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Google Going After Microsoft and Apple

Posted on: Sunday, 15 January 2006, 15:00 CST

By Mike Langberg, San Jose Mercury News, Calif.

Jan. 15--I'm not one of those who believes Google has a secret plan for world domination.

But I do see Google moving rapidly, if somewhat haphazardly, beyond its core business of Internet search in ways that put the Mountain View company on a collision course with other tech giants -- specifically Apple and Microsoft.

It's my job as a columnist to take small shreds of evidence and stretch them beyond reason. So, at the risk of over-analyzing what are now small or non-existent steps, here are three extremely ambitious goals I believe Google is pursuing:

1. UNDERMINE OFFICE: Microsoft makes almost all of its profits, which reached a staggering $12.3 billion in the fiscal year ending in June 2005, from two near-monopolies: the Windows operating system and the Office workplace software. Office, which includes the familiar Word, Excel and Outlook, accounts for almost half of Microsoft's bottom line.

In October, Google announced a vague partnership with Sun Microsystems that included a passing reference to what I regard as a crucial development: Google will start contributing to OpenOffice, an open-source project backed by Sun that provides a free alternative to Microsoft Office.

Then, at the Consumer Electronics Show in Las Vegas on Jan. 6, Google unveiled a new product called Google Pack, a combination of software and services that gives consumers essential tools for using and automatically updating their computers.

Google Pack today doesn't offer anything new or exciting. There's the Firefox open-source browser and a free trial of Norton Antivirus, along with several programs created by Google such as the Google Toolbar and Google Earth.

But Google Pack could become the delivery mechanism for a Google-ized version of OpenOffice.

During an interview at CES with Marissa Mayer, Google's vice president for search products, I asked if OpenOffice would be part of Google Pack. I expected the usual non-reply that Google executives make when pressed about the company's plans.

Instead, Mayer surprised me by declaring: "It would be logical to include some office productivity tools in Google Pack in the future."

Google is driven by logic, so I take Mayer's statement as confirmation Google will soon offer a free alternative to Microsoft Office.

This could force Microsoft to slash the selling price of Office, which in turn would severely dent Microsoft's bottom line.

2. ANNOY APPLE: Last week, Google launched its Google Video Store offering previously aired CBS prime time TV shows for $1.99 each, as well as some very moldy old sitcoms and dramas such as "The Brady Bunch."

The online video store, to me, is a classic example of Google's "release early, release often" philosophy of putting out half-finished products. In a quick look, I found the video quality poor and almost no text description for the video clips on sale.

But the video store will get better, and it represents a powerful idea.

Google is allowing anyone to post video for sale on the site, using Google's copy-protection software at no charge, and letting content owners set the prices. Google keeps 30 percent of any proceeds, passing along 70 percent to the owner. Content owners can even post free programs that contain advertising, making money for themselves while paying nothing to Google.

There's also no technical or market barrier to Google adding music downloads.

Apple now has more than 80 percent of the market for music downloads and has expanded into video, through its iTunes software and store. ITunes grabbed this early lead because the software is easy to use and works with Apple's wildly popular iPod.

But music publishers are already chafing at Apple's insistence on setting fixed prices, with Apple maestro Steve Jobs insisting all songs sell for 99 cents.

Google's open market approach could, once the store acquires some polish, become so attractive to content owners that Google could have a much bigger selection of music and video than Apple.

Apple might then be dragged toward a more open and less profitable model to defend its iTunes-iPod franchise.

3. SMASH WINDOWS: I love a good rumor, and there's a persistent rumor about Google that's so intriguing it might be true: Google is about to start selling an inexpensive computer-like box for home Internet access.

This box would presumably offer Google's expanding suite of consumer applications, including e-mail, chat, mapping, photo organizing and blogging. These programs would be updated and expanded through Google Pack.

And the box would run a Google-ized version of the open-source Linux operating system rather than Windows -- kicking Microsoft's other leg out from under it.

It doesn't make sense for Google itself to get into the business of manufacturing and selling such a device; the competition is too intense and the profit margins are too slim in consumer electronics.

But it would make sense for Google to create a free reference design, a package of hardware blueprints along with Google's software, allowing others to build the boxes.

Google already makes extensive use of Linux for the servers running its search network, and has most of the necessary consumer applications in hand.

While the Google box might not match every feature offered by a Windows PC, it could still cut deeply into the Windows market.

Microsoft would have a hard time responding, because the complexity of Windows makes PCs more expensive to build than slimmed-down Linux boxes.

I could, of course, be completely wrong about all of this. But there's no disputing Google has enough money in the bank and clout in the marketplace to slowly wear down even the biggest of rivals.

Contact Mike Langberg at mike@langberg.com or (408) 920-5084. Past columns may be read at www.langberg.com.

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Copyright (c) 2006, San Jose Mercury News, Calif.

Distributed by Knight Ridder/Tribune Business News.

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Source: San Jose Mercury News

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