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Microsoft's Fatal Google Obsession
Keizo Mori, UPI / Newscom
In its latest attempt to unseat Google, Bill Gates’ company just announced it will give away Microsoft Office for free. Douglas Rushkoff on why it could doom the software giant.
In announcing this week that it will be releasing a free, online version of its popular Office suite in 2010, Microsoft did something good for customers—especially those of us who want to work with all those Microsoft files favored by our employers or clients but don't want to pay for the software. But at the same time, Microsoft’s announcement, an obvious effort to fire back against Google's new free operating system, is bad for Microsoft. As two computing giants compete against one another to bring us cost-free software and services, only Google—with its near-monopoly on online advertising—appears to have an alternative source of revenue.
It’s an extremely dangerous game for Microsoft, which is effectively amputating its most profitable businesses in order to retain its share of the market.
Strange as it seems, while television moves increasingly toward a pay-per-view and premium channels model, computing is getting cheaper and freer. Verizon gives away netbooks to new FIoS subscribers, eTrade gifts BlackBerries to account holders, and Optimum provides access to free WiFi hotspots for its cable-modem users. These strategies can work because the customer still pays for something. The free phone requires a two-year contract.
While Google has given away pretty much everything it has to offer—from search and maps to email and apps—this has always been part of its greater revenue model: the pennies per placement it gets for seeding the entire Google universe of search and services with ever more targeted advertising. No, online advertising may not be much more successful than an old double-barrel but—like a good spray of buckshot—it makes up for its lack of accuracy with sheer volume. There are 10 unique ads listed with every Gmail message in your queue, each tied to the message content. And a paying sponsor.
As Google continues to dominate the Internet as an advertising space, it is to the company's advantage to push for more of the free. Its objective is simply to get more people online, using more applications, and in ways that are as free and open as possible. This is why the company frequently lobbies the government for open systems, open spectrum, and open operating systems: the more open the Internet, the more open it is to Google's ubiquitous advertising presence. Just as the World Bank or IMF press for "open markets" wherever they lend money, opening developing nations to first-world corporations, Google gifts the computing universe with free software that is open to the messaging of its own client corporations.
And so the Internet becomes more like television, with users' activities subsidized by the advertisers who want their attention. This might be fine for Google, whose business has nothing to do with selling software to users and everything to do with selling users to advertisers. But it's an extremely dangerous game for Microsoft, which is effectively amputating its most profitable businesses in order to retain its share of the market.
So, the same announcement by two different companies means two very different things. For Google, free software means a new advertising platform. For Microsoft, it means the demise of another source of revenue. Of course, if Microsoft really wanted to undermine Google's journey into the free, it would keep its customers paying for software but start giving away the ads. The fact that it can't do that demonstrates that Microsoft is on the wrong side of the equation of free stuff.
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Paul Schrodt is a writer living in New York City. He has contributed to New York magazine, Radar, and Esquire.com.
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MurrayAbraham
MS Office for free? You mean there are people who pay for it?
JoshAus
Yes, businesses in the Western world where copyright is actually enforced. Unlike however businesses in China, India and the rest of the 3rd world. Yet one more reason they can perform back office work far cheaper than their Western competitors. (So much for a level playing field)
Granite
Microsoft is already doomed. For years they having been taking advantage of the non-savvy user. People are more literate now and Microsoft needs to do something serious if they hope to stay on top.
Microsoft might want to start a buy one PC get another PC free sales event. Because when one PC crashes (which will be sooner rather than later), you need the other PC in order to stay up all night researching and trouble shooting the problem online.
Last week my neighbor came knocking on my door shortly before midnight. His PC started acting irrationally while he was trying to finish a project for work the next morning (I don't remember what the problem was because I was on my way to bed). So, he came over to my house to use my PC to troubleshoot. When I got up at 7am he was still nowhere near the answer.
I'm a PC! Yay!
