Spite Is Not a Business Strategy

37 Comments

-1Count me among the skeptics who see Google’s (s goog) Chrome OS announcement this week as, first and foremost, an effort to induce pain in its longtime rival Microsoft (s msft). And a pointless one at that.

Many people writing about Chrome OS have argued that there’s a sound business strategy behind it, that of leading to more Google ads for us to click on. While I agree in principle, I also think it’s easy to overstate the benefit to Google: Isn’t most of its revenue already coming from surfers using Windows-based PCs? And yes, many PCs take minutes to boot up and hours to configure – as Google cattily pointed out in arguing how computers (read: Windows) “need to get better” — but will we really use the time saved to click on sponsored links? I doubt it.

Microsoft’s operating software isn’t stealing ad revenue from Google, but if Chrome OS is broadly adopted — a big if for now — it would devastate Microsoft’s profits. Putting such a stake in Microsoft’s cold heart has been a dream inspiring Google’s founders since the company’s earliest days, long before it made much strategic sense.

There’s a similar logic here to Google’s attempt to forge a revenue-sharing partnership with Yahoo, which would have incrementally improved Google’s own revenue had antitrust concerns not derailed it. Google didn’t really need that deal. Rather it was looking to deprive Microsoft of a search asset it very badly wanted, because it believes that if Microsoft loses, it wins. Even if winning is just schadenfreude.

Google’s desire to beat Microsoft goes well beyond its other rivalries. Yahoo (s yhoo) has long posed a more direct threat to Google’s ad revenue, but the competitive spirit was always a productive one, and the goal seemed to be a better experience for the web user. Twitter’s real-time search looms as a new threat, but Google has nothing but respect for the company. But Microsoft? The overriding goal is to cause pain.

And that may explain why Google is announcing an operating software that won’t actually be used by many consumers until well over a year from now. Forget that the web and open-source software will all have all evolved significantly by the fall of 2010; the news of Chrome OS has dominated the tech news cycle just as buzz for Windows 7 was building. Google did something similar when Microsoft unveiled Bing, stealing the PR thunder with its own announcement of Google Wave.

Silicon Valley companies have long fostered an animosity toward Microsoft because of its long history of bullying and squashing innovative startups. But that’s ancient history now, as antitrust probes have weakened Microsoft and the cloud has made its core products more peripheral. Beating up on Microsoft used to be a matter of survival in Silicon Valley. Now it’s just an exercise in spite.

37 Comments

Grok

You underestimate the ad revenue potential. Google does not have to do the exact same thing we are all used to… there are many ways to integrate ads into the experience if you own the operating system.

Roland

The cost to google for all this is not much. Anyone can make their own linux distribution–it’s easy. Simplify it, eliminate login, put it in an eprom–that’s Moblin! Put it in a netbook with no disk drive and CF or USB for the user’s home directory. It will be secure, rugged, and inexpensive–maybe US$100. Allow users to install apps in $HOME, do complicated stuff in the cloud. If it breaks or you lose it, get another-you still have your files on CF or USB. That would sell like crazy.

Sonal Maheshwari

Is Google trying to follow the history of Microsoft or is it a policy of “eye for an eye…..”. We all know Microsoft has some really negatives vibes associated with it but does it mean we give our support to Google to do the same? I don’t understand the logic behind it, I believe competition is good but then there is lot more happening behind the scenes than mere competition. Let us see where this leads the world of computers to.

Sonal Maheshwari
USourceIT your single source for all IT needs

Ronbo13

“Spite is Not a Business Strategy”? Perhaps true. But clever sound bites don’t necessarily equal a good argument, either. And that’s all this article is.

Our problem is that we’re arguing in a vacuum right now. None of us actually knows anything. Google’s argument is valid. The current OSs out there were all created before the web. They think they can re-envision the OS in a way that makes more sense. The internet is full of praise and criticism about Google OS, but no one yet has an idea one way or the other, including fake Steve.

