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Gates Pans Google Again – Why Gates thinks Google
By Jim Hedger, StepForth News Editor,
StepForth Placement Inc. (c) 2005

Bill Gates is blowing smoke at Google again. Twice this week
Gates has said nasty things about Google. Yesterday he was
sounding sort of high-school churlish with his statement,
"Google is still perfect; the bubble is floating, and they can
do everything. You should buy their stock at any price. We had a
10-year period just like that." Earlier today, he and his buddy,
lil' Stevie Ballmer, sounded like they were playing
king-of-the-castle at recess when he predicted that Google was
going to be dethroned because the other kids will want to play
with new-tech toys that Microsoft has, but Google doesn't.

Bill Gates is not a man who likes to play catch-up. Being the
world's wealthiest person and running the most lucrative
corporation that has ever existed, he is not often in a position
where he feels behind anyone's eight-ball. One can only imagine
the frustration he must feel when he thinks about Google and the
threat they pose to his empire.

As everyone knows, Gates' empire, Microsoft is enormous. With
the copyright over the operating systems and business software
used on the vast majority of personal and business computers
around the world, Microsoft has long used that advantage to
dictate how things would be done. Over the past 30 years, Gates
has seen Microsoft's revenues grow from the $16,005 they made
with 3 employees in 1975 to the $36,840,000,000 they made with
57,086 employees in 2004. For the most part Microsoft has
concentrated its energies on developing the software that runs
personal computers, web servers, mobile phones, vehicle
components, and much of the global digital infrastructure.

Riding the strength of IBM's reputation Microsoft was
established as the predominant maker of operating systems and
operating system accessories by the mid 90's. A short and brutal
period in the early to mid-90's marked the point Microsoft
understood the importance of the Internet. An upstart company
named Netscape Communications had created a web browser that was
not only better than Microsoft's Internet Explorer; it was being
given away for free. This was in the first few years of the
commercial Internet and Gates correctly sensed the importance of
controlling how people view information found on the Net.
Through a strategy of bundling a free browser into the Windows
OS and providing tools that would create non-Netscape friendly
code, Gates managed to seize significant parts of the browser
market back from Netscape. Netscape was forced to sell itself
and its technologies to AOL which later introduced the nail in
Netscape's coffin, the terrible AOL-heavy Netscape 6.0.

Even with AOL's unwitting assistance, establishing control of
the global digital environment was hard work. Over the thousands
of person-years of programming, many a mortal soul was invested
in producing that outcome. Whatever anyone says about the darker
nature of Microsoft's monopoly and corporate business practices,
Gate's obsessive interest and passion for IT drives his
thinking. One just has to accept that a big part of the thought
process involves further ingraining Microsoft's control over the
IT environment, as it has for the past 30-years. What he missed,
as he elegantly admitted at the January 2004 World Economic
Forum meeting in Davos, Switzerland, was how important finding
information on the internet was going to be. Another upstart
rose to become king of the only castle that made sense of the
Internet for average users, search. "Frankly, Google kicked our
butts...", said Gates in an interview in Davos. Imagine how he
must have felt the day he realized the foundation of his empire
had to be supported by the shifting sands of search.

Since at least December 2003, Gates has sensed a shift in the
sands of fortune. He was already working on plans to deal with
Google's dominance over the search market but while spying
around on their website, he noticed that Google was hiring
software engineers with qualifications that had little to do
with search. Google was (and still is) hiring operating system
designers, systems architects, email specialists, and other IT
engineers who could easily fit into one of many of Microsoft's
divisions. Everything about the Google Job Opportunities page
screamed to him "INTRUDER ALERT". The day is practically
legendary in Internet history. Apparently he was more than a
little annoyed and after firing off a warning email to key
executives, he has spent much of the past year in a public pique
over Google's continued growth.

