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API Journal: Article

Google's Competitive Advantage: It Leverages "The Power of Free"

The New York Times Nails Google's Competitive Advantage

Would Microsoft be able to use its eventual acquisition of Yahoo! to "shake its obsession with catching Google and instead look to the next generation of the Internet," asked John Markoff in The New York Times yesterday. Writing in his popular "Silicon Valley Memo," Markoff nailed the one thing that Google 'gets' that Microsoft doesn't (yet): how to leverage 'The Power of Free.'

Markoff quoted Nicholas Carr, author of the recently published book The Big Switch. The bid for Yahoo!, Markoff cited Carr as saying,  “underscores how Microsoft’s hold on the personal computer desktop is meaning less.”

The context of Carr's observation is found in The Big Switch itself, in which he sets the scene for his book-long discussion of the future of computing by describing the circumstances surrounding what he calls "an extraordinary memorandum" that Bill Gates sent to Microsoft's top managers and engineers on October 30, 2005.

Here's Carr's succinct characterization of this major sea-change moment at Redmond:
"Belying its bloodless title - "Internet Software Services" - the memo was intended to sound an alarm, to warn the company that a new revolution in computing was under way, and that it threatened to upend Microsoft's traditional business."

What had always been the linchpin of Microsoft's success - its control over the PC desktop - was fading in importance. Thanks to the proliferation of broadband connections in homes and offices, people no longer had to buy packaged software programs and install them on their computers. Instead, they could use their web browsers to tap into software supplied over the Internet from central data-processing plants."
Gates wrote, somewhat understatedly, that this "will be very disruptive." And three years on, his $44.6BN bid for Yahoo! is Microsoft's biggest ever  attempt to respond to that disruption.

But it it too late?

"Now Microsoft is trying to make up ground by buying what it has not been able to build," wrote Markoff. But he noted a major barrier: "Ultimately, Microsoft’s challenge in making its new acquisition work will be a cultural one."

Pointing out that Redmond, WA, is no fewer than 850 miles away from Silicon Valley where Yahoo! is based, Markoff wondered out loud if Microsoft can truly "use a huge acquisition to tap into what makes the Valley tick?"

"Will it force Microsoft to look forward instead of backward?" asked Markoff towards the end of his column in The New York Times. If it doesn't, then even Microsoft+Yahoo! will not, ever, equal Google.

Google's secret, according to Markoff, is as follows:

"It has unleashed the power of free — not a new idea for the Valley — to endear itself to a new generation of computer users with services they find they cannot live without, like e-mail, digital video and social networking."

Only time will tell if Microsoft can, via Yahoo!, tap into that same power source.

More Stories By Jeremy Geelan

Jeremy Geelan is Chairman & CEO of the 21st Century Internet Group, Inc. and an Executive Academy Member of the International Academy of Digital Arts & Sciences. Formerly he was President & COO at Cloud Expo, Inc. and Conference Chair of the worldwide Cloud Expo series. He appears regularly at conferences and trade shows, speaking to technology audiences across six continents. You can follow him on twitter: @jg21.

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