On June 15, Bill Gates announced that he was relinquishing day-to-day management of the company in two years. This announcement will provide enough time for the market and employees to prepare for the event. Although this may come as a surprise to many outsiders, it has been rumored that, within the company, BillG was simply acting as a sounding board to various product divisions. Given his history with the industry and their products, he has made strategic decisions around interoperability that gave the Windows franchise control over the industry. This strategy, while giving it great success over the years, is beginning to fade with the arrival of Web 2.0 represented by Google, Salesforce.com and others. Microsoft’s acquisition of Groove added a key weapon to its competitive arsenal -- Ray Ozzie. Given Ozzie's experience with peer to peer software, he is a natural champion for the software as a service (Live) agenda. This requires the company to rethink Windows as the architecture control point and begin to transform itself to create new sources of control and value appropriation. With BillG moving on, it gives Ozzie the chance to conceptualize and create the new source of competitive advantage for Microsoft.

 

A recent NYT article reports that Google is estimated to have 450,000 servers in 25 locations. What is interesting about this is that all the competitors in the search space have started to make heavy investments in physical facilities and IT. MSFT is spending $2 billion and Google is spending $1.5 billion. This spending on infrastructure creates a huge barrier to entry. In addition, these companies are accumulating behavioral data within these data centers that creates additional barriers.

Like Google, Yahoo and MSFT, now eBay has an engine that will serve up context sensitive advertising on affiliate websites (link). The only difference is that, upon clicking, users would be sent to eBay's auctions. Based on initial reports, affiliates can accept the keywords that eBay generates by scanning their content and connecting it to eBay auction keywords or they can get the list of recommended keywords using eBay APIs and choose the ones that they prefer.

While eBay claims that this service is complementary to the existing ad engines from Google and Yahoo, I wonder if they are true complements. Take for instance a situation where companies could be listing their products on eBay. Would Yahoo and Google agree to direct traffic to eBay? Also, given that GoogBase can substitute some of eBay's functionality, would eBay agree to coexist with other context engines? Their mutual adjustments should be interesting to watch.

There are 90 nodes and 581 links in this picture.

A NYT article about Netflix once again reinforces the long tail concept. Francis Ford Coppola made a movie called "The Conversation" in 1975 with stars who later became very famous. This movie, although highly acclaimed by critics, was a box office loser. Given the notoriety of the stars today, this movie is highly rented today. In fact, it is the 14th best of all movies from the 70's. Another interesting factoid from the article -- of the 60,000 movies carried by Netflix, 35-40,000 are rented on a typical day! The long tail is indeed wagging! 

The link between Google and Dell is getting stronger with the announcement that Dell will supply the hardware for the product. Search appliances account for ~1% of Google's revenue. A WSJ article estimates that 4000 customers have installed the search appliance. Previously, Dell had agreed to bundle search functionality from Google with its desktop. From an architectural perspective, Dell is a control point that was mostly Microsoft oriented. With these two announcements, that control point is at risk.

Here come another product that is web-based, minimalist and a limited release. Just as user behavior data provided Google with the ability to provided more relevant search results, now Google could potentially provide user with relevant spreadsheet models. A key problem with spreadsheets is finding the relevant models to use -- financial planning, inventory management or forecasting. Given that Google Desktop can access and store corporate spreadsheets, that information could be used, along with who uses these models, to present end users with relevant spreadsheet models. Long live model management!

A NYT article points out that this application from Google is desinged for collaboration and can handle up to 10 users. While this does not have all the rich functionality of Excel, it does have enough for simple uses (think 80/20 principle). Google is planning to use its worprocessing (based on Writely from Upstartle) and spreadsheet functionality to provide a uniform and consistent set of applications for its own internal services. This allows Excel (with or without Live) to continue to serve the high-end users.

Google should either create its own browser or pick one from the existing options. Recently, when Google announced its alliance with Dell, it left me wondering how it would protect itself from interference by Vista. Although, Google will get its search and other products preloaded on Dell machines, Vista could simply redirect users to another search engine or have MSFT products embedded in it. If, on the other hand, Google had a browser (say Firefox) that worked well with Google search products, and Firefox became the default browser, then the browser could help reconnect with Google's search engine. This works because IE is unbundled from any MSFT operating system.