I for one have seen Wave. It’s astounding. I don’t know if it has a future, but it’s astounding. I’ll give Google the benefit of the doubt and see what they come up with with Google OS, if for no other reason than that. If they can make an OS that’s as innovative and functional as Wave, I’ll love it. If it’s just a mediocre me-too OS, then feel free to criticize the guys. But it may well be that they’ve got something very innovative coming.

Don’t get militant in favor of the status quo. Cheer for someone trying to shake it up, once in awhile. Maybe it’ll fail, maybe it’ll succeed.

Cheese

>>Don’t get militant in favor of the status quo. Cheer for someone trying to shake it up, once in awhile. >> Maybe it’ll fail, maybe it’ll succeed.

You bet, buddy ! I hope Bing shakes up the world of search. Wonder what would happen if microsoft simply announced that Bing would be open sourced !

There is a pattern to Google – systematically undermine the cash cows of microsoft – by value adding to OSS projects, and promote them as google sponsored OSS. So webkit gets the limelight as Chrome, Linux as Android. Not denying the value add of Google, the essential question which Google is too smart to confront head on is: Why not open source the search engine – the bread and butter of Google? Now, let’s turn the tables. Assume Microsoft open sources search, the staple of Google. Whoa, will be amongst the best corporate battles ever. Redmond, do you copy?

zato

“Isn’t most of Googles revenue already coming from surfers using Windows-based PCs? And yes, many PCs take minutes to boot up and hours to configure – as Google cattily pointed out in arguing how computers (read: Windows) “need to get better” — but will we really use the time saved to click on sponsored links? I doubt it.

So what you are saying is there should never be an OS to compete with Windows. Your God, Microsoft, must remain the one and only all-powerful God forever.

And while I’m at it, Anil Dash in the original article wrote: “I know Google is convinced its employees are smarter than everyone else in the world, but this is a product management problem, not a computer science problem.”

“I know Google is convinced…” who at Google? Name someone at Google who thinks it’s employees are smarter than everyone else in the world.

Another a$$hole comment from another Microsoft a hole.

AndreaF

It’s not about bullying; it is as Vijay says about not leaving any stone unturned. This is what Microsoft does and does well. Sometimes this strategy causes more pain to others than we all would like it did and sometimes it’s just right.
I think this is a quality to admire in MSFT. They try and try until they succeed. If they don’t succeed they try again.
I am certain this is one of the reasons why MSFT has been so successful to date and it’s the only company that can actually pose any threats to Google and other big tech companies.
That is why companies like Google bring innovation and why so many entrepreneurs start up and build great products.
By the way, Google got complacent on search and MSFT reminded them this was a mistake and came up with a better product.
MSFT was getting complacent on the browser and OS field and it’s being reminded it shouldn’t.
Google should go after MSFT and try and cause them as much pain as possible as they are the only company, at the moment, that can crash them.
I would not bet on Google though in the long term.

Fabian Schonholz

I personally think there is more to the story than just pain – however, pain is not a bad thing. I think that Google is trying to diversify and become more than just a one pony show and depend mostly on Ad revenue. As more and more data moves to the web, an OS that is web integrated makes a lot of sense. An OS where Google Docs run somewhat native and the user experience is as though you are running it locally makes even more sense. An OS that is Grand Central enabled makes even more and more sense. You get the point.

Kudos to Google for giving it a shot.

The Shadow

This is about the most naive blog posting on this subject I’ve seen.

I am forced to assume Kevin Kelleher has never run or managed a business.

Taking away your competitors’ revenue is not spite, it’s a perfectly valid business strategy. Even if you don’t take their revenue and simply reduce theirs’, it makes you stronger in a relative sense. It’s a form of COMPETITION on which our economy is based.

This posting is a perfect example of why some people are journalists and some are bloggers.

devarajaswami

Hey Kevin,

Kevin,

Totally agree with you. Funny how in trying to spite Microsoft, Google is forced to ape Microsoft …

I mean, Microsoft INVENTED vaporware, right?
But lo and behold, here is Google doing the same thing with Chrome!

