To be filed under Outsource THIS right off my desktop!

Google has taken aim at one of the two biggest Mister Softee moneymakers:

"On Thursday, Google, the Internet search giant, will unveil a package of communications and productivity software aimed at businesses, which overwhelmingly rely on Microsoft products for those functions.

The package, called Google Apps, combines two sets of previously available software bundles. One included programs for e-mail, instant messaging, calendars and Web page creation; the other, called Docs and Spreadsheets, included programs to read and edit documents created with Microsoft Word and Excel, the mainstays of Microsoft Office, an $11 billion annual franchise.

Unlike Microsoft’s products, which reside on PCs and corporate networks, Google’s will be delivered as services accessible over the Internet, with Google storing the data. That will allow businesses to offload some of the cost of managing computers and productivity software."

There can be no doubt that Microsoft has a dangerous rival in Google, but
its more than mere business challenge — its a philosophical, also. The battle is
between Microsoft’s approach of owning a stranglehold on desktop  computing, versus Google’s massive online server cloud accessible by any user, anywhere, no IT dept
necessary.

As we noted previously, adaptation of both Vista and the new Office have been slower than expected; indeed, its hard to describe it as anything short of a disapointment. Google obviously recognized this softpoint and decided it was an opportune time to pounce. Very Sun Tsu of the not-so-genteel Google boys: Always take advantage when your adversary is weakened or vulnerable.

This is a potential paradigm shift. Do the math, and you will understand why:

"While most analysts say that businesses will increasingly use software delivered over the Internet and supported by advertising — a formula that Google has mastered — they are split over the threat that Google’s offering represents to Microsoft in the near term.

“I think Microsoft should be very concerned about this,” said Rebecca Wettemann, vice president of Nucleus Research.

Ms. Wettemann noted that a business may spend about $80,000 on a systems administrator to manage e-mail and desktop office software. For the same amount of money, Google Apps allows a business to support 1,600 users, she noted. Simply in terms of staffing, “this may be a better proposition even if Microsoft were free,” Ms. Wettemann said." (emphasis added)

A better value proposition than free Microsoft. Now that’s a tough gig to beat (even with Googler’s egregious boilerplate).

Critics will note that the Fortune 500 are unlikely to adapt this. After all, Windows XT was called the IT Department Full Employment Act, and well paid CIOs are unlikely to put themselves out of a job.

It is also true that the growth segment of business and computing is NOT the Fortune 500; rather, its in the small start up, the entrepreneur, the solo practitioner. This is the area where Google can lay a pretty decent hurtin’ on their older, less nimble rival.   

Is Microsoft the next Blockbuster Video? I doubt it. They have too much cash, too many franchises,  and too many sharp people to be totally marginalized. But I also very much doubt they are the next GE, a company that has managed to evolve and reinvent itself repeatedly over the course of more than a century, and remain a top layer in numerous niches. Not Blockbuster, not GE, but somewhere in between (if anyone has a perfect corporate parallel, let me know in comments).

Whether Microsoft can do the same, whether they can adopt their monopolist business model to something that thrives on competition, has yet to be seen.

>

UPDATE February 25 2007 8:42am

IT Wire notes that:

"Google’s newly released online productivity suite Google Apps has already replaced Microsoft Office at more than 100,000 small to medium enterprises and has been deployed at two of the largest companies in the world, according to the search leader’s enterprise product boss."

Google manager: Google Apps replaced Microsoft Office at 100,000 businesses        http://www.itwire.com.au/content/view/9889/53/

>


Source:
A Google Package Challenges Microsoft
MIGUEL HELFT
Published: February 22, 2007
http://www.nytimes.com/2007/02/22/technology/22google.htm

Category: Consumer Spending, Corporate Management, Digital Media, Intellectual Property, Technology, Web/Tech

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

57 Responses to “Smackdown! Microsoft versus Google”

  1. M1EK says:

    This was all tried before – and Microsoft used the power of the OS monopoly to destroy Netscape (and mortally wound Java) when push came to shove.

    They’ll do it again. And nobody can stop them; it would take tens of billions of dollars and the patience of a saint to build an alternative commercial operating system – and, no, linux isn’t good enough to fit the bill.

    (I worked on OS/2, in case you’re keeping score; and have a good friend who worked on Netscape).

