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Microsoft strikes Google in crucial spots

The Google strikes at Microsoft were initially on the periphery and slowly like the experimental tactician it started getting ambitious and the attack was more defined, writes Puneet Mehrotra.

india Updated: Sep 26, 2007 20:57 IST

For more than two years it was attack after attack. The attacker was one of the most ambitious companies in the technology space, Google and the defender was tech giant Microsoft. The premise was simple Google had nothing much to lose anyway. Microsoft had a lot of defend.

The Google strikes at Microsoft were initially on the periphery and slowly like the experimental tactician it started getting ambitious and the attack was more defined. The only problem this time was the attack was in the heart of the empire of the world's biggest company, Microsoft and the target was its cash cow Microsoft Office. Microsoft had been rather quite for a while and all of us were wondering what it was really up to. The response from Microsoft is now coming.

The world's biggest company is in war mode and the target is Google. Yesterday reports came of talks between Microsoft and Facebook with Microsoft willing to put in an eye-popping $10 billion value on the Palo Alto-based social networking site. Noteworthy is Facebook is a privately held start-up. The second attack from Microsoft is on Google cash cow i.e. advertising.


The Targets of Microsoft

Why is Microsoft choosing Facebook? Why the valuation of $10 billion? What does Microsoft gain by attacking Google's cash cow advertising? To understand this we need to go into a little background about Google and Microsoft.


Being Google - Hype versus Reality

While companies spend millions just to get the bytes Google seems to just get it. Like the fascinating Casanova bytes just follow Google wherever or nowhere it goes.

Take the GooglePhone example. Nobody knows anything about it really. Yet it's been covered in the top notch media across the world. It's even had 'product reviews' without anybody even knowing if there actually is a product by that name. Take another instance of Google Labs. Month after month Google lab churns out innovations. Some good, some bad. Yet all of them make news and keep Google in the headlines. How many of them are making money? Nobody knows. Ask Google and you never get a reply.

Google is considered a mecca of openness and probably the biggest booster of the open source. Quite true and probably for this reason Google has a following like no other tech company. Yet this is the same company that sold its freedom to the Chinese a year ago. This is the same company that is so secretive that it doesn't even share simple data like percentage of revenue sharing from advertising which many feel the consumer does have a right to know. Also there are major concerns about privacy.

News bytes have always belonged to Google and that's probably the reason it hasn't much bothered about it earlier. Since last year things changed. Orkut.com the friendly networking site started getting Google in the news for all the wrong reasons. Since than Orkut has been high on Google's agenda. Consider as an example Google India (a small but crucial unit of overall Google). Google India Managing Director, Shailesh Rao, actually sending a message to Orkut users this 15th August. That puts into perspective the importance of Orkut for Google.

Microsoft attacks Google in crucial spots

The acquisition of Facebook for Microsoft means killing several birds with one stone. Facebook has been billed as the "next www". That's not all its also being called as the "no.1 destination on the web". Some even call it the "new broadcaster' , the "new Microsoft" the "new Aol" and the list goes on.

Facebook for Microsoft would mean a lot of things. Firstly for Microsoft this would mean getting into a territory dominated by Google i.e. online dominance. Secondly Facebook is a high fuelled next generation version of Orkut. It has a learning curve which Orkut didn't have and had to learn the hard way. It gives Microsoft a strong position to rake all the issues for which Orkut has been getting into trouble and getting bad publicity. Thirdly Microsoft has lately been treading the middle path, between proprietary and open, and Facebook sets the agenda just right. Last but not the least, the reported value of transaction ($10 bn) sends a clear message out to the rivals.

In this context also worth reading is Duncan Riley post in Techcrunch, could Facebook become next Microsoft?

He says "The growth strategy is two fold:
1. use third party developers to create compelling applications/ content
2: acquire other companies and incorporate their offerings into Facebook to provide more compelling applications/ content"

Attacking Google's Cash Cow - Advertising

What are Google's revenue sources? It's advertising, adverting and advertising. Google doesn't talk about it but anybody who has been following this company knows Google's bread and butter is advertising and the bulk of revenues come from there. Microsoft has decided to attack right at its heart.

According to a report by Robert A. Guth and Charles Forelle in Wall Street Journal 'Microsoft Corp. executives and a public-relations firm, Burson-Marsteller, retained by the software giant are waging a quiet campaign to convince Internet companies, advertisers and regulators to oppose Google Inc.'s planned $3.1 billion acquisition of online advertising specialist DoubleClick Inc." They go on to add "In the written pitches reviewed by The Wall Street Journal, Burson cites the deal as part of a larger discussion of "fair and free competition" in Internet-search and privacy rights."

Citrix and Microsoft - Virtualization the next round of battle

Last week Citrix and Microsoft announced extending their virtual alliance in desktop and application delivery market by standardizing on the Microsoft Virtual Hard Disk (VHD) format as a common runtime environment for both virtualized operating systems and applications. This collaboration will result in future versions of Citrix's Desktop Server and virtual application solutions adopting the Microsoft VHD format.

Looking it from another angle that's another area where the Microsoft and Google war can extended in times to come. Google dominates the online experience virtualization maybe a good way to check that. Another company, VMware, specializes in products which allow computers to run several operating systems at the same time, just maybe an added player in this battle. That just maybe the next round of Google Microsoft saga.

(Puneet Mehrotra is a web strategist at www.cyberzest.com and manages www.thebusinessedition.com you can email him on puneet@cyberzest.com)