What about Google?

Tim commented on my post about Microsoft Live with

...but wanted to comment on your note on Google, given today's announcement of Google Base and a stock nearing $400/share. how long will it be before Google offers the same basic suite of products Microsoft offers, with more limited functionalit,y but completely integrated with your phone, email, music and videos?
i think their model will have a devastating effect on Microsoft, but will take some time. we are still at the early stages of advertising funded services and software products. i will enjoy the convergence of technology and consumer need/wants as companies like Google eat away at Microsoft's market share.

Indeed, I see Google has gone above $400 today giving it a market cap of $111 billion - still just over a 1/3 of MSFT, but astonishing nonetheless.

There have been lots of stories that it is Google that Microsoft fears most, from chair throwing by Ballmer, to lawsuits about employees being poached. And also, much of the coverage of the MS Live announcements was about it being primarily a response to Google. Clearly Bill is quite worked up about Google. Web 2.0 (whatever that actually is) and the advertising model are truly massive threats to the traditional MS business.

But, is it all going to go Google's way? I can't decide. Of course, I use Google, and it is hard to keep up with all their offerings. I saw today (Guardian) how a journalist uses GMail to actually write his stuff on the road these days rather than buying another Office license. Is this the way it can go? I personally don't like the ad model - I prefer my TV to be adless. And (as Tim well knows) I hate anyone having too much control (I'm as vehemently anti-Murdoch as I am anti-Microsoft). How long before Google gets in this position? And does it matter whether a few of us rail at it's powers? What worries me most about a Google dominance is that it not just has us by the short and curlies with a tightly integrated service (well not yet, but supposedly one day!), it actually has our DATA. With Murdoch we get HIS views rammed down our throats, but that's it. With Gates, we get his software forced on us (pretty much in business anyway), but that's it. With our data there (or perhaps more worryingly, data about us put there by someone else) the scope for abuse becomes much much bigger. What happens if the NSA/FBI/CIA has backdoors into it? There is scope here for a 1984 scenario. And there are other issues about privacy that are quite concerning.

And while I can make a choice and take my custom elsewhere with Murdoch and Gates, I can't really take my data away from Google - it's there, potentially indexed for ever. Even if I trust the Google mantra of doing no harm, I'm not sure I can trust their system not to let out this data, nor can I blindly trust that someone will not takeover Google and use it more nefariously.

So, it is for reasons such as this, I won't be putting a lot of my data on Google, though I can't necessarily stop other people putting data about me on it (a bit like Plaxo contact system which I avoid like the plague). But, my fellow citizens demonstrate I am in but a small minority with views like this and principles that I stick to (whether stupid or not). Lots of people have subscriptions to Sky and buy the Murdoch media. So, whether I do it or not, I may again just put myself in the position of denying myself something useful for a point!

But, it might only take a mistake or two in execution from Google to put this plan into jeopardy. If the trust element that Google has so strongly today is compromised, I'm not sure it can be as dominating. It can also start to lose that trust not through bad execution but through turning the screws on ads to please the never-ending financial growth projections, while slowly making the service less useful than it was.

If Google doesn't mess up, and doesn't push too hard, AND it can demonstrate to people that they SHOULD trust it, then Microsoft is stuffed. As I pointed out in the earlier article, I don't think they can maintain/transition a model of license fees, service fees, AND ad-based revenue without people just getting more and more suspicious. With Google you know where you stand - it's free and it's ads. But as MS goes through the transition, people will start to feel they're paying out multiple times for much the same thing, and will resent it. Also, I don't think they've got the innovation to WOW people. So, people will be less inclined to jump on the next MS thing.

But, I should also point out that my prediction of MS in it's last dying gasps is meant partly in jest, and that I don't expect MS to suddenly dry up and go bust. But it will become as irrelevant as, say, IBM is in setting the trends and dominating IT. Sure, it will still make money - probably from the Enterprise market which through it's conservative nature of upgrades etc will continue to stay with MS for far longer than it should. And also, MS is still a great friend of the developer community (at least for Corporate software), and this momentum will take a long time to slow down. So, as a consumer, I expect MS to lose its monopoly position anyway. Whether Google picks up the baton is partly up to its own execution and whether people in general will swallow the not-so-obvious downsides of a "free" service.