Back in the 90s, everyone feared Microsoft. The moment they entered your space, even with an entirely undeveloped vaporware product, you lost funding and you could only hope to be David fighting Goliath, even if you were previously the Goliath in your market. Microsoft bought, bundled or loss-leadered their way into an industry and you were SOL if you didn’t have Windows-Office profits-sized backing. You sometimes failed even if you did (RIP Netscape).
No one fears Microsoft today. They make noise about new products, but it is getting tougher by the day for them to force adoption through bundling, Office products aside (beware VOIPers and organizers). Somehow Microsoft hasn’t even succeeded at increasing Live Search adoption through bundling their search engine as the default option in Vista and Internet Exploder 7.
Startups fear Google, but for the wrong reasons. Like Microsoft, Google is happy to muscle and even buy their way into industries they think they can own (email, ad delivery, online office, calendaring, video), but the last couple of months should teach the Google killers out there a lesson: where Microsoft just fought harder when they couldn’t win, Google will commoditize your industry and make it impossible for you to create a stronghold. If you create a closed network that is too big for them to buy, they will pull the rug out from underneath you by opening up and giving away whatever it is that drives your profits.
Google’s closed successes:
Web search: Google owns it and they are not opening it up. You have a very restrictive API and no plugins for search ( Ask.com images alongside your Google text search? no way!)
Email: Google owns enough of it and they’re growing. Not open (no API, no plugins).
Video: Google owns it through YouTube. Not open (no API, no plugins).
Potential Google killers:
Social Networking: Google can’t win it (except in Brazil), so they create an industry-wide API. They want to make it possible to “Friendster” any social networking site by taking the “juice” and features that makes any given social networking site great, breaking them up into little pieces, and letting competitors duke it out to create the best video / photo / sheep sharing plugin. The functionality becomes a commodity that Google can stick their advertising next to and no one gets oversized profits. No one gets to dominate a userbase and shut Google’s closed successes out.
Proprietary handsets: Google is too late to own it, so they create a free and open operating system. There is no chance for Microsoft to be the default search engine on the phone and no chance for phone companies to “own” the software installation process on their phones. Google gets to replicate their closed web successes in the mobile space. No one gets to dominate a userbase and shut Google’s successes out.
(posted by Galen Ward, the co-founder of the real estate search website, Estately.com)
About Nathan Kaiser