Embers
Oh come on -- this again? I've used PCs and Macs and hands down, the Mac was more trouble. WAY more trouble. Stay up all night troubleshooting a PC? Well, that's better than spending weeks troubleshooting a Mac!
logicwhore
your a mole for MS...no way in hell you had more issues with a MAC .....number 1. have you ever gotten a trojan on your MAC...hell NO!
Embers
Uhhhh.... no, I have never gotten a Trojan horse on my PC. I have found that people who are so rabid for Macs have absolutely no idea what they're talking about when it comes to computers. Macs look good, I'll give you that, but I use my computer for more than showing off at Starbucks, which is why I have a PC.
NHBill
Hey Microsoft had a good run. You can't stay on top forever.
mzeb88
Please put all the cards on the table when you write tech articles. There are going to be multiple versions of office out there. First will be the free ad supported version which you have mentioned in the article. Second, there will be the version of office that runs locally on the PC which we are all used to, this will not be free. Lastly, there will be an online version for those that purchase the local PC version that will not be ad supported.
So hold on a second. As for Microsoft "amputating" that's not entirely the case. Read a little more into it and you'll find that while MS may canabalize some of it's home sales, this probably won't be the case for business sales since most companies don't want to move to the cloud yet. Businesses like to keep control of their own data in a big way, and that means local PCs running office Saving documents to company owned Servers. Not running through a web browser and saving to Google's back end.
There is a change in business model here, don't get me wrong. But I think MS is putting out a product that fills a space that the original product did not to compete with Google directly. I do not think It will hack dramatically into the bread and butter sales of the original product.
sophia5
Run for your lives, the sky is falling.
Microsoft's "FATAL" Google Obsession.
Facebook's "FATAL" Error.
The term "FATAL" in the columnist's articles is starting to
sound tedious, redundant, and exaggerated.
Microsoft and Facebook are doing just fine.
Ever notice, the more someone screams,
the more everyone else stops listening or believing ?
What company will make the next "FATAL" mistake ?
djmalone80
I think the author is making a subtle play on the "fatal error" messages that are all too common in the PC computing world.
I will say that for as flakey as windows is, the blue screen of death is about 1000 times less common nowadays. That is a good thing.
primemover
It would be great if they had a version for Linux.. Haaaa evil laugh.
tonyw1538
As MurrayAbraham above notes, Microsoft is giving away that which is already frequently stolen. There is no downside, and there is a big upside - the online version dovetails beautifully with the desktop version. As we all know, sometimes the internet is not available.
margonaut
Google continues to dominate the landscape of innovation in computing and Microsoft is chasing its lost luster by targeting Google. This reminds of the days when IBM was chasing Microsoft. Every dog has his day. There is a place for a Microsoft in the world technology but it does need to get rid of its legacy management starting with Steve Ballmer. There just isn't anything innovative and exciting come out of Microsoft these days.
m0dulus
Microsoft still has a net profit of 21.81%, they have a very diverse business. And as many people noted they will still sell many copies of MS Office to businesses and individual power users. Microsoft has twice the market cap of Google as well.
You can say "MS is chasing Google.. blah blah" but who won the OS war? Who is beating Sony in the console gaming way? Who is making huge inroads into server technology with .NET? Who already has a browser with most the market share? At the end of the day MS owns or competes very, very well in a large number of Markets, and frankly, I think Google's position is much more precarious. Search technology will democratize just like every other tech and it won't just be Google's game anymore.
MS can construct massive complex software projects almost at will, they understand the platforms better than anyone because THEY MAKE THEM...
Veronicaxy
Douglas read up on their Azure & Mesh strategy.
They're so ahead of Google. They own most developers with Visual Basic Studio. They own consumers from an interface perspective. They own enterprise because of untold investment in MS products over decades now.
inbetween13
Hmmm, let's see. The free ad-supported MS Office Suite will instantly become the most used free office suite on the internet where it will generate a continous stream of income to MS through the ads it will place there. So, how exactly does this hurt MS and benefit Google?
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