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March 10, 2006



Henry -

I completely agree and furthermore what is GOOGLE thinking! Would someone please send a copy of Brian Arthur's: increasing returns.

Technology/software is not something that the masses and more importantly corporations/govts/institutions will choose to jump to simply for cost. There are many factors such as: user lock-in, standards and the increasing benefits for each user as more employ the technology. I.E. the PHONE...if only one person used it it would in fact be meaningless but it grew in popularity because each user to the network increased the others benefits!
Google needs to give IBM/Lotus/Linux a call and see how they feel and felt after stepping into the ring with MSFT.

Neal Lachman

some self promotion here... I wrote a blog with some basic yet intrinsic characteristics and differences between Google and Microsoft.

I didn't mention technology, rather drew a financial comparable.

Neal Lachman


To comment on the technical and product/service offering of Google, I'd like to mention that most of Google's inflated value came from releasing a beta service every now and then, showing investors or maybe-investors that the company is flush with ideas, has great future offerings, and has a stable of products that it can build a business on. Your last question is the thesis question here. If the company cannot capitalize on these (beta) services, what is then the reason of making investors believe it will, and why?


Small enterprises are not an option? It has not been easy for Microsoft to tackle that markey and there are already some succesful online ERPs storing critical company information.

Neal Lachman

Henry, to proceed on your train of thought... even if people don't want to pay for MS software/OS, they rather use a MS crack (or whatever you call them) than open source. Doesn't that show something?

Neal Lachman

I meant "open office" and not Open Source in above comment.


Henry, I wanted to highlight the following points:

1. No "Big Cheque Writer" (read: Fortune 500 Decision Maker) ever thinks about google. Well, except when he wants to find some information online.

2. google "enjoys" this status. this is evident from what they spend their resources on.


Even though I'm not as knowledgeable as you all, and this is the first time I've read this blog, I must point out something that's painfully obvious. Google must offer these kind of tools like email, and other tools for publishers of information. Why? Because Microsoft, and Yahoo intended to corner google peripherally using these kind of services. Yahoo and Microsoft representatives basically said this many times. You see, if google only does direct search sooner or later yahoo and microsoft are going to catch up(and they are getting there) since they have more staff and money. So, all that they have left to do is use their other services to steal mindshare in the search area from google. This is part of Microsoft's strategy with Yahoo is also trying to leverage it's large community of users to do this. Google was smart in realizing the need to strenthen themselves peripherally, so that with these tools they can further maintain their search mindshare. Also these apps provide a way to spread their ad base, their other core product, and gain customers. They don't need to compete directly with MS in these areas, they just need to protect themselves peripherally, and develop peripheral products that are related to search.

One last thing. I don't believe Google thinks of themselves as a media company. They see themselves as an information company...organizing information in every arena.

Still Inside

If MSFT and/or YHOO "catches up" in Search, then GOOG is dead meat, pure and simple. Search is 90% of their profit and about 99.9% of their brand name. MSFT has more "staff and money" (but YHOO? maybe just barely...), but most of the staff at MSFT is busy handling the current MSFT revenue-producing products, whereas GOOG is completely dedicated to one thing. They have comparative advantage in that sense.

Or at least they did, before the management team went batshit insane and thought they could kill MSFT with open source re-runs from the 90s.

The only way GOOG can survive is to continue to be the most popular Internet search engine. I bet if they focused all of their resources on that, they could stay on top. Letting go of Search for GOOG will be the same as NSCP letting go of the browser. It's a road to obscurity.


Neal Lachman


I totally agree with your comment. Or has a valid point tho: Google has to diversify.

However, what has gotten me personally pissed off is that Google went also into the business of wireless fidelity and fiber optics. What MS did in the ISP/Telco/Cable business (they bougth chunks of companies such as the old AT&T and Comcast and so on -even Teledesic, remember?). Why then is Google acting as a proactive infrastructure building with its partner EL?

This is totally out of the loop, and it will be costly for Google, because although they have more market cap than my itsy bitsy company, we are going to freaking kick their butt if they go on like this. Investors will kick Google's butt in another way, which they have been doing proven the $12B wipe off of GOOG MC in one week! One week, if that would happen with MS it would be all over the financial market with analysts shouting sell, sell, sell.

Neal Lachman

I pasted this quote wrongly on anoter post. Here it is:

"Writely is in a developing "beta" stage, like many of Google's products, and is "far from perfect", according to Ms Mazzon." (FT article 9 March -

Still Inside


Just to be clear, I certainly think GOOG should go into related things that PLAY INTO THE CORE STRATEGY OF SEARCH. Things like Gmail, Maps, Shopping, etc. are fine because they are all about keeping people on their portal, and thus keeping them there to search (although I'd do more partnering to do this to keep the technology focus on search).

Their forays into other non-related markets, however, indicate that they have already given up on search, and need to do other things. Out of all of GOOGs announcements from the last five years, how many of them have to do with improving the experience for end-users "Googling" for answers? I bet its under 5%. This, for the business that is 90%+ of their net.



Look, I'm not a techie person, I'm just speaking as a user who observes certain trends. I agree Google should focus on search. But you guys are missing something. If Google was like Ebay or ipods, I would agree that all they should do is search. But search does not provide the same value online auctions does, or travels with me like an ipod. Search does not provide me personal profit; it only provides meaningful relevance - the info I want when I want. It also does not build community- it's an individual thing, unlike Ebay. So for google to win only by focusing on search, then their search engine must be years ahead of the competition. With competitors like yahoo and microsoft, *realistically*(unless google pulls a surprise) that is not possible, considering the money and size they have. The best Google can do now is stay ahead, until they get a breakthrough in research.

