Van Knapp's Take On Microsoft

By: Jason Kelly Thursday, June 12, 2008 9:48 AM

Symbols: AAPL, GOOG, IBM, MSFT

Email Article
Bookmark:
Font Size
Print Article

We had to have the business standard. The only question was who made the best/fastest/cheapest computer, and there were lots of choices. They all worked together. None worked with Apple. The IT choice was a no-brainer: PCs with MSFT software. This also contributed to MSFT's moat, and they deserve credit for a masterful strategic move.

Another area where MSFT out-strategized Apple was in their partnership with Intel. Remember "Wintel"? It's only in the past couple years that Apple has used Intel processors, and it has been one of the keys to their resurgence in PCs (a term that is now generic, not referring only to IBM products).

Meanwhile, MSFT was beaten down by Google in paid search, not just in search. MSFT tried (as did Yahoo and many others), but Google hit on the winning formula, tying ads to search results in an appealing and effective way.

It's Google's strength and also their greatest vulnerability. I think more than 95% of Google's revenue comes from paid search (AdWords and AdSense). Google essentially did an end run. While others were trying to become "portals" to the Internet (which usually meant keeping you on their own site for as long as possible -- AOL, MSN, Yahoo, etc.) -- Google recognized that a simple search of the Internet was what most users wanted. That allowed them to take advantage of a ridiculously simple interface, which many found superior to the portals' hodgepodges. Google gets huge innovation credits for that, although it can be argued that appealing paid search is their only successful commercial innovation to date.

Google ideas that you are touting -- such as Google Apps -- have been around for years. (They were formerly called ASPs...application service providers). Google has no lock on winning that race, if indeed there is a race.

Just in the past couple of days, I have seen Microsoft ads for their version of Internet-provided workspaces, just like Google Apps. Adobe has been doing it for a long time. There is no guarantee that working on the Internet will supplant working within one's own PC...although I personally think that will happen. I do know that there are many professions -- doctors and lawyers come to mind -- that have yet to come close to the trust needed that they would place their clients' confidential information "out there" on the Internet.

Every time Google (the inaptly sloganed "do no evil" company) pulls a stunt like scanning and publishing copyrighted material, or publishing "geographic" photos so detailed that men can be identified walking out of strip clubs, they hurt their own cause in regard to Web-based applications.

What's the bottom line? I sold my MSFT 8-9 years ago when they were adjudicated to have violated antitrust laws...I happen to have strong feelings about things like that. I've never been sorry.

Related Stories