Not too long ago,
Google Inc. seemed little more than a pesky insect to
Microsoft Corp.'s 800-pound gorilla.
As Google rapidly rolls out new products, the company
best known for its wildly popular search engine is muscling
into the software giant's turf, including its stronghold:
the computer desktop.
Google's aggressive ambitions could pose a formidable
threat to Microsoft because it gets to the heart of what
drives Microsoft's dominance: its control of the user
experience through the Windows operating system.
If successful, Google
could help refashion computing, making people less reliant
on storing information on the Microsoft-powered PC on
their desk and more dependent on free Web-based e-mail
and search functions that can be accessed anywhere from
any device regardless of the operating system.
Under such circumstances,
the risk for Microsoft is that the computer desktop as
we know it could cease to exist, said David Garrity, an
analyst with Caris & Co. The question, Garrity said,
is whether computer buyers may one day decide that they
no longer even need a Microsoft operating system.
The two companies
are already battling it out on fronts including Web search,
free e-mail and better ways for searching individual computers.
Analysts say that's evidence Microsoft should -- and likely
is -- taking Google much more seriously.
``They'd be mad not
to,'' said Niki Scevak with Jupiter Research.
Marissa Mayer, Google's
director of consumer Web products, said the company's
goal is to organize information and make it universally
accessible, and that goes far beyond search. But she downplays
the suggestion that Google's tools could eventually overtake
Microsoft's ubiquitous software, saying the company doesn't
currently have such plans but ``it's hard to speculate''
what the future might bring. Chief executive Eric Schmidt
has, however, ruled out developing a Google browser to
compete with Microsoft's dominant Internet Explorer.
competition is good news for consumers because it means
more choices and better products.
For instance, Google's
expansion into e-mail already has forced Microsoft and
others to dramatically increase free storage. Analysts
say it's also prodding Microsoft to improve products customers
have long complained about.
As it became clear
that Google and other search engines were increasingly
gaining control over people's time online, Microsoft's
MSN online division rapidly began developing its own search
technology. Microsoft had previously outsourced that job.
Web search isn't
the only place where Microsoft is playing catch-up. In
June, Microsoft launched an Internet browser toolbar that
blocks pop-up ads and enables search, years after Google
had created its own.
And after Google
announced plans for Gmail, a free e-mail service touting
massive amounts of memory, Microsoft said it would boost
free memory on its Hotmail accounts. Adam Sohn, a director
with MSN, said to expect more Hotmail improvements soon,
but he wouldn't provide details.
has promised its own system for searching desktop
computers, responding to frustrations over how difficult
it is to find things like e-mails and family photos on
increasingly cluttered computers. Google launched its
desktop search product last month and said users should
expect more improvements to that product.
Then there is ad
delivery, where Microsoft recently extended through June
2006 a contract for Yahoo Inc. (Nasdaq:YHOO - news) to
place relevant ads alongside its regular search results.
Ad placement alongside search results is Google's main
a vice president with Gartner Inc., says the chain of
events illustrates that Google is proving to be customer-driven
while Microsoft tends to be more driven by competitive
Microsoft denies that Google has been the impetus
for improvements in its products. Sohn says the company
is simply responding to customer feedback. He also downplays
the Google competition, saying Microsoft has always
faced plenty of foes.
of innovation and competition, and it's way bigger than
just Google, who I think everybody's excited about and
focused on because they're a little bit newer,'' Sohn
has signaled that it will fight Microsoft's moves into
its turf. The day before Microsoft launched a test version
of its Web search engine, Google said it had nearly
doubled the size of its search engine index. And this
week, Mountain View, Calif.-based Google opened an office
in Kirkland, not far from Microsoft's Redmond campus.
Mayer said the
goal is to attract employees who don't want to leave
Asked if that meant
the company was recruiting Microsoft workers, she said:
''Not in a specific or targeted way, but we are looking
at technical workers in the Seattle area who are interested
in working for Google''
Still, Scevak said
it's still too early to say if Google will ultimately
be able to pull off a massive shift in allegiance. While
many people turn to Google for search, he says plenty
of others could see no reason to leave Microsoft products,
such as Hotmail _ especially if Microsoft is willing
to match Google's improvements for free.
And while Google
has been the first to desktop search, he says many users
may still prefer to wait for Microsoft's more familiar
''It's a very,
very early stage,'' Scevak said.
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