So google is lacking mind share in services that gives me value beyond relevant information. Google can stick with that, but the problem is the competition is so much now (unlike their younger years), that if they don't build adjacent values for its users they will have problems.

So should they focus on search, yes! But they got to build other related things to add value.

Also, you guys have a tunnel view thinking on search - it will evolve beyond the box. And so from my view most of the things they are doing play into the core strength of search. With the search box, I go looking for info; but I may want the info to come to me(feeds, ads, email, etc), or give the info so others can find(documenting, publishing, tagging, email), or document the info that I may find it later.

Also, I don't believe Google has left off search. It's just that improvements they have been making are not *exciting* things to talk about. I think they are incremental things that go unnoticed, such as their one-box results, and personalization features, and fighting spam. The media and blogosphere focuses on the *exciting* things that they do such as acquiring a web 2.0 company. But you didn't hear much, when google released several one-box results over the last two years, plus quick Q&A answers or the inline suggestions, or their improved define feature. Also, they have made several announcements with their enterprise search. And did you forget google maps, local, mobile - these were all search - book search - google scholar improvements, blog search. The blogosphere or media just didn't find many of this exciting.

One final thing..In the area of search, google has(or will have) the same problem mapquest has with its maps. Mapquest had many features that added to its value for users. But when google, ms, and yahoo came with their map products, it made mapquest seem boring, and google maps exciting.
But guess what, most people still use mapquest, because they have certain features that people have grown accustomed to, despite its lack of excitement. Google will just need to stay ahead, and then change the game in search, before someone else does.

Still Inside


Just to be clear, I agree that its perfectly reasonable for GOOG to diversify into RELATED product offerings (see above).

As for the idea Search does not (currently) have significant competitive barriers, once again I agree totally.

As for the idea that they can slip into another market while their core market position falls, the iPod is a great example. APPL lost the core computer market (down to about a 1% market share, let us say for argument). Then Steve Jobs came in and used what tiny brand equity they had left and leveraged it into a completely different market. This market has turned out to be much bigger than the 1% of the computer market APPL had. Now APPL is healthy again even though they still don't have much (any?) more market share in their original market.

If GOOG is trying to play out the same scenario, then they might have a story that portends a company that will be around in 10 years, but with a $5B market cap, not $100B.


Neal Lachman

SI, I agree with you 100%, again.

OR, you are also correct in most of your reasoning, but there is a difference between directly related, core-business relevant diversification, forays into added-value endeavors, and trying to become an infrastructure player. That happens to be my core business. It is Google's largest non-core business related commitment, and it will cost much more than they think. Investing is one thing, but announcing that a so called muni-wifi project will be funded by Google (and operated by Earthlink) because the company thinks it will earn money with advertising makes me think back of the pre-bubble burst era.

I don't try to pull Google down, but I simply think these guys lost track of reality, or at least do not keep with their core-business -Internet. They could also try building a human-colony station on the Moon, because these people will need to access the internet too, making it a good opportunity for Google to sell some adds. Great business model.

People who know me are aware that I make great efforts as to evangelize the future of internet infrastructures (based on true broadband wired-FTTx- and wireless -Broadband Wireless Access- infrastructures). I try to reason and I try to understand. I try to analyze and I try to predict. All that i can see is that Google is feeling itself God Almighty, and they think that all they set their minds on will be condoned by its investors. I think they are betting with investors' money.

I have posted an article that includes Google's bold but stupid foray into WiFi and Fiber-To-The-whatever industry.


So then subscriptions? Maybe. But if users are paying money anyway, why not pay it to Microsoft--especially if/when Office Live delivers its own web based solutions Very Simple. Whatever Google does, does it with perfection and is very user friendly. Henry, the difference between MS & Google is INNOVATION. No. No Office Live is not web-enabling of existing office, it will be a cool app which only INNOVATORS can think of ;-)

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This is exactly what Microsoft must believe for Google to succeed. No one in a Fortune 500 company will swap Office for some AJAX piece of crap... till there is no reason not to. Then they will. And since Office will do everything in its power to stop anyone else at Microsoft from doing anything to compete with Google, Microsoft will wake up one day to find the cash cow's run dry.
At least, that's the script according to the Innovator's Dilemma. I'm pretty sure everyone at Microsoft has read it. How do you think they will respond?

Neal Lachman


You are making two major mistakes in your thinking.

1) Switching from one user standard (MS Office) to another (Let's say Google something something, or OpenOffice or so) is far more costly than you think. That is besides the fact that standardizing an alternative would easily take up a decade. Google better come up with some great software, starting with... yesterday.

2) MSFT cash position is not easily going to deteriorate. You must be forgetting that MSFT is still going strong, after being harassed by some powerful governments and communities for almost a decade. MSFT has not just one cash cow, they have a herd.

Kevin M.

I love it "AJAX Piece of crap" right on target!!!

Can Writely build a better word processor just because it is on the web? If so why has it not been done before (by some other company on the web or not), and is the only answer because it’s Google and it’s free? And if there is a better word processor, what are the features that make it better? Usability? Printing? Sharing a Single file? Merge multiple users’ changes? What is it that makes it a better better word processor? For crying out loud it's a WORD PROCESSOR, it's been around for more then 20 years, being on the web is better? Tell me how, seriously email me at I'll go write the god damn thing tomorrow and put it on the web.


I do not see this happening at all. Microsoft is the king and will always be the king. This is a big mountain to climb.
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