GATES VS. GOOGLE - 6
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Search and Destroy
Bill Gates is on a mission to build a Google killer. What got him so riled? The darling of search is moving into software—and that's Microsoft's turf.By Fred Vogelstein
(Photo: Newscast)
For anyone who has been watching Gates over the years, the idea that an upstart like Google could so flummox him and his fierce company takes getting used to. But Google is a rival unlike any he has faced in a long time. In previous battles, Microsoft always had a powerful trump card: It controlled the Windows operating system. That meant that when consumers bought a PC, Microsoft had a powerful say in what products and services they saw first. It had pricing power and distribution power over competitors. Because of that, its applications didn't have to be superior to those of the competition—just roughly equal. Windows wasn't better than the Macintosh; Word didn't improve on WordPerfect, or Excel on Lotus. Even Explorer was only as good as Netscape. Microsoft's genius was integrating them seamlessly to make them easier for customers to default to, and then using its marketing, distribution, and pricing clout. It won by attacking competitors' business models, not their technology.
Microsoft's array of weapons has so far proved next to useless against Google. For one thing, any attempt to bundle search with its products will probably be scrutinized by antitrust regulators. Meanwhile, you no longer need a PC to use Google—it works fine from a Treo, a BlackBerry, a cellphone, a television, an Apple, or a Linux computer—any device with some kind of keyboard and Internet access. Nor can Microsoft undercut the price of Google software as it did with Netscape: Google is already free. There's no quick and easy way to lure away Google's online advertisers either. They pay based on the price of a keyword in a search and on how many times users click on the ad, but Google doesn't control that—it's set by auction. Says a former Microsoft executive: "Microsoft can play its old game to compete with Linux and Apple. It has to play Google's game to compete with Google."
Gates and Payne don't agree at all. To them, beating Google is the same as beating any of Microsoft's previous challengers. It's still about writing software that is easier to use, and the easiest-to-use software is always the kind that's integrated with what people already have—like Windows or MSN. Gates says that when Microsoft is done integrating search into future versions of Windows and Office, the world will look back at the way we are now "Googling" for stuff on the Internet and laugh. "The idea that you type in these words [in the search box] that aren't sentences and you don't get any answers—you just get back all these things you have to click on—that is so antiquated," he says, later adding, "We need to take search way beyond how people think of it today and just have it be naturally available, based on the task they want to do." For example, if you wanted to look up a factoid while you were writing a document, you might search for it without ever leaving Word.
Perhaps Gates is right—again. After all, Google may be hugely profitable and a Wall Street darling, but it is also a young company, largely controlled by its founders and dealing with the unavoidable pains of torrid growth. Oddsmakers would say the likelihood of its stumbling is high, and no one is better at outlasting the competition than Gates. Certainly the search game is still in its infancy. Only a fraction of the content available online is actually searchable. For instance, even subscribers can't search current and archived issues of the Wall Street Journal0 or most other publications with a search engine; you have to go to the publication's site. This suggests that the search engine that can get the world to list premium content on its platform will have a leg up on the competition. Microsoft has plenty of money to buy the rights to such content; it also owns powerful digital-rights-management software, which helps copyright holders control who uses their products and how often. Those should be advantages in negotiations with companies worried about losing control of copyrighted text, music, and video on the Net.
Another advantage for Gates & Co. is that search engines are still technologically primitive. They can't understand context, for example; if you type "chip," they can't tell whether you are looking for a snack food or high-tech equipment. As a result all three big search engines are scrambling to find ways to make search more personalized. The thinking is that the more a search engine knows about who is searching, the more accurate the results will be. Each company has the foundations of such a product in its desktop-search software, which can tell what you have on your hard drive. Perhaps Microsoft, because it understands Windows better than any other company, will be able to offer faster, more accurate searches.
All the same, Microsoft is taking longer to catch Google than anyone could have imagined—and it will take longer still. Unless it can deliver search that is plainly better, most users won't bother to switch, says Piper Jaffray analyst Safa Rashtchy. He adds, "Google is a huge brand. From where I sit, it's their game to lose." The competition could well test Gates' patience as never before. In spring 2003 he told one of his executives, "These Google guys, they want to be billionaires and rock stars and go to conferences and all that. Let's see if they still want to run the business in two or three years." Well, two years have passed, and so far, they sure do.
