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Friday, January 07, 2005

Technology Review highlights fragility of Google's competitive position

The January 2005 edition of the Technology Review contains a detailed article by Charles Ferguson called What's Next For Google? Ferguson argues that Google's competitive position is tenuous. In his words:

...Microsoft’s control of Windows, Internet Explorer, and Office is a real advantage...  ...recent search innovations are really enhancements to the Web browser. Google, Ask Jeeves, A9, Blinkx, Yahoo, and Microsoft are all providing search toolbars that can be downloaded into the browser, and independent developers have created many search-related enhancements to the open-source Firefox browser.

But we know who really owns the browser. Ramez Naam, group program manager for MSN Search, declined to say whether or not search functions would be integrated directly into Microsoft’s Internet Explorer. But a Microsoft executive, who asked to remain unnamed, told me that his company had recently reconstituted its browser development organization. “Microsoft effectively disbanded the Internet Explorer group after killing Netscape,” he said. “But recently, they realized that Firefox was starting to gain share and that browser enhancements would be useful in the search market.” He agreed that if Microsoft got “hard-core” about search (as Bill Gates has promised), then, yes, Google would be in for a very rough time.

Google's reliance on the browser should concern all long-term investors in its stock, for whom Ferguson's article is critical reading. He suggests strategies for Google to entrench itself, but concludes that the outlook for Google is uncertain. Similar to the briefer discussion here.

Posted by David Jackson on January 7, 2005 at 12:10 AM in Sub-sector: Search, ticker: GOOG, ticker: MSFT, ticker: YHOO | Permalink

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I have a lot of discomfort with this article. First of all the guy posts that he urged netscape to close web standards.

Destructive and probably impossible. He wanted Netscape to try and create it's own little AOL on the web?

The following statement is one of many subject to question:

-------------------------------------------------

These contests are extremely complex, but they have a common underlying logic, which Charles Morris and I described a decade ago in our book Computer Wars. The best technology does not always win; superior strategy is often more important. Winners do tend, however, to share several important characteristics. They provide general-purpose, hardware-independent architectures, like Microsoft’s operating systems, rather than bundled hardware and software, like Apple’s and Sun’s systems. Winning architectures are proprietary and difficult to clone,

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Ok one of the examples he gave before was IBM's mainframe architecture. Believe me this intertwined hardware and software. The hardware was also cloned, that was the seventies Japanese computer industry. Only a court case allowed an independant software industry to develop.

AMD clones intel. Digital Research amoong others cloned DOS in the eighties, they did it better than MS but got little business. Windows is not for any practical use "hardware independant," it's welded to the Intel architecture.

The reality here is complex with permutations, but it is instead twisted to "prove" his thesis which despite a nod to the hundreds of competitors rising (yes google is threatened) that it will be MS that eats it.

First of all let's put the redesign of Windows into perspective. Yes MS at least temporarily won the browser wars, but it lost it's attempt to impose standards.

Microsoft products were redesigned and made exceedingly sophisticated to integrate *all* tools into the net. It was a replayy of Engelbart's augmentation systems, most people know bits and pieces such as the fact that you can look at spreadsheet columns in a word column, have them recalulate etc.

MS originally left all these powers on so it's powerful tools wouuld connect through email and other net connections. They are now off because any dummy can wreck a system using them, you have to turn them on.

Most people don't know about them. They have no idea of all the "meta" structures in word.

And Microsoft itself has announced that it is accepting the community decided standards of xml. These are the tags which allow things like rss. "Ontolgies" (xml hierarchies) to define things like medical records are being developed. To some extent they are shared.

These will work across a broad set of platforms including cell phones, but MS is going to coopt this and define standards that no other search system can use?

Nope. And much of the future of search depends on increasingly sophisticated and specialized approaches.

What can we expect in the future? Basic features such as figuring out "level" of discourse already in many word processors, crude AI parsing to translate complex queries, crude parsing to figure out if targets meet this, reputations systems to judge relevance and value of article... oh yeah and xml ontologies.

Lots and lots of things and approaches.

And MS will make the product that replaces all others?

The author announces with some triumph that interfaces will now have search built in. Useful, yes, but one wonders why Microsoft took so long to put easy capacities into their operating system, why the tags to associatively organize documents are so lacking and maybe, just maybe structures like the gmail you recently suggested using for backup might not evolve into the chosen base for many people.

Automatic backup, a system mantained externally, a simple interface easy for the majority of users, platform independant in the true sense in that you can access it from computer or cellphone or game box... And for applications share the resources, if you need to do some heavy processing on your photos maybe several hundred graphics processors will do it in parallel.

What the article argues is that because MS knows about the guts of Windows it has advantages, but most data people care about mining isn't in Windows. Most Window users needs rudimentary tools and a number of companies do a better job of providing looks into Windows than MS.

I don't know where this guy is coming from, but he is sggesting that IBM, Oracle... are going to say "Bill Gates wants us to store data this way so only he can get it! Boy we'd better start working overtime to change everything!"

Yep, just like there are only a "couple" of relevant search engines. There are a huge number. And some providers have made money 'data mining" corporate and other bases. This guy focuses on the unsophisticated user market, then extrapolates from that to the big corporate reality and all the huicy niche markets.

It's a surrealistic vision with no connection that I can see to the actual computer and social architectures.

Posted by: david bennett | January 7, 2005 03:09 PM

I think MSFT does some disadvantages. They're not very innovative (they're a sales and marketing machine), and from an investment standpoint the company is a no-growth entity. Plus, I'm sure they have a problem recruiting the very best and brightest. If you took a group of top computer science students, there's no way they'd join Microsoft over younger, more innovative firms. Over time the brain drain will have an impact.

Posted by: Mike | January 31, 2005 02:00 PM

I am not sure I want to do an analysis of the author in TechnologyReview along the lines "I sold out and how smart I am especially if M$FT stock goes up again." For starters, he sold an enabling piece of technology and not a platform. Netscape browser and server had the chance to become a platform yet the company behind it did not have what it took--to be honest to all parties involved, Netscape did not have the resources to wait for the rest of the world to know what to do with its technology.

Google now is in a slightly different situation. It's got more cash that Netscape could ever dream of. It has founders with a vision that is being shared by more people than a handful of early adopter enthusiasts. It has been on a path to build/acquire the elements of an online platform of which end-user search is only a piece. (Con-)Text based advertising may be a more important piece of the platform that's in a whole different space than Microsoft--read different business model.

What remains to be proven by Google is the ability to grow as a company. Yahoo, by bringing Semmel in, has proven that. Now it is the turn of Google. Stock-price included, Google has to keep innovating/adding to what it does before things turn sour or the competition comes from behind...
fCh http://chircu.com

Posted by: fCh | March 4, 2005 06:39 PM

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