Why Microsoft Always Wins
Technology Review has an intelligent, detailed article handicapping the search war. Writer Charles H. Ferguson, who was involved in the first browser war as a creator of FrontPage, argues that an industry standard proprietary architecture is the only way to succeed. The article starts off with explaining Netscape's greatest failure, which was to realize that fact:

At breakfast, and repeatedly over the following months, I tried to persuade Barksdale to take Microsoft seriously. I argued that if it was to survive, Netscape needed to imitate Microsoft’s strategy: the creation and control of proprietary industry standards. Serenely, Barksdale explained that Netscape actually invited Microsoft to imitate its products, because they would never catch up. The Internet, he said, rewarded openness and nonproprietary standards. When I heard that, I realized that despite my reservations about the monopolist in Redmond, WA, I had little choice. Four months later, I sold my company to Microsoft for $130 million in Microsoft stock*. Four years later, Netscape was effectively dead, while Microsoft’s stock had quadrupled.

Explaining how Microsoft approaches this sort of battle:

Strategies and Prescriptions
In all of Microsoft’s successful battles, it has used the same strategies. It undercuts its competitors in pricing, unifies previously separate markets, provides open but proprietary APIs, and bundles new functions into platforms it already dominates. Once it has acquired control over an industry standard, it invades neighboring markets.

In contrast, the losers in these contests have usually made one or more common mistakes. They fail to deliver architectures that cover the entire market, to provide products that work on multiple platforms from multiple companies, to release well-engineered products, or to create barriers against cloning. For example, IBM failed to retain proprietary control over its PC architecture and then, in belatedly attempting to recover it, fatally broke with established industry standards. Apple and Sun restricted their operating systems to their own hardware, alienating other hard­ware vendors. Netscape declined to create proprietary APIs because it thought Microsoft would never catch up. Google—and Yahoo—would do well to take note.

What can Google do to win? Well, Charles argues that Google and Yahoo merging might be a necessary first step to turning Google into an internet standard. Google would do well to try to reach a larger audience than it currently does. Last week, I caught a bit of flack for arguing that Google should have a portal of some sort, but the crux of my argument was that Google cannot afford to not offer anything important that anyone else offers. If Yahoo creates a search engine for movies, Google needs to build its own, or at least license IMDB's database. If Microsoft offers an RSS reader in its search portal (as Yahoo already does), why shouldn't Google? Locking customers into your site by giving them everything they need is important. Give customers one good reason to sign up with Yahoo or Microsoft, and they might find good reasons to switch entirely. I hate to say it, but Google doesn't have a single lock-in product yet. What Google product do you use that you couldn't switch from in the next fifteen minutes, if a better product came along? Gmail? GDS? Neither is good enough to lock-in users, and Google Search will only hemorrhage customers as other engines get better.

But even more importantly, as the article argues, Google must work at locking in content providers into Google's massive indices. Google may need to start offering its search appliances to corporations for next to nothing, or even for free. If companies use Google internally, and software is produced with "Google Inside", then Google has a lead it won't easily lose. Otherwise, Microsoft will just capture it all. Imagine this: How many programs have an internal search feature that sucks? If Google offered to just hand them some Google tech to make it better, most companies would take it. If Google doesn't, WinFS will come around with its powerful search algorithms, which program developers can use in their programs. Google has a powerful spell checker. Why isn't that offered to companies for their text editing products? If no one needs Google, what's going to keep Google around?

Is Google playing to win? Can Google win? Things certainly aren't as rosy as they looked back in April, when Gmail was released. Can anyone still argue that Google is untouchable?

This article was found via Search Engine Watch, which also noted this eWeek article which talks about the future of the search war, and argues that Google is on offense and Microsoft on defense. Really? You're only on offense if you have something to win. Google needs to solidify its territory while creating and expanding in other arenas. Microsoft is trying to take Google's territory. Which one sounds like offense to you?
- posted by Nathan Weinberg @ 12/14/2004 10:33:00 PM