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June 09, 2005

Microsoft vs Google

The way to understand how Google competes with Microsoft is to understand how Google's business model is the direct opposite of IBM while Microsoft's is not.

Back in the days when people believed that computers were evil, they were mostly right. That was because computers forced people to reduce their ideas to the small kinds of symbols that then primative computers could manipulate. The reason your check has an ABA routing number that reads 16-66 is because in 1966, it was too expensive to just enter 'Bank of America' into a computer.

An entire generation of programmers and consequently people, learned to think in the way that reduces complex meanings and media to simple codes.

The IBM computing paradigm was to squeeze the most performance out of their machines, and in those days it meant disciplining everyone and everything to use simple short codes. Nobody had the luxury to support strings, much less complex data structures or objects as we do today. So it was hierarchical and a great deal of effort was made to make the use of the computer's memory and processing power as efficient as possible. IBMs operating systems are still unmatched in managing queues of instructions. The paradigm: You translate your thoughts into computer code. You wait in line to have your simple codes processed. The computer is master, you are slave.

The invention of the personal computer greatly altered that paradigm. It shifted it, but I would argue that it didn't reverse it. Instead, it redistributed it.

You see Bill Gates' business model isn't really much different from IBM's. IBM charged you for the privilege to have time on their computer. You couldn't own the software because you would clog up their precious computers with your idiot code which couldn't possibly be as efficient and secure as IBM's own code. They were masters of the algorithms and queue management. The upside, guaranteed reliability. The IBM data center never got a virus.

Gates made people feel free by allowing you to own your own little computer - the PC. IBM scoffed. Gates made people feel free by letting them run whatever kind of software they wanted on their own computer. Moore's law saw to it that these little computers became powerful enough for it to seem that they are waiting on you. Software can now handle more complex and abstract data structures. But the business model is still the same. You pay to use the computer.

Gates doesn't let you really own the software. It's licensed. Most software run on PCs is licensed, not owned. In that way, its not very different from IBM's rules about the software. You can use it, but you can't remove the cover and service it yourself. You can't, having 'purchased' it, take it apart and sell off parts to your friends, like you could if it were your car. Software is essentially as inviolate in the PC world as it was in the mainframe world, and you still have to pay to use it.

Now let's look at Google.

Google does not charge the user. All of Google's software and hardware is at Google, behind locked doors, just like the IBM data center. To Google, you are a user, not an owner. You couldn't own the Google software because you would clog up Google's precious computers with your idiot code which couldn't possibly be as efficient and secure as Google's own code. They are masters of the algorithms and queue management. Google releases no product that doesn't scale to infinity. Google never gets a virus. Google is a free IBM datacenter. Google is the opposite of IBM despite all these similarities because its business model does not involve charging the user. Microsoft and IBM are the same because they charge the user. Microsoft makes you configure your machine and calls it freedom.

Furthermore, Google deals in human scale media. Google does not deliver compacted abstracted codes. Google delivers whole books, whole libraries of books. Google delivers satellite images of the whole planet. You are incapable of asking too much of Google, and their orientation is to deliver that all to you for free. Plus they take away all of the headaches that Gates delivered, the world of limitations of PCs. Clunky, insecure software written by anybody.

Google is one of the only computing products that hasn't bloated. Even Linux is running into controversy over kernel bloat. Pigs aren't flying, they're recompiling RPMs on their anti-Microsoft boxes. Same paradigm, same headaches. Free software approaches perfection, but there is no guarantee. Google guarantees, and that is why Google is rich and there are only two or three Linuxes left worth mentioning, all equally user poor.

Google and Microsoft are in the same business only in the broadest sense, but if they are Google is far superior. If you think of them as being service providers, they are similar. Microsoft's delivery vehicle is an operating system that the end user must install, configure and outfit with a ragtag collection of software. Microsoft, in order to retain its OS value must be backwards compatible. If they were transportation companies, Microsoft would be selling personal locomotives to which you can attach any kind of rail car you like - stuck on narrow guage. Google would be selling you passage to your destination in a customized seat. It could be on a train today, a jet tomorrow, a quantum transporter next week. You don't know or care, you just get there.

Invention in the computer industry is going to continue, but it has reached a plateau of penetration. The mass market has been established, the networks have been built, the infrastructure is there. Now is the time that the real future can come. But the way to think of all of the businesses is en masse. How does IBM deliver its services, how does Google deliver its services, how does Microsoft deliver its services?

Google is a service bureau, an ASP, a utility. Microsoft is a tools peddler. Microsoft will be a force to be reckoned with so long as people continue to like configuring PCs. That generation is aging. Microsoft understands this failing. That is why XBox Live is such a huge success. I'm not sure that it is as profitable as it should be, but it is a step in the right direction (even though it's not free). The XBox is a commodity item. You don't configure it, you don't tweak its software. You plug it in and you have scaled gaming services. The service paradigm will win out after we stop giggling about the technology.

This leaves us with certain questions about the PC industry itself. If all computing is a service industry, what of the hardware? It's either going to be built to consumer or industrial specs, just like other durable goods. The trick is to insure that the high quality highly branded players we have now stick around while commodity knockoffs flood the market. It's something of a tough differentiator since everything is getting cheaper, but I think we may be in for a crisis in quality. At that point of inflection, Apple could make money making high end wintel hardware, just like Sony - not that they have to, but they could and maintain their profit margins.

Posted by mbowen at June 9, 2005 06:58 AM

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Great post. I read something along these lines in Fortune magazine recently. Google's attractiveness, for me, comes down to two ideas: reliability and possibility. I trust most of the information that comes to me through Google and very little of what comes to me through MS. I believe in the possibility of using the many Google search engines, of using Picasa and Hello...and I don't like the possibility of virus invading my space or the possibility of the blue screen death. I certainly appreciate the historical reference to IBM. Well done.

Posted by: Temple3 [TypeKey Profile Page] at June 16, 2005 03:30 AM