  2. Bob A says:

    Google’s no better than Microsoft folks.
    You really want every keystroke you’ve ever made stored for EVER and available to ANYBODY?
    Stick with your old copy of Office that works just fine, or switch to Openoffice.org if you want something free.

  3. Sailorman says:

    In a large company, the IT department and CIO do not spend a huge amount of time on XP software maintenance. The bulk of the time is spent delivering communication services and custom applications that require powerful servers with high bandwidth locally between clients and servers.

    In addition, it is not yet clear how Google will implement the controls that most companies apply to the use of email; not to mention record keeping and profile management.

    Google might someday be a formidable rival to Microsoft, but so far, this is firing a pop gun at a bull elephant.

  4. Craig says:

    I’ll keep my current office, it works fine.

    MSFT is not like Blockbuster or GE, they are like….IBM!

  5. GRL says:

    One big issue is privacy. How many businesses, large or small, are going to want to keep their most sensitive information on someone else’s servers, no matter how secure those servers turn out to be.

    For example, let’s say you’re in charge of the IT department of a law firm. How many attorney-client privilege and work product doctrine protected documents are you going to want to leave hanging out there on Google’s servers?

  6. joe says:

    Everyone wants to write the “death of Microsoft” article, that’s why we see one about every 6 months. Yawn…

    Wake me up the first time a public company announces that they are henceforth going to allow Google to maintain ALL their emails, written documents, presentations, etc… on Google’s servers.

  7. loren says:

    Considering our small office keeps Office for many years I’m not sure the cost benefit works out in Google’s favor. And many small businesses (most that I now of at least) already outsource the email service part. Exchange is a larger company product.

  8. Good post.. I’ve used Google Aps, and I must say for being web based, they’re pretty darn effective. Microsoft definitely has some big competition on their hands now. Let’s see if google can get their apps to go mainstream enough to compete.
    Eric
    New York Real Estate

  9. Michael says:

    how about comparing them to coke. great brand, crappy stock. If you have owned either one for 7 yrs you have lost $.

  10. Chad says:

    I would actually be worried for Microsoft if Google offered businesses the applications without offering to store the data. I think very few people or companies want their data out of their possession/control.

  11. Estragon says:

    Craig – The IBM analogy is a good one… it took a near death experience for them to reinvent themselves though. I don’t think MSFT is there (yet).

  12. paul says:

    Google’s system will sound great until the first time there’s a deadline and the internet connection goes down. (Got local backup of docs and programs?)

    This is probably a great idea for students to store and work on papers from home, coffee shops and computer labs.

    Maybe I’m an old (40ish) fart, but I trust my home computer, external backup and USB cable to the printer more than I trust Google and my Comcast internet connection.

  13. Estragon says:

    Chad – “I think very few people or companies want their data out of their possession/control”.

    I agree, but I’d append “yet” to that. Do you keep your money in your house, or do you give it to a bank to look after? Most of us give it to a bank, because our money is almost certainly more secure there. Maybe someday we’ll think the same way about our data.

  14. Elaine says:

    Locking up your data in proprietary formats that belong to other companies is out of your control. Unfortunately, most people’s eyes glaze over when you try to explain that.

  15. Kevin Rooney says:

    Microsoft is the New Haven Railroad, but you are probably a little too young to remember it.
    Microsoft is the town that is on the US highway that is being bypassed by the Interstate. But is it 1 mile from the Interstate or 10?

  16. M.Z. Forrest says:

    This will be niche product for one essential reason: VBA. You would be shocked at the number ERP systems that have hooks into Office. I couldn’t even consider such a deployment in the little company I work at with 60 people. While there are automation possibilities using XML, for quite a few projects it makes the most sense to have the end user perform merges and other fun things. The end user is not sophisticated enough to work at a level beyond Office, for example directly writing a SQL query, and this core business function cannot be replicated with Google, so this thing should flop.

  17. V L says:

    This is the dumbest idea from Google yet. They should market it as “Pay us every year for our below average office suite and store your company and customers confidential information on our servers for any snoop in the world (including terrorists, competitors, criminals, and foreign governments) to break in and see it via the internet. In addition, if you do not have the access to the internet on your computer, you cannot see and work with your documents. Moreover, if there is an earthquake near San Francisco and our servers damaged you will be screwed. ”

  18. P. Stan says:

    A reasonable parallel to Microsoft is IBM. They too had a monopoly, and have managed to retain a top tier position in technology and services to the corporate marketplace. In fact, at least one of their top leaders comes from IBM.

