Bill Gates's mission to build a Google killer

Fred Vogelstein wrote in 2 May 2005 issue of Fortune the article subtitled “Bill Gates is on a mission to build a Google killer. What got him so riled? The darling of search is moving into software—and that’s Microsoft’s turf.” He goes on to document the difficulty Microsoft is having trying to catchup with Google and why this is not Netscape all over again. Interesting read. Some excerpts …

Microsoft was already months into a massive project [Underdog] aimed at taking down Google when the truth began to dawn on Bill Gates. It was December 2003. He was poking around on the Google company website and came across a help-wanted page with descriptions of all the open jobs at Google … Gates wondered whether Microsoft might be facing much more than a war in search. An e-mail he sent to a handful of execs that day said, in effect, “We have to watch these guys. It looks like they are building something to compete with us.”

He sure got that right. Today Google isn’t just a hugely successful search engine; it has morphed into a software company and is emerging as a major threat to Microsoft’s dominance. You can use Google software with any Internet browser to search the web and your desktop for just about anything; send and store up to two gigabytes of e-mail via Gmail (Hotmail, Microsoft’s rival free e-mail service, offers 250 megabytes, a fraction of that); manage, edit, and send digital photographs using Google’s Picasa software, easily the best PC photo software out there; and, through Google’s Blogger, create, post online, and print formatted documents—all without applications from Microsoft …

Simply put, Google has become a new kind of foe, and that’s what has Gates so riled. It has combined software innovation with a brand-new Internet business model—and it wounds Gates’ pride that he didn’t get there first. Since Google doesn’t sell its search products (it makes its money from the ads that accompany its search results), Microsoft can’t muscle it out of the marketplace the way it did rivals like Netscape. But what really bothers Gates is that Google is gaining the ability to attack the very core of Microsoft’s franchise—control over what users do first when they turn on their computers … The most paranoid people at Microsoft even think “Google Office” is inevitable. Google is taking over operating system features too, like desktop search

Just how big is Microsoft’s Google problem? First, a reality check: Microsoft, with nearly $40 billion in revenues, is ten times the size of Google. It’s sitting on $34 billion in cash, generating $1 billion in new cash a month, and, thanks to its core Windows, Office, and server products, growing at 15% a year, with operating margins above 30%. Most companies would love to have such numbers …

But Microsoft isn’t exactly in fighting trim. Its ambitious new operating system, code-named Longhorn, is more than a year late, even after having been scaled back. Linux, the free operating system that Gates once scoffed at, is fighting Microsoft for share in both the server and desktop markets, forcing the company to do the unthinkable: offer customer discounts …

Every month it seems as if Google hires away one of Microsoft’s top developers. Before Google’s IPO last fall, Microsoft executives dismissed this brain drain as a function of greed. But when the exodus continued after the IPO—especially when Marc Lucovsky, one of the chief architects of Windows, bolted for Google—it was clear that Microsoft had a bigger problem on its hands. As of March, roughly 100 Microsofties had left for its search nemesis …

Microsofties have always been voracious samplers of competitors’ products; many used the Netscape browser for years until Microsoft’s Internet Explorer was good enough. But today, stop almost anyone on campus and ask which e-mail or photo or blogging program he uses, and the answer will invariably be Google’s. No wonder Bill Gates is mad …

Microsoft’s array of weapons has so far proved next to useless against Google … Says a former Microsoft executive: “Microsoft can play its old game to compete with Linux and Apple. It has to play Google’s game to compete with Google.” …

All the same, Microsoft is taking longer to catch Google than anyone could have imagined—and it will take longer still. Unless it can deliver search that is plainly better, most users won’t bother to switch, says Piper Jaffray analyst Safa Rashtchy. He adds, “Google is a huge brand. From where I sit, it’s their game to lose.” The competition could well test Gates’ patience as never before. In spring 2003 he told one of his executives, “These Google guys, they want to be billionaires and rock stars and go to conferences and all that. Let’s see if they still want to run the business in two or three years.” Well, two years have passed, and so far, they sure do.

Links:

  • Slashdot | Gates on Google – EnsignExtra on 5 May 2005 wrote “A long and interesting article in Fortune on the battle between Gates and Google.
  • Fortune says Bill Gates is riled – Dave Winer on 20 April 2005 wrote “Bill Gates does get riled, or simulates getting riled, but what really happens is the other guys get scared and blink and then he wins by default. But that was when Gates was young and feisty and more convincing. And when he had Ben Slivka who wore shorts and ate red meat, not the people working on the search engine at MSN these days. Give me a break. Those guys freak out if you raise your voice. All Google has to do is say Boo and they’ll spend a year getting over it.
  • Fortune on Gates and Google – John Batelle on 20 April 2005 wrote, “Fred Vogelstein has penned a piece on MSFT and Google for Fortune (sub required) and taken the tack of Google’s push into software, generally. A good overview of a subject covered often here – the idea of search becoming the interface to all data, and therefore, the “Windows” of the web platform. He’s got Gates on the record on Google, which is a pretty big deal.
  • Fortune article about Microsoft vs. Google – Mark Jen on 19 April 2005 wrote “Cover story for Fortune this issue sheds some light on the competition heating up between my two most recent former employers. Fred Vogelstein does an excellent job writing it up and got some really neat perspectives“.
  • Ex-Microsoftie Spotting – Who da’Punk on 9 March 2005 wrote «I think we need a trendy name for the new game of finding the latest ex-Microsoft veteran, where they are working now, and what their blog might reveal regarding Microsoft vis-à-vis the new job … Joe Beda moved on a while ago to Google. In his random update post, he notes: “The contrast between Google and Microsoft couldn’t be greater (at least from an engineer’s point of view). No meetings and few politics means that I spend much more time coding.”»
  • Microsoft Reaching out to Google – Who da’Punk on 16 October 2004 wrote “We recently held an MSN Search Champs evangelical NDA meeting to start sowing the seeds of nodding consensus for when we manage to start shipping our search solutions. But what if we went and partnered with Google?“.
  • Google vs. Gates – Kevin Kelleher wrote in March 2004 in Wired Googlemania issue, “They’re obsessed with success and each other. Call it a (death) match made in heaven.
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