In the new normal, seems like Google is the new Microsoft :-)

I was reading Fake Steve just now, and as usual he has a dead-on take on this Chrome stuff from GoogleSoft.
http://fakesteve.blogspot.com/2009/07/lets-all-take-deep-breath-and-get-some.html

Cheers!

Gadget Sleuth

Vijay: The problem is, Silverlight has been a pretty big failure so far in its attempts to unseat Flash (even MLB.tv dumped it, saying in a statement it was too slow to run their videos properly).

John

“I also think it’s easy to overstate the benefit to Google: Isn’t most of its revenue already coming from surfers using Windows-based PCs?”

That doesn’t mean this move was made (solely) out of spite.

In 3 weeks of iPhone usage Google has earned exactly $0.00 from me despite it being the only search engine I’ve used, and my main email provider. Several other much smaller companies have earned revenues from me as an iPhone user. The iPhone user experience isn’t enhanced much by search and this has to concern Google a great deal.

Alex Schleber

So if MSFT keeps on insisting that it somehow has to compete in search, despite much evidence to the contrary (as in 13.5+ years of failing on the Web), then Ballmer is right on, but if Google decides to compete in a limited area of the OS market (for netbooks), then it’s somehow an affront?

Get real. No one believes the “poor, poor Microsoft” story for one second, or that they are done bullying. Even though I must admit that MSFT’s recent ad campaigns to feel better about being slighted by Apple have had a very ingrained “victim” tack…

This move by Google is a nod toward LINUX, toward open source, and toward the open Web with HTML + JavaScript as the key software stack (that is what the Chrome browser was/is all about, fighting off proprietary solutions like Adobe Air and MSFT Silverlight by massively increasing JS performance). Can’t see anything wrong with that.

If you doubt that MSFT would make the Web proprietary again in a heartbeat if it could, you are kidding yourself. How do we know? They already tried with IE. And when that didn’t work out as planned, they left IE to languish, it is still to this day a broken product. It’s in MSFT’s DNA to want to marginalize the Web, despite all protestations to the contrary. We’ll see if IE8 ultimately can persuade us all otherwise.

Vijay

Specious argument. There IS an unremitting battle going on – Microsoft (as usual) will leave no stone unturned to be the sole dominant power and it will (as it has always done) try eat everybody’s lunch. Just look at its attempts to undermine Adobe with Silverlight and Expression, and its continual attempts to scare corporate customers from using Linux by raising the bogey of patent-infringement suits. Google would’ve been total ass not to preempt MS at every feasible cross point in order to dissipate its resources because otherwise MS will most definitely use them to eat and/or piss in the Google’s plate. On what evidence you decided that MS now intends to play the ‘live-and-let-live’ game?

Kevin Kelleher

I wouldn’t say Microsoft is playing that game, it’s in fact still willing to be the bully. It’s just not very good at it anymore. Adobe is hardly dying – NBC, MLB and others have dumped Silverlight for Flash.

jayasimhan

Lets just examine Bing. Bing has been the most competitive search engine to google’s till date. Most of the Bing traffic I assume would be from IE since it is the default search engine on IE. Average users don’t take the time to change their default search engine. Now IE is the default browser on windows. Again average internet surfers don’t think that they need to download an extra browser when they already have one that is now not bad.

Now, this takes away a market share away from Google automatically. Chrome OS’s major aim would be to curtail that default traffic share to Bing generated by windows PCs. Google chrome would be the default browser in the OS and so goes the story. Every % of market share the ChromeOS gains, google search wins.

Also, the days when companies can rule just with superior technology is gone. Every piece of technology can be replicated or even made better. The question now is, how many customers you keep with yourself. I believe Google is just trying to do that.

To sum up, we all say “I googled it” and not “I binged it” yet. Google will do everything in every angle to keep that.

