Microsoft and Google are the two most valuable technology companies, according to Bloomberg, and they are engaged in a battle to control “how consumers and corporations work, shop, communicate and go about their digital lives,” according to an article in the NY Times on 12/16/07. Google sees all these things happening through a Web-based system, but Microsoft envisions a future where most of these things happen through desktop PC software.
By offering Web-based computer software applications, called Google Apps, for word processing, email and spreadsheets to companies, universities and consumers, Google is trying to change the software business and in the process is directly challenging Microsoft’s PC software empire. “If Google succeeds, a lot of the value that Microsoft provides today is potentially obsolete,” David Yoffie, a professor at the Harvard Business School, told the Times.
Taking on Microsoft will not be an easy task for Google. Microsoft has a commanding position in the personal productivity software business, with a share in excess of 90% and with Microsoft’s Office Suite running on 500 million computers, according to the Times. It’s certain that Microsoft will fight tenaciously to defend their business. They already are investing heavily in Web-based software, large data centers and are adding Internet features, to counter Google’s advances in these areas. Microsoft’s strategy appears to be one where they will embrace the web, while trying to maintain the profitability of their PC based business.
Some of the advantages of Google’s software include being able to develop and release it more rapidly than conventional software, new features and improvements can be added quickly and you can access it from any online connection, without being tied to your PC. Eric Schmidt, Google’a CEO, told the Times that small businesses could greatly reduce their costs and technology headaches by adopting Google’s web offerings. Dave Girouard, who runs Google’s enterprise business, told the Times, “a lot of big companies” will soon be using Google Apps. Jeff Raikes from Microsoft dismisses Google’s optimism as wishful thinking, in the Times article. Google must also face the fact that many large companies view Microsoft as a safe choice and may be reluctant to switch software vendors. Companies and individuals may also be reluctant to store sensitive information on Google’s servers.
Ultimately, the success of Google’s Web-based software will be dependent upon the cost and ease of use. Business people in a variety of industries are watching this venture closely, to see if Google can be successful in an area outside of Internet search. In the near term, I believe Microsoft will continue to be the dominant force in the software business, but if Google succeeds overtime, Microsoft will likely have to lower their prices, which will cut into their profit margins. Whatever the outcome, it should be interesting to watch these two technology heavyweights battle it out for control of the digital universe.