Google’s New Threat to Microsoft

Microsoft has warned that it’s preparing a Google killer in the form of a better search tool. But while MSN fine-tunes its algorithms, Google has struck at the heart of Windows with a beta release tool to search PC desktops.

Google Desktop Search, which for now works with Windows XP, Windows 2000 Service Pack 3 and above, represents a new front in Microsoft’s war for the Web; it was never really about the browser, according to Jupiter Research analyst Joe Wilcox.

While Microsoft came to dominate the desktop OS market, the rise of the Web threatened it, because people didn’t need a specific operating system to access Web content. “Netscape was not really the competitive threat Microsoft was trying to address [with Internet Explorer],” Wilcox said. “By making the browser part of the operating system, if you have the dominant platform, you can extend it to the Web. You’re also extending the utility of the operating system and the way it takes in information.”

Google’s move has again raised the question of whether Windows is required to access the Web. “By extending its search platform, Google creates a presence in other browsers and other operating systems, and potentially in new devices that will be increasingly be used to access the Web, such as Wi-Fi-enabled PDAs, cell phones and smart phones,” Wilcox said.

At the same time, Google has invaded Microsoft’s prime turf: the desktop. Said John Battelle, author of an upcoming book on search, “Search has become a de facto interface for the Internet, and I think Google has quite elegantly leveraged that presumption back onto the desktop.”

He said Google’s clean and simple interface is a better solution to finding all the various files that Microsoft creates. While it’s neither an alternative to Windows nor an interface on top of it, he added, “there’s no question that this approach will eat into the amount of quality time a consumer spends with Windows.”

But desktop search itself is not such a threat to Redmond, said Directions on Microsoft analyst Matt Rosoff. Microsoft certainly knew Google was working on this, and MSN is working on a similar tool, with Lookout as the basis.

In July, Microsoft bought Lookout, a third-party developer’s “personal search tool” that lets users search their desktops from within their Outlook e-mail client. The software was placed under the purview of the MSN Search team, which is working on new Web search technology.

At the same time, another team at Microsoft is building WinFS, a new file system that supposedly will let users search through multiple file types stored on a desktop computer.

But Lookout — and Google Desktop Search — are very different from WinFS. “WinFS is a whole different search beast,” said Jupiter Research analyst Joe Wilcox. “You’re talking about more than just searching for documents, you’re also searching for complex information. One of its fundamental aspects is being able to use metadata as a means of not just finding information but also making it more meaningful.”

“MSN is making significant investments in search, and we will ship the product when we are confident it will meet the needs of our customers,” a Microsoft spokesperson said. The company plans to release betas of the new algorithmic search engine and desktop search in the U.S. by the end of 2004.

Rosoff said that WinFS is a non-starter in this battle. Microsoft admitted in August that WinFS would not ship as part of Longhorn, the next Windows version expected in 2006. “It’s not going to be in Longhorn, and I’m not sure when we’ll see it,” he said. “MSN search will be their answer to Google for the time being.” In fact, he said, Microsoft has always used MSN as a blocking tool, first against AOL and most recently, with the launch of MSN Music, against Apple’s iTunes music download service.

“MSN has the time and resources, and they will hammer at this idea until they perceive the threat is gone,” he said.

“The bigger threat from Google is that end users will turn more and more to hosted online services to perform regular functions, rather than using the Windows shell or Microsoft desktop applications,” Rosoff said. “The threat [is] from hosted applications versus Microsoft’s thick client and desktop operating system. When Google is looking more and more like a thin-client company, that poses threat to Microsoft’s core business model.”

And it’s not like there aren’t other alternatives for desktop search, according to Gary Price, author of “The Invisible Web.” He pointed out that companies like Copernic have offered desktop search for years. “Alta Vista in its raw form is still more powerful than Google,” he said, adding that Google doesn’t index a lot of file formats.

Josh Jacobs, president of search technology provider X1, which powers part of the new Snap personal search tool, said his company’s desktop search technology indexes 255 different file types, including MP3 and PDF. X1, which retails for $79.95, is aimed at professionals who understand file types and how to refine searches, while Google Desktop Search, according to Marissa Mayer, Google director of consumer Web products, is aimed at people who aren’t sure of where the information they’re looking for is located.

“A lot of time users don’t even remember where things are,” she said. “All they remember is that they saw it.”

X1 users, on the other hand, “focuses on people who use desktop search as a part of the way they do their jobs,” Jacobs said. “They’re people for whom the information on their computer is the key to business success.”

Jacobs said he welcomed the arrival of Google’s product, because it would raise awareness of the desktop search category.

After all, awareness is one of Google’s key strengths. Said Price, news editor of Search Engine Watch, which, like Jupiter Research, has the same corporate owner as “What’s equally impressive about Google is how they’ve turned something you can’t hold in your hands into a verb — without doing any consumer-facing marketing.”

“A lot of companies besides Google do desktop search,” Battelle said. “But none of them are Google. Integrating it into Google’s strength, the Web interface, that’s what makes it special.”

But if the desktop is the new front in the war for the domination of search, the battle has just begun. As Microsoft homes in on the problem via the OS and MSN, rivals Yahoo , AOL , Ask Jeeves and even e-commerce-oriented Amazon are offering their own versions.

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