Microsoft, Google Face Off over Services

Microsoft and Google are on a crash course in an escalating competition to reign supreme as the center of computer innovation, observers say. Tech analysts are speculating what the future of computing will look like as free web-based services and open-source software increasingly compete with Microsoft's core product line of operating systems and office products.

The theory runs that at some point advertising-supported, web-based applications and services could take the place of shrink-wrapped, store-purchased software.

Microsoft executives have been aware of the threat internet-based applications could pose to their offerings for quite some time. Five years ago, during Microsoft's antitrust trial, a memo from Microsoft engineer Ben Slivka detailed those fears.

"The Web… exists today as a collection of technologies that deliver some interesting solutions today, and will grow rapidly in the coming years into a full-fledged platform that will rival—and even surpass—Microsoft's Windows," wrote Slivka.

Now those fears have a face, or rather a friendly, childlike logo. Google, with its famous free services and exploding web prominence, has got all the right ingredients to bring Microsoft's boogeyman to life.

And Microsoft seems to be worried. In a memo this October Chief Technical Officer Ray Ozzie said, "While we continue to make good progress on many fronts, a set of very strong and determined competitors is laser-focused on Internet services and service-enabled software."

"We knew search would be important," he added, "but through Google's focus they've gained a tremendously strong position."

David Bank, ex-Wall Street Journal reporter and author of Breaking Windows: How Bill Gates Fumbled the Future of Microsoft, echoes other analysts who interpret Microsoft's latest web-based offerings as an attempt to address this threat.

"Microsoft has moved in the direction of web services already… to sort of take their existing products and make them more like services."

"It would be incorrect to say Microsoft is not in web services; they may be the biggest player in web-based services… the bigger question is whether, just like they did in browsers and media players… they can keep coming back with the latest version of their services and over time… chip away at their competitors' market share lead."

In what may be an attempt to do just that, Microsoft has announced Windows Live and Microsoft Office Live. Windows Live—still in beta—touts a streamlined email service, instant messaging, security and maintenance services, and the ability to access Internet Explorer favourites from any PC that is online.

Meanwhile, Office Live promises services for core business tasks, such as project management and billing.

Microsoft apparently plans to offer free, advertising-supported access to some of the basic services, and subscription- or transaction-based access to higher-end services.

But while Microsoft's web presence is undeniable (MSN, Yahoo, and Google top the list of most-visited websites in the world), the question remains: can Bill Gates and company hold their position as suppliers of the world's dominant computing platform and keep the attention of software developers?

"Basically that's the whole game; basically that is what the software game is about," says Bank.

"People think it is about buying software, which on some level of course it is, but in terms of getting these big run-ups of value that Microsoft had in the ྌs and ྖs and Google has now, it's basically about having the mindshare of developers and being the [platform] the developers are writing their programs against."

In an effort to keep developers writing programs for Microsoft products, Microsoft is following Google's lead and publishing interfaces to allow developers to incorporate its web-based services into other systems.

Google has long been an advocate of free software, and this is one reason for its popularity. Google offers users a variety of free, useful stuff, including Picasa (an image filing and editing program), a desktop search tool, a virtual globe assembled from satellite imagery, and, of course, its web search engine. And one of its most recent open-source efforts seems directly aimed at Microsoft's core product line.

Five years ago, OpenOffice.org was born from the ashes of Sun Microsystems' StarOffice suite of programs. The project's website (www.openoffice.org) describes their offering as "both a fully-featured office suite compatible with leading office products, and a virtual community working through OpenOffice.org's numerous projects." While OpenOffice.org is not presently a major competitor to Microsoft's Office suite, that could change with Google's help. The search giant recently announced it would assign some developers to work on improving OpenOffice.org.

The newest release of OpenOffice.org includes new features and an updated interface, and supports OpenDocument, a standardized file format that could undermine Microsoft's proprietary formats.

Meanwhile, Microsoft, which is already in the search business, has gone one step further with an attempt to strike at the very heart of Google. The software giant has released a new version of its search engine, called MSN Search, which sports a search builder interface for lay users, but falls short in the critical juncture of delivering relevant search results. In that most important aspect, Google still reigns supreme.

While no one can say who may win the tech war these two giants appear to be gearing up for, it seems unlikely to end up as the kind of winner-takes-all competition that characterized the tech industry in the past.

"I think now, given the internet [and] broadband computing power, it is less of an all-or-nothing game," says David Bank. "I think that's exactly why the competitors can get traction now"—competitors like the Firefox browser, which arose from the ashes of the Netscape browser years after the browser war was thought won and forgotten.

"I don't think Microsoft is going away… they're going to be one of many big software providers."

In the future computer users may have several computing options, including various operating systems, various web browsers, desktop software or web-based services, and any combination of the above. However it ends up, computer users should be able to expect the competition to provide a larger variety of cheaper options.