Google has correctly assessed Microsoft’s weaknesses with Windows in its Chrome OS attack. But having a good strategy doesn’t assure success — it is simply more difficult to achieve success without a good strategy.
Much like Microsoft was with projects like Zune (and Netscape was with its attempt at an enterprise offering) Google appears unwilling — and possibly incapable — of doing what needs to be done to make Chrome a success.
Google will undoubtedly force market changes by both Apple and Microsoft that are likely long overdue. Yet also like Netscape, Google hasn’t done the groundwork to assure it will benefit from these changes and, instead, may have laid the foundations for its own demise. We won’t go that far in this writing, but unless something changes dramatically at Google the Chrome OS will fail.
There are four things you should look for in a strong challenger to a dominant offering: 1) a good strategy, which Google has, 2) an ability (both skills and resources) to convince people to try something new and hold them once they try it, 3) an ability to focus on the task at hand, and 4) the capability with partners to build enough trust to displace the dominant vendor.
We’ll take each in turn.
Google’s goal is to effectively remove the foundation that sustains Microsoft, and that foundation is Windows and Internet Explorer.
Microsoft has made serious strategic errors with both products over the last 15 years. With Windows they forgot that it was a keystone product, effectively a razor to their tools and applications business blade, and treated it like an application rather than an operating system.
Microsoft’s strategy with Windows: Growing it in relative price and complexity and building in components that otherwise might have been separately sold, products that were often incomplete and not particularly competitive.
This strategy allowed the groups working on these components to have modest goals that they could more easily achieve. But it left the market with an expensive mess. In addition, the critical PC OEM base and end users were not pleased with the result. It did create a rather impressive windfall for Apple, which couldn’t take full advantage because they were vertically integrated.
IE became one of these underfunded and under-marketed components and is currently in freefall in terms of market share, even though IE 8 is actually vastly improved.
It too is a razor product, but because it doesn’t generate revenue by itself it isn’t resourced to a level that allows it to defend its turf, either with marketing or development focus. IE is at high risk of being trivialized this decade.
Finally, both Windows and IE are largely based on core concepts that existed prior to this decade. These concepts include non-pervasive network connections and the belief that running applications locally is superior to SAAS offerings.
The EU is now forcing Microsoft down a path that should assure the company can’t fully update their products. And Microsoft is simply not yet structured to move to a SAAS revenue model.
Google’s Chrome OS is focused on Microsoft’s mistakes and inability to correct them quickly. It is a very good strategy.
Behavior change — marketing
Apple has demonstrated that even when the dominant vendor is having substantial problems it takes a lot of effort to get customers to consider alternatives. Its aggressive campaign designed to point out the faults, often in excess, with Windows has allowed it to gain nearly three times the market share they started the decade with. It has done this while maintaining some of the highest margins and growth rates in the segment.
Google can’t market. Like a lot of engineering companies they appear to subscribe to the “we will build it and they will come” method of marketing incompetence.
At the recent HTC launch of the latest version of the Android phone, Google didn’t even bother to show up. This mistake has been common with Microsoft and component manufacturers as well. Many seem to hold the belief that marketing is the responsibility of the business partner, and because they give their OS away for free, much like Microsoft does with IE, they don’t fund marketing.
Microsoft’s Plays for Sure effort was another example of this mistake and it isn’t uncommon in the industry. But it will likely remove approximately 90% of their available market opportunity.
Page 2: Focus and partners
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Google is all over the map at the moment. It’s going after Smart Grid, it’s going after Telephony with Google Phone, and it has a Cell phone offering that has been having trouble getting out of what appears to be an extended beta.
The company is struggling with productivity applications, trying to index all books and fight related anti-trust actions, scaring the hell out of folks in Europe with their mapping efforts, and unsuccessfully defending Google Search against Microsoft’s well-marketed Bing effort.
They are starting to look a lot like AT&T or Chrysler in the bad years. Those companies also lost focus and diluted their massive resources down to a point where the firms had to replace executive leadership or fail. You don’t take on a company like Microsoft part time. Going after Microsoft’s crown jewels means, if they weren’t before, they are now in a fight to the death and Microsoft, who often also has a focus problem, will now focus on them.
No matter the opportunity, fighting this kind of a fight is not done casually. Yet Google seems distracted and lacks apparent coordination.
For instance, the product that is coming out on Netbooks this year is called “Android,” the product next year is called “Chrome,” and Chrome is the name of their browser. It looks like groups inside Google are at war with each other over naming, platforms, and control, even though it appears these are all facets of the same product.
It’s almost like watching the players on a sports team fight with each other while forgetting they have a game to win. Their CEO Coach doesn’t even appear interested in running the company anymore, as he too appears interested in other things.
Microsoft’s power isn’t in marketing or even product. It is in their ability to get, hold, and to a certain extent, control partners.
Their key OEM partners are currently not happy with them and one of the reasons the Chrome OS is getting traction is that, unlike the MacOS which they can’t get, or Linux which is a fragmented mess, what Google is offering looks distinctly different and potentially more attractive than Windows.
They would like to use it, much like they use AMD against Intel, as a way to shift the balance of power and get Microsoft to listen and better respond to their needs.
However, as AMD has discovered, having someone wishing you to be a bargaining chip and not a major component of their marketing strategy is not a particularly successful path. To become strategic Google would have to both listen and become subservient to the OEM’s needs and create a level of loyalty that exceeds Microsoft’s. This seems unlikely given that Google’s apparent arrogance meets or exceeds what Microsoft is currently demonstrating.
For instance, the first three companies to bring out Netbooks will do so this year using the Android branded offering. But Google has effectively made these offerings obsolete at launch by renaming the platform and attempting to differentiate strongly what will come in 2010 from what will arrive this year.
In effect they shot these partners right between the eyes before Acer and the rest could even launch their now lame duck products. This is not a way to build trust or loyalty.
Wrapping Up: A train wreck by any other name
This is not to say that Microsoft should sleep easy. On the contrary, Google is accurately showcasing what Microsoft should have in their keystone products and now lacks.
However, you don’t go after any dominant vendor half-assed. This is like watching students who think they should get A’s on their papers because they had a good idea, copied lots of stuff off the Internet, and turned in a 200-page piece of crap. In the real world you don’t get an A for faking real effort.
This is an A idea followed by F execution and the market doesn’t grade on the curve.