Throwback: Not the Future We Want (Premium)

Ten years ago this week, I observed that the future of computing was in the cloud and that Google was outperforming Microsoft. This is interesting timing because, in my recent assessment of Microsoft’s more recent efforts for developers, I noted that it continues to push proprietary solutions instead of open source and open standards.

Here’s a look back at this editorial, which was published just after Google I/O 2010, along with some accompanying notes and commentary.

Three Screams and a Clod

Last week, I wrote a deliberately provocative commentary, Kickin’ It In The Cloud, in which I described how Google’s cloud computing mindshare vastly outperforms the company’s cloud computing revenues. Put more succinctly, close to 99 percent of the almost $24 billion in revenues Google posted in 2009 is tied directly to advertising revenue on search results. This makes complaints about Microsoft’s inability to expand beyond its core products seem somewhat humorous by comparison.

10 years later, Google has made some progress diversifying its revenues. In its most recently quarterly results, for example, the firm reported that 82 percent of its revenues had come from advertising.

Last week’s reality check shouldn’t obscure one simple fact, however. The future of computing is very clearly in the cloud–just ask Microsoft CEO Steve Ballmer, who spent last week explaining that to the nation’s top CEOs. And though Google has yet to establish a financially successful cloud computing product to rival the software dynasties Microsoft owns, its advertising revenues are hefty enough to finance numerous projects for decades to come. Like the Microsoft of 15 years ago, Google can keep trying and trying until it establishes a beachhead, all while keeping less well-funded competitors at bay. And my expectation is that, left unchecked, it will be successful at doing so.

The Microsoft of 2010 was quite different than today’s Microsoft, of course. But here’s a milestone to consider: Microsoft publicly released Azure, then called Windows Azure, on February 1, 2010, just three months before I wrote this. So it’s not coincidental that Ballmer was busy proselytizing this future then. And Office 365, the successor to Business Productivity Online Suite, would debut just a year later, in June 2011.

Not coincidentally, Google this past week held its third annual Google I/O conference, a developer-oriented show that, like Microsoft’s PDC (Professional Developers Conference) and Apple’s WWDC (Worldwide Developers Conference), provides a revealing glimpse at where the company’s platforms are heading. This show was fascinating for a number of reasons, but for me, it provided an interesting look at how Google views the world, and how its competitors–Microsoft among them–can hope to beat back this seemingly unstoppable force.

Here are the major business-oriented product and technology announcements Google made during this show, and how I feel Microsoft is positioned from a competitive standpoint.

Open standards

Since its products are essentially all web-based, Google makes a big deal out of the open nature of the technologies underlying these products. And to its credit, Google does open source many of its own technologies as well, effectively losing control of them in the process. That said, the proprietary vs. open source debate has been done to death, and it’s as hard to imagine a world of only open source technologies as it is to imagine the reverse. Point being that proprietary and open source technologies will continue to coexist going forward. And you know, even Google gets that, though they don’t point it out very often. And I don’t recall Google open sourcing its advertising engine. Just a thought.

While I don’t believe we’ll ever see a world of entirely open source technologies, it’s a lot less difficult for me to imagine a world in which open source dominates today. That said, my observation about Google’s business is still accurate today. And it kind of mirrors Microsoft’s today, too, when you think about it.

In a bid to position Google as the future, Google vice president of engineering Vic Gundotra–a former Microsoft executive, by the way–noted that “the web is the most important platform of our generation.” The aim here was also to position Microsoft as the past. But come on, there’s no reason Microsoft can’t extend its traditional software product lines successfully to the cloud. And I’d argue that decades of experience in that market will only help it as it moves ahead to yet another platform. Google’s occasional support of open source isn’t going to prevent that.

The later success of Office 365 neatly proved that theory. The said, the fear for Microsoft continues to be that individuals, education, and newly-formed businesses will choose less expensive and purely cloud-based solutions like G Suite over Office 365.

HTML 5

Google won some points in the I/O keynote by pointing out that, even with IE 9, Microsoft’s support of web standards dramatically trailed all of the competition. Microsoft’s hope, of course, is that the continued success of its desktop products will render that fact less damaging.

That didn’t work. Today, we’re on the receiving end of a 1.5-year effort to completely overhaul Microsoft Edge with an open standards-based Chromium infrastructure. They got the message, just a bit too late.

Google, meanwhile, is claiming that all meaningful software development since 2004 has occurred on the web, and not on traditional PC platforms like Windows. I suspect it really meant all meaningful “new” software development, since new versions of products like Microsoft Office and Adobe Flash continue to be hugely successful and are installed on hundreds of millions of PCs. But the point is valid enough. And web apps based on the emerging HTML 5 standard are an important focus for all major platform makers, including Microsoft.

One advantage that Google has here is that virtually all of its applications are, in fact, web applications. So it behooves the company to update them rapidly with support for new web technologies and while doing so, its gaining valuable experience about how these web apps perform and scale. Microsoft, meanwhile, has cash cows to protect. And its most innovative work–I’m thinking of Windows Phone 7 here–is occurring only in those markets where the previous product failed, so there’s no reason to carry it forward. I’ve said it before, but Microsoft is going to need to adopt this mindset for all of its product lines if it intends to remain dominant in the coming generation of web apps.

