News Headlines
US Tech Titan Turf War Goes Far Beyond Online Search>GOOG
22 Nov 04 20:42
SEATTLE (AP)--Not too long ago, Google Inc. (GOOG) seemed little more than anuisance to Microsoft Corp.'s (MSFT) software domination.
No more. As Google rapidly rolls out new products, the company best known forits wildly popular search engine is muscling into the software giant's turf,including its stronghold: the computer desktop.
Analysts say Google's aggressive ambitions could pose a formidable threat toMicrosoft because it gets to the heart of what drives Microsoft's dominance: itscontrol of the user experience through the Windows operating system.
If successful, Google could help refashion computing, making people lessreliant on storing information on the Microsoft-powered PC on their desk andmore dependent on free Web-based e-mail and search functions that can beaccessed anywhere from any device regardless of the operating system.
Under such circumstances, the risk for Microsoft is that the computer desktopas we know it could cease to exist, said David Garrity, an analyst with Caris &Co. The question, Garrity said, is whether computer buyers may one day decidethat they no longer even need a Microsoft operating system.
The two companies are already battling it out on fronts including Web search,free e-mail and better ways for searching individual computers. Analysts saythat's evidence Microsoft should - and likely is - taking Google much moreseriously.
"They'd be mad not to," said Niki Scevak with Jupiter Research.
Marissa Mayer, Google's director of consumer Web products, said the company'sgoal is to organize information and make it universally accessible, and thatgoes far beyond search.
But she downplays the suggestion that Google's tools could eventually overtakeMicrosoft's ubiquitous software, saying the company doesn't currently have suchplans but "it's hard to speculate" what the future might bring. Chief executiveEric Schmidt has, however, ruled out developing a Google browser to compete withMicrosoft's dominant Internet Explorer.
The Google-Microsoft competition is good news for consumers because it meansmore choices and better products.
For instance, Google's expansion into e-mail already has forced Microsoft andothers to dramatically increase free storage. Analysts say it's also proddingMicrosoft to improve products customers have long complained about.
As it became clear that Google and other search engines were increasinglygaining control over people's time online, Microsoft's MSN online divisionrapidly began developing its own search technology. Microsoft had previouslyoutsourced that job.
Web search isn't the only place where Microsoft is playing catch-up. In June,Microsoft launched an Internet browser toolbar that blocks pop-up ads andenables search, years after Google had created its own.
And after Google announced plans for Gmail, a free e-mail service toutingmassive amounts of memory, Microsoft said it would boost free memory on itsHotmail accounts. Adam Sohn, a director with MSN, said to expect more Hotmailimprovements soon, but he wouldn't provide details.
Microsoft also has promised its own system for searching desktop computers,responding to frustrations over how difficult it is to find things like e-mailsand family photos on increasingly cluttered computers. Google launched itsdesktop search product last month and said users should expect more improvementsto that product.
Then there is ad delivery, where Microsoft recently extended through June 2006a contract for Yahoo Inc. to place relevant ads alongside its regular searchresults. Ad placement alongside search results is Google's main cash cow.
David Smith, a vice president with Gartner Inc., says the chain of eventsillustrates that Google is proving to be customer-driven while Microsoft tendsto be more driven by competitive threats.
Microsoft denies that Google has been the impetus for improvements in itsproducts. Sohn says the company is simply responding to customer feedback. Healso downplays the Google competition, saying Microsoft has always faced plentyof foes.
"There's lots of innovation and competition, and it's way bigger than justGoogle, who I think everybody's excited about and focused on because they're alittle bit newer," Sohn said.
Google, meantime, has signaled that it will fight Microsoft's moves into itsturf. The day before Microsoft launched a test version of its Web search engine,Google said it had nearly doubled the size of its search engine index. And lastweek, Mountain View, Calif.-based Google opened an office in Kirkland, not farfrom Microsoft's Redmond campus.
Mayer said the goal is to attract employees who don't want to leave theirhometown.
Asked if that meant the company was recruiting Microsoft workers, she said: "Not in a specific or targeted way, but we are looking at technical workers inthe Seattle area who are interested in working for Google."
Still, Scevak said it's still too early to say if Google will ultimately beable to pull off a massive shift in allegiance. While many people turn to Googlefor search, he says plenty of others could see no reason to leave Microsoftproducts, such as Hotmail - especially if Microsoft is willing to match Google'simprovements for free.
And while Google has been the first to desktop search, he says many users maystill prefer to wait for Microsoft's more familiar product.
"It's a very, very early stage," Scevak said.
(END) Dow Jones Newswires
11-22-04 2042ET
www.nyse.com/about/newsheadlines/...1/22%20792&isdowjones=true