Google is the new Microsoft – musing on the meme

By October 9, 2015Google, Uncategorized

We have just learned that over half of Google searches are now on mobile which has got me reflecting on where the company is going.

Before I go any further I should say I’m a massive fan. Google has had an amazing run as a company, built many amazing products, is pursuing lots of super interesting and brave projects, and generally handles itself well. Moreover, I’m a very happy customer both professionally and personally and I have many friends who work there.

However, the world has turned decisively in directions that don’t favour them. The Apple driven smartphone revolution has taken attention from the open web where Google is strong to apps, the Facebook inspired social media revolution has taken traffic from the open web to closed ecosystems which Google can’t access, and they are haemorrhaging search volume to Amazon.

Microsoft’s monopoly on desktop software looked unassailable until the internet came and similarly Google’s monopoly on desktop internet looked unassailable until a couple of years ago. Microsoft invested big in the internet with Internet Explorer and their MSN portal (remember that?) and now Google is investing big in Google Maps and Android and has numerous failed attempts in social. In an interesting parallel, Microsoft’s internet products were free just as Google’s mobile products are free. Both wanted to protect their core business model.

In another interesting parallel both launched lots of new projects in an attempt to build new revenue streams. Prosaically they both moved into enterprise and more radically Microsoft achieved good success with Xbox whilst the jury is still out on Google’s self driving cars and other Alphabet projects.

Despite all these similarities the companies feel very different. In the 1990s Microsoft was an aggressive monopolist and few people liked them. In 2015 Google has a mix of supporters and detractors but to my mind at least the company has many endearing qualities, as I’ve said.

It’s unclear how much that will matter though. In the arena of business profits count, and whilst feelings might buy Google some loyalty from people like me that won’t be enough to save them from being the next Microsoft. In fact, as I write this it’s difficult to see what will.

I would love for their autonomous cars to become a serious business, or maybe project Loon, but if they do they will become Google’s equivalent to Microsoft’s Xbox, thus completing the parallel.

Finally – being the next Microsoft is far from a fate worse than death. As of June 30th they were still the world’s second most valuable company, and on top of that they are now enjoying a resurgence.

  • Henry C

    Interesting parallels. The last point is most salient – a seemingly faded giant (yet still a commercial juggernaut that prints billions in cash profits).

    Will be interesting to see if the many product failures will be seen as effective black box methodology if they come up with a paradigm-changing and commercially significant service in the coming 3 or so years. A paradigm changer will have to come as an evolution of many accepted failures as it seems Google do not have the best eye for an acquisition, or ability to close an acquisition as others. To my mind, Facebook’s acquisition strategy (primarily focusing on WhatsApp and Instagram) will be deemed as not only far-sighted, but handled tremendously well, both products growing strongly and then being hugely monetosed post acquisition.

    The fees paid for both will likely be seen as bargains 5 years hence.

  • I don’t see any real parallels between Google and Microsoft. Microsoft had a network effect propelling it – the more OS’s it sold, the larger the packaged software market, the larger the packaged software market the more people wanted MS OS’s. MS was not satisfied to have a natural monopoly and artificially enhanced it by creating barriers to keep competitors out of the market. In the 1990’s it was pretty much impossible to buy a PC that didn’t come with Windows. Toshiba owned a Linux distribution at the time and MS used their monopoly power to stop Toshiba from shipping dual boot PCs. It took a platform shift – the Internet – to dislodge Microsoft.

    Google is not a monopoly. There are no barriers and network effects propelling it. MySpace crashed in a year when something better came along, Google is vulnerable to this same effect. With MS you couldn’t abandon Windows, MS has made that impossible. You can easily abandon Google. Just buy an iPhone and ignore The switching costs away from Google are very small, in the 1990’s the switching costs way from Windows was extreme.

    It is perfectly reasonable to have a high market share and not have a monopoly.

    Many people get this wrong – Google is an advertising company, the software is like the free toaster that banks gave away. Microsoft is a software company, Free Android is an ad platform, not an OS offering. This is why Microsoft hates Google so much – Microsoft is in the toaster business and Google is a bank giving away toasters.