  19. Bob A says:

    Microsoft is more like the Postal Service than IBM. IBM actually invents and innovates. Changing around the menu system on Windows hardly qualifies as invention or innovation. Big difference.

  20. HVH says:

    Estragon,
    I wouldn’t compare Google to a bank. A good bank is obsessive/compulsive/paranoid about data security, because their data IS money. (Having worked in IT for a major bank, I’ve seen this first-hand.) And a bank can’t weasel out of responsibility with a disclaimer.

  21. HVH says:

    More on Google not a bank:
    Major banks also have redundant data centers (yes, entire fortress-like centers) and elaborate disaster recovery plans which often include reciprocal sharing agreements with other banks.

  22. RM says:

    Is Microsoft the next Blockbuster? I personally don’t think so but neither did I see a small company out of California (Netlfix) come from nowhere to centralize the process of DVD delivery much the same way Google is doing with Apps. While we could spend hours/days debating this question from an investing standpoint, why do it? Through this lens Microsoft represents an asymmetric payoff against you. There are much easier fish to fry with better payoffs. I wrote about it here:

    http://dowellanddogood.typepad.com/blog/2007/02/no_called_strik.html

    I think sticking to investments where you can figure out what the biz will look like in 10-15 years is a much safer bet than trying to guess who will emerge in the MSFT vs GOOG battle.

  23. Anil Passi says:

    In a nutshell, microsoft failures thus far:-

    Microsoft has lost the battle for Enterprise Servers O/S to Linux/Solaris

    Microsoft has lost the database battle to Oracle and IBM

    Microsoft has lost ERP battle to Oracle and SAP

    Microsoft’s dot net, despite all its marketing is not as widely used as Java.

    Future trouble…
    ———————-
    Microsoft may or may not beat Nintendo-WII in Gaming

    Linux flavours like Ubuntu for PC are closing in on VISTA in terms of usability and features

    Google is closing in on PC Products and Email products.

    Keeping in mind that ERP Market leaders are integrating their next generation ERPs with Google Docs for publishing docs[via google API webservices], I think Microsoft has a stormy weather ahead.

    Despite what I write above, microsoft is capable of turning things around. But before the turnaround begins, have they accepted the new paradigm?

    Thanks,
    Anil Passi

  24. Eclectic says:

    Go read the boilerplate signup disclosures (better pack a sack lunch first… and wear a space diaper) for the Google apps, and then, Barry, you can put the Rittie R&R’s personal word and spreadsheet docs on it.

    Yep, I can jiss see that. There you’ll be at home… Mrs. BP callin’ you down from the attic office where you play with the Mac:

    Mrs. BP: “Time for supper, Hon. Come on down.”

    BR: “What… what’d you say?”

    MBP: “Supper’s ready!”

    BR: “What… what now’d you say, Hon?… speak up! I can’t hear you for this damn fan motor!”

    [BR gets up to come closer to listen, tripping over the pile of burned-out electronic gizmos of a lifetime of pack-rat'domhood... steps on his iPod, falls again and cracks the lens on a digital camera]

    BR: “Whassat you said, Hon?”

    MBP: “I said it’s time for supper.”

    BR: “Be down in a minute… I’m almost finished with the annual Rittie R&R customer reports. I’m doin’ ‘em on Google apps this year, and well… oh, now dang it!… jiss lost my Internet connection!… pisser!”

    MBP: “Well, Barry, don’t be long. I’m trying this marvelous new exotic recipe – we’re having squab… I’ve always wanted to try it!”

    BR: “Oh, NO!… HON!…. you didn’t… please tell me you didn’t!”

    MBP: “Why yes, isn’t that what you bought them for?”

    http://tinyurl.com/2cf8y2

    BR: “NOOOOooooooo!!… I needed ‘em for messageesss back to the office!… not for eatin’ the damn things!”

    hehehe.

    I’ll admit, they’ll probably sign up a lot of users and no doubt make money… but nobody above the sophistication of Little Jimmy’s Lemonade Stand is going to seriously rely on them… at least not now.

  25. Eclectic says:

    Estragon, quoting you:

    “…Maybe someday we’ll think the same way about our data.” …end quote.

