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Microsoft Has Played the Role of Disruptor, and Disrupted…

The NYT has a nice piece called “Google gets ready to rumble with Microsoft.”  The fighting words in question are Eric Schmidt’s prognostication that if customers could wave a magic wand, they’d be better off with 90% of their computing in the cloud and 10% on their desktop PC’s.  Obviously Microsoft has to take exception to this, since that would eliminate a huge amount of their business.  One the chief desktop proponents at Microsoft would be Jeff Raikes, whose response indicates he feels Google’s remarks are pretty self-serving:

“It’s, of course, totally inaccurate compared with where the market is today and where the market is headed,” says Jeff Raikes, president of Microsoft’s business division, which includes the Office products.

Yeah, whatever.  The NYT wound you guys up and set you at each other’s throats like a couple of pitt bulls.  It’s a time honored tradition among reports, and besides, they spelled everyone’s name right, so it’s good PR in the end.  Yet there are some nagging doubts out there.  What if the Google guys are right? 

Ask yourself this question:  Is there any new desktop software being created today, or is all the innovation happening on the web?  At best I think we’re seeing the new breed of web apps that live well on the desktop courtesy of Google Gears and Adobe AIR.  This puts a shelf life on the dreams of the desktop empire builders.  They have a period of time in which to get their act together and learn to be the top dogs in the clouds.  Don Dodge’s message is not to count Microsoft out because:

It is important to remember that Microsoft has played the role of “Disruptor” in the past, and learned a lot along the way.  

Color me skeptical.  Microsoft has been at the Internet game for a long time now, since the days of fighting it out with Netscape.  The outcome of that battle was that Microsoft was the disruptee, not the disruptor.  They thought the Internet was all about the app, so they have huge browser share that doesn’t really matter strategically.  Meanwhile the web went along on its own way and Microsoft’s participation in building out the big web companies has been sharply limited as I’ve written before.  I don’t see the web so far as a proud chapter of successful Microsoft plays so much as a time when they’ve struggle breathlessly in race after race only to learn the finish line moved on before they could get there.  Has Microsoft learned a lot?  Perhaps.  Maybe Ray Ozzie brings that new perspective to their camp. 

OTOH, this may turn out to be disruption that is similar to SaaS.  It’s extremely hard for a company used to selling perpetual licenses to convert over to SaaS.  The business model is corrosive to their financial results for one thing.  Another issue is that it changes almost every aspect of how they think about doing business.  Is it so far fetched to think that a totally advertising oriented model like Google’s could be very corrosive to Microsoft’s history of charging for software license and historically Kingly margins? 

Dan Farber points to an interesting insight, which is that Google’s massively dominant search position has an impact on the other areas.  What if you could easily access search to manage all of your information?  Microsoft had been promising a better answer than file folders for a long time.  It was supposed to be part of Vista,  but we are still waiting.  This is definitely a point of vulnerability.  When does powerful search, collaboration, freedom from manually shifting data between machines, freedom from installing or upgrading, and all the rest finally add up to enough that people move in droves to the new model?

This is one of those things where you’ll wake up and the revolution will be well underway.  Suddenly you’ll notice a lot of friends have already crossed the bridge and are waving back at you to join them.  Think of the MP3 revolution.  The awesome power of free struck the record companies with a vengeance.  Even though the sound quality was very poor compared to good CD playback, people started switching in droves at some point and never looked back.  Consider the Macintosh.  For years it was written off as dead.  Now if you don’t have fruit on your machine you’re just not hip.

Microsoft is one of the most (if not THE most) hypercompetitive companies on the planet.  I don’t think Google has any idea what they’re dealing with there.  Google is not hypercompetitive.  They’re great technologists who’ve been in the right places at the best possible times and they occupy the strategic high ground in a way that makes them the Microsoft in this new battle.  It will be interesting to watch the contest unfold.  Microsoft had just better not wait too long to figure out the winning plays.

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