The growth and nature of the Internet has allowed serious rivals
to emerge. Before the mid 90's, Microsoft could be reasonably
certain it fully controlled the operating environment by
controlling the delivery system. By controlling the means of
delivery, Microsoft could control the software Internet users
used. Software bundled into the Windows operating system became
the standard used around the world because it was instantly
accessible and guaranteed to work with Windows at least 99% of
the time. When upstart competitors popped up, Microsoft was
generally able to limit their market penetration by simply being
there. Gates has good reason to worry.

Today, Microsoft faces a host of challenges. The open source
movement has propelled development of literally thousands of
variations of the Linux OS. Internet users can download a
variety of applications that work on multiple operating systems
as well as the Windows OS. Microsoft no longer controls the
means of information delivery in the way it once did and it no
longer can. Their major attempt at dictating a standard
information infrastructure of the Internet, the massive .Net
project has likely been shelved at least according to
speculation at Slashdot
(http://developers.slashdot.org/article.pl?sid=05/05/27/168225&from=rss).
The forum conversation was brought to me by my very own
personalized Google homepage incidentally.

Microsoft actually has a plan to deal with Google. It is in
development and code-named Longhorn. Longhorn is the
long-awaited Swiss-army knife operating system Microsoft has
been hyping for almost two years. With rumoured features such as
desktop search and a host of other Internet related tools,
Google, Yahoo, Ask Jeeves and several million open source
developers have already made its greatest offerings seem
obsolete. Longhorn, in turn has been delayed time and time
again, forcing the cynical to speculate on why. My personal
favourite theory is they are swapping out the Solitaire game and
replacing it with a stripped down version of Duke Nukem Forever.
In reality, it appears Microsoft is actually far behind the
tech-curve race for the first time in its corporate existence.

The speed and stability of the Internet combined with vast
improvements in storage and file compression allows Google (and
other rivals) to offer server-side applications such as GMail,
Blogger and Google Earth. These applications are precursors to
more robust server-side applications and when presented by
Google at least, they are available at no-cost to users. Google
has also used the Internet to invade what used to be Microsoft's
sacred space, the desktops of individual users. This is
especially troubling to Gates as the desktop was the domain that
Longhorn was supposed to rule. The desktop has always been
Microsoft's greatest asset.

In its history, Microsoft has been known to move heaven, earth
and entire corporate law divisions defending its turf and
defending against lawsuits stemming from stuff they did to
defend their turf. Google is a different sort of foe and after a
decade of practice, Internet users are now better prepared to
pick and choose which products are useful to them and which are
not. The days when a product line could be protected with
proprietary practices are long over. While bigger than any other
entity on the Net, Microsoft does not control it and therefore
no longer controls the means of delivery.

That's where search comes in. While the Internet is the primary
delivery vehicle, search engines provide the primary means of
finding the stuff that is being delivered, whatever that stuff
might be. Controlling search is the key to controlling Ecommerce
and the future of advertising. He who controls search gets
richer than rich, and that is why Mr. Gates thinks about Google
so much of the time.

Google is not Microsoft's richest competitor. Sun, Apple and
Yahoo are. The thing that sets Sun, Apple and Yahoo apart from
Google is that Google has the most momentum and a hell of a lot
of available capital. It also has stock values that rival those
of the late 90's. Google closed the day at $266 per share.
Microsoft on the other hand is sitting in the $26 per share
range. While we all know stock values are hardly a measure of
competence they are a measure of available capital and right
now, Google is enjoying more cash-flow than they ever dreamed
of.

For the vast majority of computer users around the world,
Microsoft's enduring legacy is seen in the generations of
Windows operating systems whose universal popularity created a
standards benchmark in software creation. Programmers had to
design software that would work with the Windows OS. Today, the
Internet itself has become a secondary universal operating
system. That and the fact that Google is synonymous with the
Net's most important application; search, puts Gates and the
wizards of Redmond behind someone else's eight-ball in one of
the highest staked billiard games ever.

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Jim Hedger is a writer, speaker and search engine marketing
expert based in Victoria BC. Jim writes and edits full-time for
StepForth. He has worked as an SEO for over 5 years and welcomes
the opportunity to share his experience through interviews,
articles and speaking engagements. He can be reached at
"jimhedger@stepforth.com"
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