    You’re probably right, but at the moment if you use the apps, every single thought you have in using them, every thought that makes it through to a keystroke, even in anger that’s later forgiven, or after haste, or edited after ‘tongue in cheekishness’ followed by a failed edit… and even if you edit it correctly, you’ve left a trail of supposed intent to say the original thing first started… and all that can come back later to haunt you.

    Google bent their knees to the demands of Communist China… you think you can depend on them to resist a subpoena for info that third parties might need to skin Estragon?

  26. Bob A says:

    Microsoft doesn’t give a crap about any ‘new pardigm’. They are the Postal Service. There will be UPS and FDX and TNT and whoever, but they will always have the monopoly on the mail.

  27. V L says:

    “but nobody above the sophistication of Little Jimmy’s Lemonade Stand is going to seriously rely on them…”

    Not even Little Jimmy’s Lemonade Stand is going to use it. Little Jimmy’s Lemonade Stand cannot afford $50 a year per user.

    Little Jimmy’s Lemonade Stand will download and use FREE Open Office Suite. (http://www.openoffice.org/)

    People forget that Google is nothing more but the overhyped and overpriced search engine. Even pay-per-click ads model was not their invention (Sergey got the idea from Overture)

    Google has not been able to monetize any of their “inventions” yet. It is amazing how much media hype they get every time they announce the release of some gadgets. How much money did they really make from Google gadgets and all other garbage they have released? I do not see why it is going to be different this time.

    P.S. Can I sue Google if they damage, lose, or compromise the documents?

  28. Bob A says:

    ..and just in case you were thinking I’m an Apple fan…

    I’m a Mac. He’s a PC. We both Suck

    “As much as I hate Microsoft I also hate the fact that I stuck on this crap Apple hardware even more. At least if I ran Windows I could just pick a different piece of hardware to hate, whereas with Apple am I just stuck.”

    http://infoworld.com/5067

  29. Limejuice says:

    OpenOffice is very good replacement for MS Office. (http://www.openoffice.org/) I’ve been using it for 2 years at home, and for the past year at work. Absolutely no problems reading MS document files.

    I think OpenOffice is probably hurting MSFT much harder than GoogleApps ever will.

  30. Jim Bergsten says:

    I see two immediate “benefits” of Google online applications:

    1. Microsoft, seeing that Google can charge “subscriptions” for applications, will start doing the same. Windows, Office, et. al. will be priced per year (or worse per keystroke). Wonder how Reg FD fits into this?

    2. Companies will sign up with Google for “Psych Ops” — downloading false or misleading data (fully especting it to “leak”) to thwart competition.

    Companies were paying “Administrators” (then called Systems Programmers) long before Microsoft was in existence and will continue to do so long after its demise (and, if you have a competent one for $80K, glue him/her to the floor).

    Finally, other companies have tried this “online” application stuff before, IBM and Oracle included. Didn’t work out.

    So, either Google expects “infinite, zero latency” bandwidth real soon now, or this is another way of tricking marketeers out of more ad revenue.

  31. Eclectic says:

    “Rittie R&R’s”

    I meant to write “Rittie R&As” to nickname Ritholtz Research and Analytics.

    All in fun, BR, all in fun.

  32. agent00yak says:

    All of this hating on Blockbuster makes me think it might be a good year to own its stock (Considering its current YTD, I’ll be wrong if it isn’t up over 60% YoY by Jan).

  33. dave says:

    Microsoft did not conquer IBM by building a better mainframe. MSFT changed the game using their rules. Netscape caught Microsoft leaning the wrong way, but MSFT rapidly changed course and won.

    Google taught everyone how Internet search should work and they remain the leader. Now, maybe Google is all that and more, but I don’t see any chance they’re going to materially take market share away from MSFT given the very obvious privacy issues. Sure it may cost less, but really, three-four hundred bucks per employee amortized over three years is really not that much money.

    NOVL tried taking on Microsoft’s office suite. We all know how that worked out. Do a Google/Ask.com/Windows Live search on Larry Ellison and the PC — he had some ideas too.

    Open office has been out there and free for a long time if money were the issue.

    I think Netscape had the best chance to take share from Microsoft by putting all things PC inside the browser and making Windows irrelevant.

    Lets review: Novell, Oracle, Netscape, now the search engine company.

    Some questions:

    How do you email a Google document or spreadsheet?

    What happens if my admin leaves the company and I forget to notify Google, does the person still have access to my company’s documents?

    Can my employees get access to company documents from home?