Search and Destroy
Bill Gates is on a mission to build a Google killer. What got him so riled? The darling of search is moving into software—and that's Microsoft's turf.By Fred Vogelstein
(Photo: Newscast)
For anyone who has been watching Gates over the years, the idea that an upstart like Google could so flummox him and his fierce company takes getting used to. But Google is a rival unlike any he has faced in a long time. In previous battles, Microsoft always had a powerful trump card: It controlled the Windows operating system. That meant that when consumers bought a PC, Microsoft had a powerful say in what products and services they saw first. It had pricing power and distribution power over competitors. Because of that, its applications didn't have to be superior to those of the competition—just roughly equal. Windows wasn't better than the Macintosh; Word didn't improve on WordPerfect, or Excel on Lotus. Even Explorer was only as good as Netscape. Microsoft's genius was integrating them seamlessly to make them easier for customers to default to, and then using its marketing, distribution, and pricing clout. It won by attacking competitors' business models, not their technology.
Microsoft's array of weapons has so far proved next to useless against Google. For one thing, any attempt to bundle search with its products will probably be scrutinized by antitrust regulators. Meanwhile, you no longer need a PC to use Google—it works fine from a Treo, a BlackBerry, a cellphone, a television, an Apple, or a Linux computer—any device with some kind of keyboard and Internet access. Nor can Microsoft undercut the price of Google software as it did with Netscape: Google is already free. There's no quick and easy way to lure away Google's online advertisers either. They pay based on the price of a keyword in a search and on how many times users click on the ad, but Google doesn't control that—it's set by auction. Says a former Microsoft executive: "Microsoft can play its old game to compete with Linux and Apple. It has to play Google's game to compete with Google."
Gates and Payne don't agree at all. To them, beating Google is the same as beating any of Microsoft's previous challengers. It's still about writing software that is easier to use, and the easiest-to-use software is always the kind that's integrated with what people already have—like Windows or MSN. Gates says that when Microsoft is done integrating search into future versions of Windows and Office, the world will look back at the way we are now "Googling" for stuff on the Internet and laugh. "The idea that you type in these words [in the search box] that aren't sentences and you don't get any answers—you just get back all these things you have to click on—that is so antiquated," he says, later adding, "We need to take search way beyond how people think of it today and just have it be naturally available, based on the task they want to do." For example, if you wanted to look up a factoid while you were writing a document, you might search for it without ever leaving Word.
Perhaps Gates is right—again. After all, Google may be hugely profitable and a Wall Street darling, but it is also a young company, largely controlled by its founders and dealing with the unavoidable pains of torrid growth. Oddsmakers would say the likelihood of its stumbling is high, and no one is better at outlasting the competition than Gates. Certainly the search game is still in its infancy. Only a fraction of the content available online is actually searchable. For instance, even subscribers can't search current and archived issues of the Wall Street Journal0 or most other publications with a search engine; you have to go to the publication's site. This suggests that the search engine that can get the world to list premium content on its platform will have a leg up on the competition. Microsoft has plenty of money to buy the rights to such content; it also owns powerful digital-rights-management software, which helps copyright holders control who uses their products and how often. Those should be advantages in negotiations with companies worried about losing control of copyrighted text, music, and video on the Net.
Another advantage for Gates & Co. is that search engines are still technologically primitive. They can't understand context, for example; if you type "chip," they can't tell whether you are looking for a snack food or high-tech equipment. As a result all three big search engines are scrambling to find ways to make search more personalized. The thinking is that the more a search engine knows about who is searching, the more accurate the results will be. Each company has the foundations of such a product in its desktop-search software, which can tell what you have on your hard drive. Perhaps Microsoft, because it understands Windows better than any other company, will be able to offer faster, more accurate searches.
All the same, Microsoft is taking longer to catch Google than anyone could have imagined—and it will take longer still. Unless it can deliver search that is plainly better, most users won't bother to switch, says Piper Jaffray analyst Safa Rashtchy. He adds, "Google is a huge brand. From where I sit, it's their game to lose." The competition could well test Gates' patience as never before. In spring 2003 he told one of his executives, "These Google guys, they want to be billionaires and rock stars and go to conferences and all that. Let's see if they still want to run the business in two or three years." Well, two years have passed, and so far, they sure do.
Labels: Experiences
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