Why is Google a threat to Microsoft and Apple?
Microsoft sells software. Apple sells hardware. Google
sells internet advertising. Each of these businesses is very
different and wouldn't normally affect the others.
Apple creates a better operating system to sell attractive hardware.
Microsoft and the PC world flip this model and use cheap commodity
hardware to sell software that Microsoft develops. They are yin and
yang to each other's business model.
Google at Risk?
Where does Google fit in? Google make its fortune selling
advertising on the Internet. Since computers are required for accessing
the Internet, Google's business is a byproduct of Microsoft and Apple.
It is a profitable
service (gross profit $13 billion and $19 billion in cash), and it
has driven Microsoft to jealousy.
When your business is the byproduct of someone else's work, you look
for ways to diversify and protect you investment. When you add to this
the threats from the company for whom 95% of your users depend on to
access your service, your need to protect your investment become a
matter of life and death.
Let's all cheer the genius of Steve Ballmer threatening Google with
extinction! What more motivation does Google need to come out with
its own alternative to Microsoft ? It is pretty clear to see why Sergey
and Larry have come up with Google apps to compete head-to-head with
Microsoft on the Internet. By opening another front in the battle, they
spread out Microsoft attacks and provide cover for their business to
thrive.
Google vs. Apple?
Like any war, there is collateral damage - innocent people get hurt.
Apple, which has shown little interest in Google's business, is being
drawn into the battle. I'm not trying to say that Apple is innocent of
all crimes, just that they have nothing to do with the spat between
Microsoft and Google. Regardless, they are being drawn into a battle
with a once close ally.
If Microsoft/PC and Apple were car makers, then Google would be the
company selling advertising on the car radio. Normally Google doesn't
need to concern itself about cars or radios. It just wants every car to
have a radio so everyone can listen to its advertisements.
I would say that most of the threats from Microsoft are nothing but
hot air. The past is a different story. Google has seen what happened
to Netscape,
IBM,
Sun Microsystems, and other of Microsoft's competitors and
partners. Microsoft controls 95% of the market, and it likes to decide
what is permitted. It can shut out a competitor and pay out the
government penalties while still making money.
Google needs shelter from Microsoft, if for no other reason then to
avoid the fate of Netscape.
Allied Against Microsoft
Apple is an ally for a now, but Apple's market share is too small to
defend Google from Microsoft. Google is busy creating other
alternatives. It builds its own tools and get support from
the open source software movement. The OSS people have alternatives
to every software product that Microsoft or Apple make. Much of the
free software is rough, but Google has millions
to spend and smart people on call to create a passing
alternative.
This situation prompted Google to spend millions to help the
development of Firefox as a competitor to Microsoft's Internet
Explorer. Then it polished dozens of apps for cloud services, from
Gmail to Google Docs, as a way to weaken Microsoft
Office. Next, it built Chrome to tie all these services
together. This creates a shell around the Windows environment to reduce
dependence on the Windows layer below.
Then, for good measure, Google released Android
to compete with Windows Mobile and the iPhone.
All of this it can give away for free, because
Google uses open source software to reduce development costs and
these services are designed to be leverage against Microsoft. Consumers
see this as a big win, because they are getting something for free.
Mostly this has been about the impact on Microsoft products. Google
is still expecting you to buy your own computer. Cheap PCs and netbooks
with Linux are good enough for logging on to the Internet. Macs are
nice, but definitely not required for Google's business to thrive.
Google's Business Model
Google is also working hard to define your user experience on the
computer so all the roads for Internet services lead to Google. The
more services it provides, the more users it will attract. The more
users it attracts, the more advertising it sells. Since more people are
using the Internet for news and entertainment, all the billions of
advertising dollars are moving to the Internet. Google wants to be
everywhere to collect those billions.
Apple is not about cheap computers or letting someone else control
the user experience. Apple is about ease of use, building products that
sell themselves, and staying ahead of the competition with vertically
integrated products. Apple tries to supply the whole solution. Despite
this, Apple benefits from having software developers choose its
platform.
Google is viewed as just another software developer, but unlike most
developers, Google doesn't rely on the sale of its software for profit.
Google gives it away to promote traffic to its services, enhance its
reputation, and create a barrier against Microsoft. If Google brings
out products that compete with Apple along the way, too bad.
Nothing personal, Apple, but Google may have to destroy your
business model in order to guarantee access on the computer desktop or
smartphone browser. This message kind of sucks, especially when Apple
has been supportive of Google.
Apple includes the Google search box in the Safari toolbar. It gave
access to many Google apps on the iPhone in preference to other
companies. (It was Google Maps that came with the original iPhone, not
Mapquest.) Apple even had a Google executive on its board of directors.
But at the end of the day, business is business, and Google has to look
out for its own shareholders.
Insider Advantage?
The friendly relationship between Apple and Google might lead to an
FTC inquiry with Google on how it used its relationship with Apple to
gain insider knowledge of Apple's strategies - and how it turned around
to use this information against both Microsoft and Apple.
From the beginning, the relationship has been one-sided.
What has Google done to help Apple sell Macs, iPods, or iPhones? On
the other hand, Apple has directed traffic to Google with Safari and
the iPhone.
Did the congenial relationship with Google cost Apple business
opportunities? Should Apple have tried to get a bidding war for the
search box in Safari with Yahoo or Microsoft against Google?
Everyone is so focused on Apple being the naughty company that they
forget that Google gained from the relationship.
Is Google a Reliable Partner?
This leaves Apple in an uncomfortable position. Is Google still a
reliable business partner? Does Apple need to establish independence
from Google apps? Has giving Google preferential treatment on the
iPhone backfired? Should Apple work harder to crush the Android
platform before it becomes too competitive?
Maybe Google needs to have a lawsuit or two to get it to back off
from Apple's business. Steve Jobs is a "nice
person", and he may have put away his killer instincts with Google.
Does he need to be reminded of the threat Google has become?
Google Voice
For all those people whining about the unfair rejection of Google
Voice on the iPhone, I say shut up. Apple doesn't owe Google anything,
let alone favored status on the iPhone. If Google can't figure a way to
meet Apple's demands on what is allowed, too bad. (Seriously, why can
smaller developers navigate the approval process while Google can't?)
Other developers have their apps rejected the same way and have to work
harder to make Apple happy.
The same goes for Google. It should ask Apple what it doesn't like,
fix it, and get on with business. Apple has its own business to run,
and that doesn't include baby-sitting Google through the app approval
process.
If Google Voice held the promise of making Apple a ton of money,
show me the money, and maybe I'll change my mind. When there is money
to be made, a little baby-sitting can be justified. But if this is just
about currying favor with Google, forget about it. Apple needs to end
the cozy one-sided relationship before the relationship gets any worse.