  34. Adrasteia says:

    I don’t know where the idea that Fortune 500 wouldn’t be interested in this came from. Disney is VERY interested.

  35. Adrasteia says:

    More on Google not a bank:
    Major banks also have redundant data centers (yes, entire fortress-like centers) and elaborate disaster recovery plans which often include reciprocal sharing agreements with other banks.

    Ok, name the only US search engine that wasn’t knocked out in China by the earthquake off taiwan last year. I’ll give you a hint, it rhymes with bugle.

    Google has hundreds of datacenters that span multiple continents. They’ve just bought multiple petabit/s worth of dark fiber to keep them synched. They aren’t going down.

  36. Adrasteia says:

    How do you email a Google document or spreadsheet?

    Click the email button.

    What happens if my admin leaves the company and I forget to notify Google, does the person still have access to my company’s documents?

    What happens if they leave the company and you forget to remove their root account? What happens if they took a bag of tapes out with them?

    Can my employees get access to company documents from home?

    I believe that’s one of the main selling points of Google Docs and Spreadsheets. Local caching on the Google Document Appliance at head office, synched with a google datacenter for offsite access.

  37. Eclectic says:

    Never let it be said that Eclectic’s foot is nailed to the floor on anything.

    It’ll be very interesting to watch and see how all this plays out. I, for one, have absolutely no idea how it will.

  38. Curtis Faith says:

    There have been two significant events that spell trouble for our fine producer of innovative and high quality products in Redmond.

    1) The effective freezing of the formats for Word and Excel (call this format freeze).

    2) The arrival of “my OS works fine, why should I buy Vista?” and its variant “Word already does more than I need, why do I need to pay for more than I need plus?” (call this feature sufficiency)

    ————
    Format freeze is the result of application feature sufficiency and the inertia of the installed base which resulted from Microsoft’s success, poor quality products, and the resulting high cost of switching or transitioning to new formats. The major problem is the inability for users with older versions of the apps to read documents which are created using the new versions.

    Since Microsoft seems to have a design philosophy that involves intentionally building resource hogs which force users to upgrade so Microsoft can sell them new copies of the OS, this effectively makes it impossible for large companies to move to a new version of their applications all at once. This means that companies like Google and the people behind Open Office have a fixed target for their application development building a Word-compatible and Excel-compatible suite is now not only possible, it has been done several times.

    How soon this translates into serious trouble for Microsoft is more a question of the innovation of others than any actions that Microsoft does or does not take. At this point no one has built a compelling reason for a switch.

    The real answer, and one that a server-based model like Google’s can potentially support is differential pricing for developing countries. Price apps at $2 per month in China, $5 in South America, and $50 in Europe and the U.S. and you start competing with the CD duplicator on the street corner of every developing nation. Microsoft pricing in developing countries makes no sense but there is not much they can do about it without cannibalizing their sales. I moved from the states to Buenos Aires six months ago so I have an intimate sense of how many potential sales are lost due to piracy. You can’t expect someone to pay 1 months salary (or more) for a word processor, and you can’t expect governments to punish piracy when prices are that high in local terms.

    ————
    Feature sufficiency has finally arrived. The combination of years of painful upgrades and the lack of any compelling innovation in Vista is a serious problem for Microsoft. I don’t see any reason whatsoever to upgrade.

    My next computer will be a Mac. I once only used Macs until the geniuses at Apple almost killed the company. The ability to run Windows using Parallel at native speeds make a Mac a reasonable alternative even for someone like me who develops and sells Windows software.

    Feature sufficiency is the reason Vista is a flop and Microsoft is in serious trouble. There is far too much hubris in Redmond for them to adapt to the new reality quickly enough to maintain their current hegemony.

    I too believe that what happened to IBM is the best analogy. I remember the headlines in the early 80s when IBM was riding high as the most important company in technology. I also remember how long it took for them to fall and how far they fell.

    I don’t personally believe that an All-Google world will be the ultimate solution, but I do believe that Microsoft has painted themselves into a corner and there is little they can do about it at this point.

    - Curtis

  39. B. Sneath says:

    Barry – Excellent observations.

    “New Business Model”, “Creative Destruction” & “Paradigm Shift” come to mind.

    This development has enormous potential to reduce the costs of doing business.

    I suspect Google’s apps may be just so so at the moment, but over time they will evolve – as did DOS to Windows to Vista.

