July, 2009

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Google and Microsoft’s Duel In The Clouds

By Jeffrey M. Kaplan, Managing Director, THINKstrategies, Inc.

Much has been written regarding Google’s latest challenge to Microsoft–its announcement last week that it plans to unveil a new operating system (OS) in the second half of 2010.

There is no question that Google’s ambitious plans can have a significant impact on the computing world. And, because computing has become an integral part of everyone’s day-to-day world, the Google-Microsoft war deserves plenty of attention, even in the mainstream media and among Main Street businesses.

However, it shouldn’t come as any surprise that Google would move in this direction. It has been nibbling away at the edges of Microsoft’s fortress for a number of years. Google Desktop does a better job finding files within Microsoft Office than Microsoft’s own software. Gmail is easier to use than Outlook. And,

Google Apps have become a viable alternative to Microsoft Office within a growing number of businesses, non-profit agencies and governmental institutions.

Even more importantly, Google has been making a concerted effort to penetrate the education sector in the same way Apple did over the past three decades to win the hearts and minds of a new generation of computer users–college, high school and middle-school students. Their teachers are even bringing Google Apps into the classroom unilaterally to encourage greater collaboration and make it easier to track school-work.

Despite the fact that many of these same kids grew up with Microsoft Xbox, Microsoft has failed to convert their affection for its games, which are increasingly played online, into any real allegiance to Microsoft’s Office or OS.

So, while Microsoft has been obsessed with derailing Google’s dominance in the search business, Google has been equally focused on dislodging Microsoft from its OS and office ‘productivity’ perch.

Since Microsoft now appears to be making some headway in attacking Google’s core search business with its new Bing search engine, Google figures the time is right to ratchet up its efforts to attack Microsoft’s core OS business as well.

Since last week’s announcement, some analysts have questioned whether the world needs another OS. Widespread dissatisfaction with the costs, complexities and security issues associated with Microsoft OS, applications and Internet Explorer has left the door wide open for a viable alternative to emerge.

Other commentators have questioned whether Google can truly disrupt Microsoft’s monopoly. Industry statistics already show a decline in Microsoft’s market share as a result of greater acceptance of Open Source Linux and Apple OS. Yet, neither can be considered as potent a potential competitor as Google.

The recent decline in Microsoft’s quarterly revenues and profits may be another indicator that customer defections are on the rise, and the market shift toward web-based, Software-as-a-Service (SaaS) and cloud computing alternatives.

In the late 60’s, few people took Japanese cars or electronics seriously. Today, American automakers are struggling to survive, and there are no major American electronics companies making their own equipment.

The Japanese auto and electronics manufacturers outflanked their American counterparts by producing simpler, more reliable and less expensive products. They also adopted more streamlined manufacturing, distribution, marketing and sales operations. But, most importantly they were willing to be patient, establishing a ten-year plan to achieve their long-term business objectives.

Google is also promising to deliver a simpler, more reliable and less expensive alternative. It has also put a long-term plan in place. However, don’t be surprised if it rolls out its new Chrome OS before the late 2010 due date.

I suspect that many of the technical aspects of the new OS are already being tested and could easily be delivered before the second half of 2010. However, Google knows that its biggest challenge isn’t perfecting the technology; it is putting the right skills and mechanisms in place to properly support corporate customers.

Organizations will not migrate to a new OS until they are convinced that the vendor is fully prepared to support them. Google’s executives acknowledged that they must do a better job of convincing customers that they can support their needs by putting an end to their “Beta” branding of their Google Apps. Businesses don’t want their day-to-day operations to depend on half-baked applications or operating systems.

So, in the end, Google’s success will depend on putting together the right combination of technical and organizational capabilities to satisfy corporate customers. Google’s new OS doesn’t have to be more sophisticated. It just has to work better.

After all, no one ever accused Microsoft of having the best OS either. It just happened to have the best business model for the past thirty years.

But, the times and customer requirements are changing.

The on-premise world is giving way to an on-demand environment in the ‘cloud’. Packaged applications and proprietary systems are being replaced by Software-as-a-Service (SaaS) and cloud computing alternatives.

As a result, a changing of the guard is also likely.

This article was adapted from the author’s blog on THINK IT Services. Reprinted with the permission of the author.

Jeffrey Kaplan is the Founder of THINKstrategies a firm which helps clients capitalize on the migration of the technology industry from a product-centric to a services-driven business model. Kaplan is also the founder of the Managed Service Showplace and Software-as-a-Service (SaaS) Showplace, the highest ranked, vendor-independent, online directories and best practice resource centers focused on SaaS and managed services. He formerly served as VP of Marketing and Business Development at InterOPS Management Solutions, and was Director of Strategic Marketing at International Network Services (INS) which was acquired by Lucent Technologies. Jeff was also a leading industry analyst at IDC, Dataquest and META Group. Jeff is a frequent speaker at industry conferences and contributing columnist for BusinessWeek, Mass High Tech Journal, Financial Times of London, NetworkWorld, Business Communications Review, ComputerWorld, InfoWorld, InformationWeek, Managing Automation, the Web Hosting Industry Review and Services News on topics including SaaS, cloud computing, managed services, outsourcing, IT operations and service level management (SLM). For article feedback, contact Jeffrey at jkaplan@thinkstrategies.com