Wednesday, July 8, 2009

Shifting sands

MSFT has done a historic job of utilizing the combination of applications (Office) and its Windows brand to build an industry defining company over the past 30 years. It's competitors were primarily in the applications camp (e.g. Lotus), the infrastructure business (Novell...once led by Eric Schmidt), or the hardware space (IBM). Its business strategy of utilizing the interplay between the two to defend its flanks, while commoditizing the overall price users paid for computing was brilliant and added value for its 'users' while maiming its competitors.

For the first time in many years there are now real storm clouds on the horizon for MSFT. Not anemic growth due to a customer saturation, or self-infliced mediocre products. But a real core competitive challenge.

GOOG's unrelated, but coincident announcements of removing the Beta from its mail client and the same day announcing it's entering the OS business via an 'open source (Linux based), free, lightweight' code base which will be initially targeted towards buyers of netbooks, represents an attempt to trap MSFT in a competitive pincer movement which combines the attributes of a technology shift to the cloud, a platform change to lighter computing (netbooks), and a differentiated business model (freemium).

I am sure there will be some initial confusion about where Android begins and this OS, named Chrome OS ends. GOOG says the following (in essence we are throwing both into the market and will let it decide which will do better:

"Google Chrome OS is a new project, separate from Android. Android was designed from the beginning to work across a variety of devices from phones to set-top boxes to netbooks. Google Chrome OS is being created for people who spend most of their time on the web, and is being designed to power computers ranging from small netbooks to full-size desktop systems. While there are areas where Google Chrome OS and Android overlap, we believe choice will drive innovation for the benefit of everyone, including Google."

In the past, MSFT was at its best when its core was challenged. Time for a Mojo test.

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