    Businesses must focus on the bottom line to survive. Small companies & individuals will be the early adopters, but google apps will undoubtedly continue to add features and refinements and the Fortune 500 companies may at some point have to follow.

  40. BDG123 says:

    Barry, this is really a stretch. Google has no clients, Microsoft has an ability to do the same thing if it so desires with the technology already developed and one of the two companies referenced as test pilots actually has issues with another company’s products, hence their willingness to be a pilot.

  41. Tom Barta says:

    Between Google on one hand and Open Office on the other, I certainly expect margin pressure on MS Office.

    MSFT’s whole business model is predicated on customer inertia. Not a good place to be, IMO.

  42. Tom Barta says:

    “The major problem is the inability for users with older versions of the apps to read documents which are created using the new versions.”

    Format chaos is about to descend– and it means big trouble for MSFT. Office 7 moves to MS-XML, which introduces all kinds of new incompatibilities that will drive businesses NUTS!

    “Barry, this is really a stretch. Google has no clients, Microsoft has an ability to do the same thing if it so desire”

    MSFT can NOT just copy GOOG, because MSFT’s cred on matters of computer security is less than zero. They tried this with MS “Passport” a few years ago.

  43. BDG123 says:

    Please. Spare me your intellectually deficient response about Microsoft’s ability to respond or compete with a freeware office product. Microsoft could give Office away and simply charge maintenance and make a fortune. They are clearly in the driver’s seat with hundreds of millions, if not billions of licenses out there. They have a multitude of options if hosted solutions, which they can clearly offer, become viable in the Office space.

  44. vader says:

    MSFT has the OEM market sewed up as well as the corp market. As long as that is true, MSFT will be big. However, its market share can only go down and margins will be threatened just like any other large corp.

    Linux, Mac et.al. will eat the margins but not the main part.

    IMHO the major threat is the copy protection for MSFT. Folks that one used pirated versions will be forced to either buy or use Linux. Assuming that piracy is an economic choice, then they will chose Linux. As the population used to MSFT goes down, and other alternatives are apparent, then MSFT will either have to reduce prices dramatically or lose marginal sales.

    In 10 years of so, MSFT may be like IBM. Unused outside of the corporate environment.

  45. Tom Barta says:

    “Please. Spare me your intellectually deficient response about Microsoft’s ability to respond or compete with a freeware office product. Microsoft could give Office away and simply charge maintenance and make a fortune”

    Your comment is insulting. Of course they could, but it would be a much SMALLER fortune than they make now.

  46. BDG123 says:

    My comment is insulting? And, what was your comment re my response? That I was clueless? If you want to debate, then say something worth debating. If you want to throw stones, don’t live in a glass house.

    Microsoft rules the roost and somehow you believe Google, which is offering a me too product comparative to other offerings that have been out there for years and something Microsoft has had the ability to offer for half a decade ………. is not able of containing or responding to? Pshaw!

  47. Tom Barta says:

    “Microsoft rules the roost and somehow you believe Google, which is offering a me too product comparative to other offerings that have been out there for years and something Microsoft has had the ability to offer for half a decade ………. is not able of containing or responding to?”

    Well, they’ve failed miserably, so far. GOOG may or may not succeed.

  48. BDG123 says:

    What are you talking about? $10,000 invested in MSFT twenty years ago is worth over $4 million today. 70,000 employees and untold millions who make their livelihood selling, supporting or serving their products. $50 billion company with 90% gross profit margins. Now, they might have big company disease and waddle instead of monetizing some of the amazing research they do but those who say Google will inherity the MSFT throne are, frankly, clueless. Microsoft spins off so much free cash they can’t spend it on enough new product development or to buy enough businesses to complement their own. They’ve likely paid, what? over $100 billion in dividends and still have $40 billion in cash? They’ll spin off so much free cash they could buy the US government.

    That doesn’t mean I think MSFT isn’t going to have to deal with future pain in their business model and competition but I’m not sure how you say they have failed miserably with the largest profit margins, largest market share and most profitable tech company on earth.

    It’s been fun but I need to go do something important like feed my dog.

  49. Tom Barta says:

    Are you even reading my posts? We were talking about delivery of web services. With regards to other products, yes, MSFT has pulled in lots of suckers.

    “70,000 employees and untold millions who make their livelihood selling, supporting or serving their products.”

