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Microsoft begins to take Google challenge seriously
Tuesday, December 07, 2004
Not too long ago, Google Inc. seemed little more than a pesky insect
to Microsoft Corp.'s 800-pound gorilla.
No more. 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.
Analysts say 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 might one day decide that they no longer even need
a Microsoft operating system.
The two companies already are 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.
The Google-Microsoft 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 about which
customers have long complained.
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.
Microsoft also has promised its own system for searching desktop
computers, responding to frustrations over how difficult it is to
find things on increasingly cluttered computers. Google launched
its desktop search product last month and said users should expect
improvements.
Then there is ad delivery, where Microsoft recently extended through
June 2006 a contract for Yahoo Inc. to place relevant ads alongside
its regular search results. Ad placement alongside search results
is Google's main cash cow.
David Smith, 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 threats.
Microsoft denies that Google has been the impetus for improvements
in its products. Sohn says the company is simply responding to feedback.
He also downplays the Google competition, saying Microsoft has always
faced plenty of foes.
Google, meantime, 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-based
Google opened an office in Kirkland, Wash., not far from Microsoft's
Redmond campus.
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