Microsoft’s Competitive Openings

by Krishna on March 24, 2007

More than a decade ago, I read an interview with Bill Gates. I apologize for the lack of proper reference here, as I am unable to recall the name of the book which contained the interview. But the point I remember was that Gates talked about how Microsoft Excel lagged behind other spreadsheet products in the market for a long time. But when graphical user interfaces on operating systems became very popular, Excel was able to surge ahead because of the investments that Microsoft had made in optimizing it for a GUI environment.

Regardless of whether the story is true or not, it raises an important point today. Despite the enormous resources of Microsoft, it has been lagging significantly behind Google, Yahoo! and other companies in web-based services. Since Microsoft-bashing has become a fashion statement, most analysts have started writing about the demise of Microsoft and about Google as the empire-in-waiting.

That may yet happen, but there are some competitive openings for Microsoft which may change the technology landscape:

  • Although Windows Vista has had a lukewarm opening, it will become the pre-dominant operating system in the next several months as companies upgrade and consumers buy new machines. That literally translates to hundreds of millions of users and computers. Vista’s integrated search features means that desktop search products are on their way out. Desktop widgets may also go the same way because of the Vista user interface and gadgets. And if the Vista security features match up to the marketing, Microsoft has scored significant points against critics. I could go on, but suffice it to say that Vista is going to create greater use of operating system functionality that will lessen the demand for online applications.
  • The Office 2007 products with the new Ribbon-based UI and OpenXML document formats are effective weapons against the encroaching threat of online word processors and spreadsheets. It buys Microsoft some more time by presenting another entry barrier for competitors because of end users who will increasingly be used to the new Office user interface at work. So instead of hurting Microsoft, what the online desktop application market will do is effectively kill Office’s competitors, namely, OpenOffice and Star Office. Most anti-Microsoft fanatics are blind to this possibility.
  • Live Search is nowhere near Google Search at the moment (in fact, suggesting it would be laughable), but there are 2 questions here:
    • Will Live Search reach the “good enough” stage that Microsoft can effectively bundle Live Search as a default within the Windows environment and not have users switch over? If you remember how Internet Explorer was terrible initially and then became “good enough” to displace Netscape, you will understand what I am talking about.
    • How will the search market splinter? Google itself has various search categories — web sites, images, blogs, products, etc. Will Google be busy defending its turf against many different entrants and not pay enough attention to Microsoft’s threat? Microsoft has enough money and resources to take the backseat for years until it can forge ahead.
  • The YouTube acquisition and the subsequent failed media negotiations/lawsuits/counter-attacks are an unnecessary diversion for Google. It dilutes their video search focus. Perhaps more importantly, management will pay heavily in valuable time and effort defending such an expensive investment and making it profitable. The question is: Having spent $1.65 billion in stock, what will be the return on investment in YouTube for Google? Microsoft has been making noises to exploit the copyright situation and present a more friendly face to the big media companies.

Google has a lot going for it, but will the Empire just lie down and be rolled over? If the past indicates anything, it will be a tough fight to the finish.

{ 2 comments }

Kaj Kandler March 25, 2007 at 8:24 pm

I would not count Office 2007 as such a success. The Ribbon Interface is rather hard to learn, only available in a few MS Office apps and not supported by the rest of the OS.

I have seen many companies realize that they need a non proprietary archival format like ODf, but non that they need a new office app UI paradigm because the current one is so unusable.

I think OpenOffice listens better to its customers here than MS Office.

Krishna Kumar March 25, 2007 at 8:43 pm

Thanks for your comments, Kaj. I think at this point, the Microsoft monopoly is sufficient to overcome a lot of objections like the new interface which requires training. Many big corporations will switch over regardless and this will force the smaller ones to do so too. And if Office 2007 does become a standard, it places huge barriers in front of other vendors.

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