Tuesday, August 18, 2009

The Microsoft-Yahoo Deal, Part 3 (the chapter of Google)

In part 1 and part 2 respectively we analyzed what the deal may bring to Yahoo and Microsoft. Yahoo sells the weapon it uses in a lost battle (to the "don't be evil" enemy) by a price (not cheap) to Microsoft, which dreams of reopening the search engine war to against the same enemy based on the gained "scale" the deal assigns. In this post we thus discuss the "don't be evil" buddy---Google.

Should Google be afraid of the "scale" Microsoft pursues and is likely to gain by the deal?

By the first glimpse, Google should. Microsoft will obtain a decent increase in "scale" because of the deal. The combined MicroHoo (Bing) search engine will host 3 out of every 10 Web searches comparing to Google's 6 out of 10. This new figure may persuade the online advertisers investing more on optimizing the results returned by Bing. Google needs to be worried of this trend, doesn't it?

On the other hand, however, Google should feel released. Microsoft has chosen the Google way when coming to the battlefield. Microsoft could have invented revolutionary new business model about Web search by utilizing its superior desktop operating system; but it did not. By contrast, Microsoft looks for fighting in muscle on capital and manpower.

Microsoft has proved successful records in defeating powerful opponents. For example, to defeat Lotus Microsoft utilized its asymmetric advantage on synchronizing the upgrade of the office software with the upgrade of the mainstream operating system (Windows, a Microsoft product). It was impossible for Lotus to catch up the pace. The continuous improvement of the desktop office software demanded heavily on the OS support or otherwise the implementation would be very expensive. With Microsoft's dominating the desktop OS, Lotus simply had no chance to win.

In another example, Microsoft defeated Netscape in the first round of the browser war. This time, however, it was Netscape that made the first mistake by having overlooked the effect of Web evolution. In the late 90s, by still being excited of its success in the first tide of World Wide Web Netscape failed to recognize the fact that the sustainable Web evolution demanded Web browsers to be free. That Web evolution could be sustained is critical to the healthy growth of all the Web companies, including Netscape, even until now. When Netscape finally realized the problem, there was few time left for it to figure out an alternate business model; and apparently Netscape did not accomplish the goal anyway. At the meantime, in his book The Road Ahead Bill Gates foresaw the future of the Web to be the "information highway". The model suggested that free information transportation through the "highway" (i.e. free Web browsing) with the charged information hosting at every exit of the "highway" (i.e. non-free software, especially the operating system, for hosting the information to be transported). Guided by this view, Microsoft started a journey on heavily investing in developing the next stage desktop operating system that well supported the network communication while at the same time it built a high-quality but free Web browser (Internet Explorer) to satisfy the visionary picture. Although history tells us that Gates did not indeed interpret the Web evolution entirely right, the vision at the meantime was superior enough to defeat Netscape. More importantly, Netscape had no way resisting Microsoft's attack because (1) it did not have the experience on developing the cutting edge operating systems, and (2) it could not figure out the real trend of Web evolution better than the vision of Gates.

Both the examples show us that Microsoft won the critical battles because it had creatively utilized its most powerful weapon---Windows operating system. Otherwise, it would be much more difficult, if ever possible, for Microsoft to defeat the powerful top dogs continuously in one and another very much profitable business sector. (In the other words, a legend never is a miracle but a creative work.) In the coming new battle, however, the first time we see Windows playing no role! My question thus is, how would Microsoft be possible to win the battle against a top dog in a very much profitable business sector, again, by without utilizing its most powerful weapon into the battlefield? The gained "scale" actually will do nothing but lead Microsoft deeper and deeper into the racing track Google invents. Since the battle is inevitable anyway, Google must have felt released on to be competed in this way.

Google's new opportunity

Not totally, but I agree to Jeff Jarvis in his Guardian column that "... Microsoft picked the wrong fight" (I tend to disagree on the Yahoo part because I believe Yahoo is the winner of the deal). In the other words, Google is getting a great opportunity to take and consolidate the leading position in the world of information technology because of the mistake Microsoft made.

As I have repeatedly argued, the key is to discover the correct path of Web evolution. No single company, even if it is as great as Microsoft or Google, could resist or detour the flow of Web evolution. History proves that only the ones that follow the Web evolution may succeed or even survive because Web evolution essentially is the aggregated will of all mankind.

Web evolution demands a revolutionary new operating system to distribute the Web resources. This is what Microsoft misses and Google apparently senses. Moreover, Web evolution demands that the end users would benefit from this switch through building up their own mind asset, or even to build up themselves. Web search is only a temporary solution to the demand fitting the current stage of the evolution. It is far less than the eventual resolution. Pitifully, Microsoft, as the dominant giant of desktop operating system, still does not understand this point.

Apparently, however, Google seems get the point. The attempt of creating the Chrome OS is not as simple as competing Microsoft, as many analysts told. It is indeed to move forward to the next stage of Web resource distribution, the stage beyond what Web search may provide.

In conclusion, when Microsoft's main attention has been distracted by this MicroHoo deal and the Bing search engine, Google is getting an extremely precious opportunity to truly lead the world of IT into a new era. This is thus what the deal brings to Google.

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