the landscape. Operator assisted calls are relatively expensive averaging roughly US 16 cents wholesale…by using a voice input instead of live operators, Internet ad models like AdWords can theoretically make monetization possible,” Matt Booth.

Microsoft: In its impending acquisition of Tellme Networks, Inc., Microsoft aims to bring the “power of voice technology to everyday life.” Tellme is: “a leading provider of nationwide directory assistance, enterprise customer service and voice-enabled mobile search. Microsoft and Tellme share a vision around the potential of speech as a way to enable access to information, locate other people and enhance business processes, any time and from any device.” 

Business Outlook: Mike McCue, co-founder and CEO of Tellme: “We now have about half of all directory assistance calls are processed on our voice platform, and roughly one in three Americans use Tellme every year to get things done. You might not know it, but it's a Tellme technology powering a lot of these services, whether you call American Airlines to get flight information, or you call Dominos to order a pizza, it's our technology underlying that that has been powering that, and powering our business. It's created profits and good success for the company.” 

Price tag? Microsoft is wagering an estimated $1 billion of its competitive kitty that it will loudly beat search nemesis Google in both the mobile search and local advertising $50 billion games.

Nevertheless, Graham insists Google is the prime “killer” of Microsoft”:

The most obvious is Google. There can only be one big man in town, and they're clearly it. Google is the most dangerous company now by far, in both the good and bad senses of the word. Microsoft can at best limp along afterward.

Microsoft limping? Really?

Microsoft is Massively overshadowing Google’s AdScape and Microsoft is Telling Google’s directory laboratory project it is on GOOG 411 hold.

Graham also has the audacity to diss America’s beloved “Grandmas,” saying:

All the computer people use Macs or Linux now. Windows is for grandmas, like Macs used to be in the 90s. So not only does the desktop no longer matter, no one who cares about computers uses Microsoft's anyway.

Doesn’t Graham know that “Grandmas” are the hottest demographic in this millennium, despite all the hip, hacker noise?

ALSO: What Microsoft is telling Google about mobile search and Google CEO gets feisty over Microsoft monopoly  and Google’s high-speed battle with Microsoft and How Google SPIN trumps Microsoft PR


PLUS: Why Google WILL pay for content

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