Uncomfortably, this reminds me of “Windows as a Service,” or WaaS, in which Microsoft has been supporting and maintaining Windows 10 as if it were an online service.

VP8

Google announced that it would open source and freely license a video codec called VP8, positioning it as an alternative to the expensive and complicated H.264 pseudo-standard. Critics–i.e. H.264 backers–note that VP8 isn’t as high quality as H.264, and they may have a point. But it won’t matter. For mobile devices and You Tube-type web video, VP8 looks just fine. Murkier is the intellectual property concerns around VP8, and since Google isn’t offering indemnity against IP lawsuits, Microsoft will support VP8, but not include it with IE 9. This is the right decision, unless and until Google offers indemnity. (IE 9 will include H.264 video support, as Microsoft is paying for that license.)

Chrome Web Store

Apple’s iPhone is such a phenomenon that few people recall that what makes it so successful—that wonderful app store with its 200,000 third party apps—was originally not part of the plan. In fact, Apple wanted to severely limit developers interested in the iPhone and provide them with access to mobile web apps only. After much public criticism and outcry, Apple relented and opened up the iPhone to developers and unleashed its app store.

Unintentional or not, Apple’s success with the app store means that every top-tier mobile platform needs such a store, and Google’s version, Android Marketplace, has been quite successful, with over 60,000 apps. Building off of this success, Google is opening a Chrome Web Store that will provide similar functionally for web applications running in Google’s browser, Chrome, and its upcoming netbook/cloud OS, Chrome OS.

Android Marketplace was later renamed to the Google Play Store.

Alternatively obvious and genius, the Chrome Web Store makes sense because it’s currently hard for users to find high-quality web apps. There’s no central place to browse reviews and ratings, find popular web apps, or interact with others who use the same solutions.

The Chrome Web Store is primarily used for Chrome extensions today, and while web apps are obviously a huge market, the Chrome Web Store hasn’t really emerged as a go-to place to get them. Instead, users just access them normally directly from the browser.

From Microsoft’s perspective, the problem with Chrome Web Store is that it’s Chrome focused. The apps will run in other modern browsers, of course, but the experience is far more complete on Google’s products. Opening its own store won’t really solve the problem, and of course, Microsoft’s own online marketplaces have seen little success, with the exception of the consumer-oriented Xbox Marketplace. That doesn’t mean that Google’s store will take off, but give them credit for filling a need.

Android 2.2

Google’s Android has done what many thought impossible: It’s unseated the iPhone as the number two selling smartphone platform in the US (after RIM) and will soon displace the iPhone worldwide as well. There are a number of reasons for this success, but a simplified view is that Google has simply taken the best parts of each major smartphone platform and created its own open and free alternative.

An even simpler view is that Google did to iPhone what Microsoft did with Windows to the Mac: It created an open (not open source) market in which multiple hardware makers could license the platform, improve it with their own software and hardware designs, and beat the monolithic Apple entry. At least from a unit sales/volume perspective.

Looking ahead to the next major update, Android 2.2, it’s pretty clear that Google aims to extend its lead and, over time, position Android as the dominant platform in the mobile space. And Android 2.2 hits Microsoft squarely in its one remaining successful mobile market, the enterprise. It will adopt a number of Exchange compatibility features, including remote wipe, auto-discovery, global address book lookup and security policy support, device administration APIs, and more. Android already supports multiple Exchange accounts.

Apple likewise was forced to do this, though it’s fair to point out that it did so much early, in 2008 with the release of iPhoneOS 2.0 (later renamed to iOS).

For its part, Microsoft is rebooting its mobile phone efforts with Windows Phone. And while I feel that this upcoming entry is innovative and exciting, success is not assured. Looking ahead, I think that Android will be the dominant player in this market and that the remainder will be split in some way by RIM, Apple, Microsoft, and perhaps one other player. Microsoft’s biggest advantage in this future is that Windows Phone will offer the best integration across the PC, consumer-oriented products like Xbox and Zune, and its various online services. That will prove a big draw for some users, but not others, especially the younger crowd that is growing up on free Google services.

Well, so much for that theory. Android did, of course, go on to be the dominant player. But only iOS/iPhone remains: Microsoft, RIM, and all other players are now gone from the market.

Microsoft calls its strategy “three screens and a cloud” but it’s so poorly realized in today’s products and services that I’ve renamed it to “three screams and a clod” because there’s nothing more disheartening than adopting a particular Microsoft solution and discovering that the company didn’t go the distance to integrate it its other products. In the fast-moving world of cloud computing, Microsoft will need to adopt at least one aspect of Google’s strategy, and that is to iterate early and often. The company still doesn’t get this–it’s been a year and a half since the last Windows Live release, which is ridiculous. And until it does, it will continue to lose mindshare–and then usage share and market share–to faster-moving companies like Google.

Again, this just reeks of WaaS. But it has also done this in many other areas, including Office 365/Microsoft 365, and that seems to have really worked out.

This, of course, is the real danger of Google’s market power, both to Microsoft and to the companies that rely on its technology solutions.