Once again, Google is making a lot of headlines. The YouTube acquisition with its eye-popping valuation gets most of the press, but in my opinion, the introduction (on the next day) of Google's new "Docs & Spreadsheets" application suite could be more significant in the long term. A code analysis (thanks, Markus) even hints at the possibility of a future offline version that would run locally on a PC.
In the context of the nascent Office 2.0 wave, that's a major thing, although the product itself is by far not the best in its class. It's not surprising that people become increasingly critical about Google's dominance. Many already compare it Microsoft, who up until now had a firm grip on the title of "most-hated IT company on the planet".
And really, an analysis of Google's strategy in the application space shows some striking similarities to Microsoft's recipe for success:
- Ignore the incumbent technology and lower layers of the stack, and focus on disruptive innovation in a new technology family. Microsoft ignored the mainframe and commodity PC hardware and fully concentrated on PC software. Google is ignoring the local client machine. They're fine with every OS and browser, as long as you use it to access their services.That's why I don't think there will (and should) ever be a Google PC or Google OS.
- Invite everyone to join in and make money from using your platform. Microsoft had its cheap developer tools and free SDK, Google has Adwords and open APIs. Of course, both companies keep tight control over the core. Both are "open, but not open" platforms.
- Build a whole range of "good enough" products around your core product. It doesn't matter if they're not best in class, as long as you can leverage the connections to your platform. Microsoft did this with Office and SQL Server, Google does it with Docs&Spreadsheet, Calendar, Reader, Froogle etc. "Good enough" is adequate to defend your position.
- Build strong distribution partnerships. Microsoft has OEMs and a huge ecosystem of partner companies. Google has Dell, Intuit and already quite a lot of enterprise partners.
Unfortunately for Microsoft, it finds itself in almost the same position as IBM 25 years ago. It's stuck with a heavy legacy that makes it difficult to fight off the disruptor. Sure, Microsoft will probably keep its dominance in many sectors, much like IBM is still the dominating mainframe computer manufacturer. The question is only if this will still be relevant in ten years.