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Gates Pans Google Again – Why Gates thinks
Google
By Jim Hedger, StepForth News Editor, StepForth Placement Inc.
May 27, 2005
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Bill Gates is blowing smoke at Google again. Twice this week Gates has
said nasty things about Google. Yesterday he was sounding sort of high-school
churlish with his statement, "Google is still perfect; the bubble
is floating, and they can do everything. You should buy their stock at
any price. We had a 10-year period just like that." Earlier today,
he and his buddy, lil’ Stevie Ballmer, sounded like they were playing
king-of-the-castle at recess when he predicted that Google was going to
be dethroned because the other kids will want to play with new-tech toys
that Microsoft has but Google doesn ’t.
Bill Gates is not a man who likes to play catch-up. Being the world’s
wealthiest person and running the most lucrative corporation that has ever
existed, he is not often in a position where he feels behind anyone’s
eight-ball. One can only imagine the frustration he must feel when he thinks
about Google and the threat they pose to his empire.
As everyone knows, Gates’ empire, Microsoft is enormous. With the
copyright over the operating systems and business software used on the vast
majority of personal and business computers around the world, Microsoft
has long used that advantage to dictate how things would be done. Over the
past 30 years, Gates has seen Microsoft’s revenues grow from the $16,005
they made with 3 employees in 1975 to the $36,840,000,000 they made with
57,086 employees in 2004. For the most part Microsoft has concentrated its
energies on developing the software that runs personal computers, web servers,
mobile phones, vehicle components, and much of the global digital infrastructure.
Riding the strength of IBM’s reputation Microsoft was established
as the predominant maker of operating systems and operating system accessories
by the mid 90’s. A short and brutal period in the early to mid-90’s
marked the point Microsoft understood the importance of the Internet. An
upstart company named Netscape Communications had created a web browser
that was not only better than Microsoft’s Internet Explorer; it was
being given away for free. This was in the first few years of the commercial
Internet and Gates correctly sensed the importance of controlling how people
view information found on the Net. Through a strategy of bundling a free
browser into the Windows OS and providing tools that would create non-Netscape
friendly code, Gates managed to seize significant parts of the browser market
back from Netscape. Netscape was forced to sell itself and its technologies
to AOL which later introduced the nail in Netscape’s coffin, the terrible
AOL-heavy Netscape 6.0.
Even with AOL’s unwitting assistance, establishing control of the
global digital environment was hard work. Over the thousands of person-years
of programming, many a mortal soul was invested in producing that outcome.
Whatever anyone says about the darker nature of Microsoft’s monopoly
and corporate business practices, Gate’s obsessive interest and passion
for IT drives his thinking. One just has to accept that a big part of the
thought process involves further ingraining Microsoft’s control over
the IT environment, as it has for the past 30-years. What he missed, as
he elegantly admitted at the January 2004 World Economic Forum meeting in
Davos Switzerland, was how important finding information on the internet
was going to be. Another upstart rose to become king of the only castle
that made sense of the Internet for average users, search. "Frankly,
Google kicked our butts...", said Gates in an interview in Davos. Imagine
how he must have felt the day he realized the foundation of his empire had
to be supported by the shifting sands of search.
Since at least December 2003, Gates has sensed a shift in the sands of
fortune. He was already working on plans to deal with Google’s dominance
over the search market but while spying around on their website, he noticed
that Google was hiring software engineers with qualifications that had little
to do with search. Google was (and still is) hiring operating system designers,
systems architects, email specialists, and other IT engineers who could
easily fit into one of many of Microsoft’s divisions. Everything about
the Google Job Opportunities page screamed to him “INTRUDER ALERT”.
The day is practically legendary in Internet history. Apparently he was
more than a little annoyed and after firing off a warning email to key executives,
he has spent much of the past year in a public pique over Google’s
continued growth.
The growth and nature of the Internet has allowed serious rivals to emerge.
Before the mid 90’s, Microsoft could be reasonably certain it fully
controlled the operating environment by controlling the delivery system.
By controlling the means of delivery, Microsoft could control the software
Internet users used. Software bundled into the Windows operating system
became the standard used around the world because it was instantly accessible
and guaranteed to work with Windows at least 99% of the time. When upstart
competitors popped up, Microsoft was generally able to limit their market
penetration by simply being there. Gates has good reason to worry.
Today, Microsoft faces a host of challenges. The open source movement has
propelled development of literally thousands of variations of the Linux
OS. Internet users can download a variety of applications that work on multiple
operating systems as well as the Windows OS. Microsoft no longer controls
the means of information delivery in the way it once did and it no longer
can. Their major attempt at dictating a standard information infrastructure
of the Internet, the massive .Net project has likely been shelved at least
according to speculation at Slashdot. The forum conversation was brought
to me by my very own personalized Google homepage incidentally.
Microsoft actually has a plan to deal with Google. It is in development
and code-named Longhorn. Longhorn is the long-awaited Swiss-army knife operating
system Microsoft has been hyping for almost two years. With rumoured features
such as desktop search and a host of other Internet related tools, Google,
Yahoo, Ask Jeeves and several million open source developers have already
made it’s greatest offerings seem obsolete. Longhorn, in turn has
been delayed time and time again, forcing the cynical to speculate on why.
My personal favourite theory is they are swapping out the Solitaire game
and replacing it with a stripped down version of Duke Nukem Forever. In
reality, it appears Microsoft is actually far behind the tech-curve race
for the first time in its corporate existence.
The speed and stability of the Internet combined with vast improvements
in storage and file compression allows Google (and other rivals) to offer
server-side applications such as GMail, Blogger and Google Earth. These
applications are precursors to more robust server-side applications and
when presented by Google at least, they are available at no-cost to users.
Google has also used the Internet to invade what used to be Microsoft’s
sacred space, the desktops of individual users. This is especially troubling
to Gates as the desktop was the domain that Longhorn was supposed to rule.
The desktop has always been Microsoft’s greatest asset.
In its history, Microsoft has been known to move heaven, earth and entire
corporate law divisions defending its turf and defending against lawsuits
stemming from stuff they did to defend their turf. Google is a different
sort of foe and after a decade of practice, Internet users are now better
prepared to pick and choose which products are useful to them and which
are not. The days when a product line could be protected with proprietary
practices are long over. While bigger than any other entity on the Net,
Microsoft does not control it and therefore no longer controls the means
of delivery.
That’s where search comes in. While the Internet is the primary delivery
vehicle, search engines provide the primary means of finding the stuff that
is being delivered, whatever that stuff might be. Controlling search is
the key to controlling Ecommerce and the future of advertising. He who controls
search gets richer than rich, and that is why Mr. Gates thinks about Google
so much of the time.
Google is not Microsoft’s richest competitor. Sun, Apple and Yahoo
are. The thing that sets Sun, Apple and Yahoo apart from Google is that
Google has the most momentum and a hell of a lot of available capital. It
also has stock values that rival those of the late 90’s. Google closed
the day at $266 per share. Microsoft on the other hand is sitting in the
$26 per share range. While we all know stock values are hardly a measure
of competence they are a measure of available capital and right now, Google
is enjoying more cash-flow than they ever dreamed of.
For the vast majority of computer users around the world, Microsoft’s
enduring legacy is seen in the generations of Windows operating systems
whose universal popularity created a standards benchmark in software creation.
Programmers had to design software that would work with the Windows OS.
Today, the Internet itself has become a secondary universal operating system.
That and the fact that Google is synonymous with the Net’s most important
application; search, puts Gates and the wizards of Redmond behind someone
else’s eight-ball in one of the highest staked billiard games ever.
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