    Well, yea, MSFT products require huge amounts of support. I suppose that’s a plus to MSFT’s stockholders, but not to their customers.

  50. Austin Cooper says:

    I’m an IT professional in the Healthcare industry. The one thing that gives me pause re: Google’s offered solutions is access — Google has access to any proprietary data and/or email traffic it hosts. Period. I don’t care what they say.

    As an IT manager, Google’s cost-savings doesn’t present a good choice, primarily due to HIPAA — and even though some businesses (even healthcare) have ‘offshored’ data storage and administration, and server hosting, to India and Romania, they’ve been bitten by it.

    Our system administrators routinely surf through the contents of personal drive space allocated on our servers. Our network security does the same with the contents of desktop hard drives. The short explanation is that there should be no personal material stored there: Space is expensive, workstations are for work, and we can’t maintain collections of cat photos — and, we find a good bit of porno; I’m not really surprised, but…C’mon.

    As an individual, I ask: Isn’t Google the business which laid down and spread its legs for the Bush administration’s demands to access private emails without a demurr, and only resisted inquiries from a criminalized Justice Department over who’s Googling for pornography when there was enough public outcry? How much of the Constitution of Bill Of Rights do they remember when they’re writing checks to the RNC?

    I use their gmail; I like it, but as with any form of communication, I use common sense. The boyz from Cupertino tell me I have almost 3GB (and counting) of space on their servers for me to use as storage for my personal data; go ahead! It’s free (at the moment)! But, I wouldn’t allow the contents of my personal hard drive to be glimpsed by anyone’s system administrator.

    It isn’t that I’m engaged in anything sordid, or illegal; I just want my privacy, and I don’t believe Google’s going to make sure I get it — at work or at home.

  51. Craig says:

    Oh, I’m old enough to remember when “Big Blue” was too big, too innovative, too capitalized, too all of whatever MSFT is purported to be now.

    Huberous is a dangerous thing.

    Do I think MSFT will fail precipitously? No. But no one suspected THEN that IBM would become IBM light either when MSFT showed up. It may not be Google that displaces MSFT, but at their size, MSFT is as “fixed” now as IBM was back then. Back then MSFT was small hungry agile and either innovative or aquisitive. They got a bit better as they gained from scale, like google now. but scale, unless masterfully managed soon becomes ungainly and inefficient. NOT hungry or innovative.

  52. cm says:

    GRL: In principle, things can probably be set up such that unencrypted data don’t leave your machine, and whatever is stored at Google or to whatever vendor you outsource is strongly encrypted with your own passwords.

    But even when hypothetically privacy is thus assured, would you want to entrust an external entity with your data integrity and 24/7 access to your critical business files? Even if Google itself doesn’t screw up, what about a general DSL/cable/internet backbone outage?

  53. cm says:

    Austin: If I remember correctly, the govt. was looking for aggregate, not personalized, data on porn searches, and I even believe that. The problem is that when data get subpoenaed, you have to turn over whatever you have, and not a sanitized version of it. When you store everything, you will turn over everything, more or less.

  54. James says:

    What I think is interesting is that this forces Microsoft to fight on multiple fronts. On one front they are trying to beat off opensource (e.g., Linux/Openoffice) which is giving away similar software for free, on the other front they have to fight Google which is giving away a similar service under a whole new paradigm. Microsoft has been great in the past at bringing their guns to bear on a new threat – but now nobody knows what threat is greater and Microsoft is paralysed.

    I think Open Source will be the greater threat in the long term because it enjoys the network effects of Metcalfe’s Law. Few people understand how big a deal this is.

    If fortune 500 CIOs had a clue they would give some support to these competitors to reduce their dependence on Microsoft and give themselves bargaining leverage. The government of Israel a few years ago paid for the enhancement of OpenOffice so that it could support Hebrew and Arabic, just before negotiating with Microsoft for their MOffice licences. The word is that they ended up getting Microsoft Office essentially for free.

  55. M1EK says:

    Craig,

    Your comments betray a lack of understanding of antitrust law and its effects. IBM, unlike Microsoft, was heavily restrained by antitrust law (through the 1980s, IBM was effectively run by lawyers who were entrusted with making sure nothing got it into any further trouble – meaning, for instance, that even the part of IBM making PCs had to treat the part of IBM making OS/2 as just another vendor rather than part of the same company).

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  57. Jack says:

    I think MS has a legit competitor in Google….Google apps are great