Friday, November 11, 2005

The turning radius of an aircraft carrier

What's the turning radius of an aircraft carrier? Conventional wisdom says it's pretty large, but occasionally conventional wisdom gets turned on its ear.

One such case was a decade ago when Netscape was dominating the browser wars while the World Wide Web was still in its infancy. Microsoft was busy developing Windows 95, so it was focused on the desktop. With so much resources working on making users productive on their own PC, Microsoft wasn't paying much attention to the potential of the Internet. Meanwhile, Netscape capitalized on their first-mover advantage to capture the lion's share of the browser market.

However, after releasing Windows 95, Bill Gates had a chance to begin serious consideration of the potential of the Web. So he hosted an Internet Strategy Day and announced Microsoft's commitment to adding Internet capabilities to all its products in what has come to be known as the Internet Tidal Wave memo.

Typically, giant enterprises like Microsoft are not nimble, so they do not respond well -- or at least quickly -- to new opportunities in their business environment. Like an aircraft carrier, it takes time for them to begin turning their massive inertia in a new direction. Subsequently, no one expected Microsoft to be able to catch up to Netscape with it's huge lead in browser market share.

But it proved everyone wrong. By 1996, Microsoft had already released version 3.0 of Internet Explorer. It was so superior to the Netscape browser of the time that it quickly began to gobble up market share from Netscape. As history now shows, Microsoft reacted to the browser wars with the agility of a small company, eventually capturing more than 95% of the browser users in the 21st century.

The question is, can Microsoft turn itself on a dime again? It has recently been flanked by another, once small, competitor: Google. Google has been applying emerging technologies like web services and Ajax to quickly release innovative products like Google Earth. It has also been acquiring companies like Blogger, the host of this blog, to offer exciting new Web-based services the market has been demanding. Of course, Google's search engine has become so dominant that the term has become synonymous with searching, allowing Google to build up billions of dollars in market capitalization from its advertising revenues. It has rapidly proved to be a serious threat to Microsoft.

Recognizing this, its Chief Technology Officer, Ray Ozzie, wrote to Microsoft executive management that it needed to respond to Google. He said the future of Microsoft was at risk if they did not do so rapidly. Recognizing the seriousness of this, Chairman Bill Gates wrote an email to Microsoft's top employees akin to his Internet Tidal Wave memo a decade prior. He said, "This coming 'services wave' will be very disruptive," and went on to add that, "We must respond quickly and decisively."

Will Microsoft be able to? Only time will tell. However, with Bill Gates still at the helm, it's likely that the Microsoft aircraft carrier will be able to turn at least with the radius of the Octopus -- the yacht recently purchased by Microsoft co-founder Paul Allen. Granted, the Octopus can't turn anywhere nearly as quickly as a Zodiac but, on the other hand, Google is no longer anywhere near what anyone would consider a small company. Therefore, with it's vast resources available to put to the task, don't count Microsoft out from being able to mount a seriously competitive response to Google's recent successes.


zenyenta said...

It'll be interesting. Microsoft's IE4 got some help from the fact that Netscape 4x was terrible and crash prone on Windows. Even if you didn't want to switch, you almost had to. I know I did, until Mozilla finally created a better product.

Microsoft also gained a lot of advantage via its marketing - to the point of that huge court case over monopolistic practices. Now that serious development of alternative browsers has revived and succeeded in producing usable products they're beginning to make an impact.

One aspect of Google is its interface design. People I know who are stymied by most computer applications take to Gmail right away. Gmail is a piece of art and science that amazes me. It has features that advanced users want, hidden, but not too hidden, from users who want simplicity more than anything else. Google simply understands the wants and needs of typical end users better than Microsoft.

Anonymous said...

Competing against Google will be no easy task, but if any company can give Google a run, it may be Microsoft. But Google is no Netscape. With Google's established business model (and significant cash generation operation) and ability to leverage its successful position into many other potentially profitable areas, together with Microsoft's desire to avoid antitrust litigation, poses greater challenges for Microsoft than in its battle against Netscape. But it will be interesting to watch!

Also, in your characterization of Microsoft's victory in the browser wars, you selectively omit Microsoft's illegal activity for which it later paid a paltry $750 million in restitution to AOL for its monopoly that pushed Netscape out of the picture.

If I was a betting man, my money would be on Google. :-)