Muhammad At-Tauhidi

Bingo. (er, no pun intended). This is what Microsoft has always done – let other innovators find/build a market, allow the market to mature, and then leverage its way into a dominant position. Microsoft leveraged its OS monopoly into the broswer market and is now trying to leverage its dominant browser market share into search. Being able to compete in search means having to compete against Microsoft’s structural advantages all along the chain.

Broadband Analyst

As a PC user, I never thought Google’s move to launch its OS could have so many hidden movtives behind it. I welcomed it because any one would love a new product. Now, I would watch everything with interest to find out how the things go

Dave

Well said.

The ultimate victim of this sort of strategy will be Google itself, squandering scarce resources on an effort that will not improve its long-term position.

Steven

Not really. Their releasing it this fall to developers, so now is the time they need to start grabbing attention for it so that developers are ready to start working on it this fall. This is really the most appropriate time to announce it in terms of the release cycle. Soon their going to have some hands off demonstrations, then they’ll release the code, and developers will have a year to get cracking before it starts showing up on devices.

The problem is, most people don’t understand this. They aren’t familiar with open source development. You need to build hype long before release to attract developers from the community. Normally, this is done behind close doors, now you can see it happening.

Jamie

Uh huh, so that’s why they need to announce it right before Office Web. Ok, keep telling yourself that.

Kevin Kelleher

This is a good point, but even so it still feels awful early in the process. There wasn’t even a demo, and Google has ended up generating more questions than enthusiasm about Chrome OS.

Eideard

Please, please, folks – read a little further, maybe even into a day or two beyond initial PR grabs before you lurch out with a 2-year analysis of what will come to pass. I realize this is asking a lot of most geeks; but, try.

Today, the announcements are “leaked” that Acer and HP “just might” have netbooks for Q4 – this year.

Maybe, your knowledge of the innards of what and how Google is developing this OS might be premature? Eh?

Steven

No knowledge of the innards, but I read the press release. And is quite clearly says:
” Later this year we will open-source its code, and netbooks running Google Chrome OS will be available for consumers in the second half of 2010.”

This is a rather standard plan when you’re looking for community collaboration. Developers have their time full with projects, essentially booked months in advance. We’re in July now. If they open source it in October, that’s 3 months. If its in December (unlikely, but possible) its 5 months. That’s it. On a developer time table, that’s not much time to schedule in working on a completely new project. If they’d announced in October, or even September, fat chance they’d get any serious community support until January or February. And if the OEMs want to get products shipping for the school rush, that’s a delay they can’t afford.
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If your supposed leak is true, then they’ll have very little time to prepare it for a general audience. I’d personally think it unwise to rush it that much. However, Chrome is pretty rock solid, and Chrome linux is getting better every day. No clue about the other tech they’re developing for this. Its a pretty tight fit, they might make it, but they might not have time to really polish it for general consumption.

Bob Morris

Also, Microsoft is about to announce Office in the cloud, which takes direct aim at Google apps / docs. They are moving in on each other’s turf.

Bing is seriously good, too.

I’d say the Borg is back in town. Big time. Never, ever count Microsoft out.

Steve

Agree 100%. Google shot across the bow too soon. MSFT has plenty of time to get aggressive with Win7 – which, as a beta user – is the best code they’ve put out in a decade.

JOHN LEE BLACKWELL

Yeh absolutely, who the fo do gogle think they are, they are advertizing reps with a lot of cred in offline media because anyone can understand white space, text ads, write in a box and click/hit enter.
Lets look at ALL their other stuff ……… its basically crap – compare Docs with Zoho for instance but Zoho and its mumbai boys are not glam. For a long long time I have despised Microsoft yes – but Google are really hoes and look at waht microsoft have actually achieved in the world – THEY are singularly responsible for spreading computing – I hate to say it but its true and mark my words – “By 2015 There will Be No Google”

Google will be assimilated. Resistance is futile.

Mikeok

Nice point of view. Where’s the “do no evil” motto?? Dualing press releases are common place but announcing and getting the press from a product no where near market is kind of evil. I hope people start to see past their image.

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