When I was a child growing up in the suburbs of Vancouver, we conducted regular drills to rehearse for what we believed was the inevitability of a nuclear assault at the hands of an evil Communist empire half a world away. This was the height of the cold war, and as our air raid siren’s tower loomed over the neighbourhood we learned to fear the Soviet Union as NATO leaders and the popular media fanned these flames and used them to rationalize and unprecedented era of expansive military spending.
During this time the practise of Policy by Press Release rose to prominence as ill-founded concepts like the “Bomber Gap“, “Missile Gap“, and “Submarine Gap” were leveraged to justify a massive expansion in military spending. U.S. Doctrine from the end of the Vietnam era to the collapse of the Soviet Union in 1991 was to essentially outspend the Soviets while engaging them in proxy guerilla wars in weak communist ally states and financing developing countries through the World Bank. It is thought by many (mostly Pro-Reagan) historians that it was indeed the US Military-Industrial Complex that won the Cold War and bankrupted the Soviet Union by simply outspending them.
Nowadays, we live under the spectre of far more benign [perceived] enemies. Most of us in the technology industry fear Microsoft’s Goliath and align with Google’s David more meaningfully than any political discourse, though we only rarely cower under our desks in fear of a Vodka-soaked phone call between Steve Ballmer and Eric Schmidt (which I am positive has happened).
Google only stumbled its way into Microsoft’s crosshairs nine years ago, whereas Microsoft’s founder Bill Gates has long sought to get in on the action on the Internet and the Web in particular. The two are presently in a pitched battle on a number of fronts, including Search (Microsoft recently launched Bing), Mobile (Google’s Android is a pattern-cut copy of MSFT’s Windows Mobile strategy), The Browser (Chrome versus the dreaded IE), Email (Google is making inroads into institutional and corporate email services), and Productivity Applications (Microsoft Office as an app and a hosted service versus a number of nascent Google Apps).
Most recently, Google responded to the Bing launch by going after MSFT’s supposed crown jewels with an announcement about Chrome OS. Microsoft then parried with its own vapourware announcement about Web Office. Engaging Microsoft on another front on an increasingly expansive battlefield might seem like the smart thing to do, but as Kevin wrote, Spite is not a business strategy. This is akin to pissing in your neighbour’s yard just because he took a whiz in yours.
The Soviets, like our more modern evil empire whose Kremlin sleeps in the dales just outside Seattle, were more cagey than we might have thought in those days. They didn’t match the US and NATO move-for-move in force expansion, and rather than counter Reagan’s famous SDI initiative with a Star Wars system of its own, they simply rejiggered their ICBMs to penetrate airspace using different methods and geared fighters up to be able to shoot down satellites from within the mundane confines of our atmosphere.
No … the Soviets didn’t join in the arms race — instead they were quite content to watch their enemy blow its own brains out, expanding US debt in leaps and bounds (US debt doubled under Reagan in a single year, mostly on the back of military spending) while their own programs pursued less lofty goals, financing battlefield weaponry and troops on the ground in Afghanistan and elsewhere.
We didn’t know it at the time, thanks to a lot of propaganda from our own leaders, but the Commies were actually the underdog. And like any underdog, the Soviets capitalized on American fear and loathing to nurture an inflated perception of its own militarism and level of armament, hoping that the US would collapse under its own weight trying to keep up — and it nearly worked. Some would argue that it has — and that our current and previous economic hiccups, heaped atop rampant social problems in the US, are the reckoning for decades of rampant Cold War spending — and may not be remedied anytime soon.
Google is apparently trying to match Microsoft on every front in the technology industry — but it too is an underdog. It’s attempting to do so with far fewer employees (Google has 20K employees – Microsoft has 90K), far fewer financial resources, and no apparent profit model associated with many of these businesses. Microsoft has also had the benefit of nearly 30 years — all supported by revenue growth in the rising tide of the PC revolution — to expand its business aspirations from its core business of supplying Operating Systems. Furthermore I would argue that the core of Microsoft is no longer Windows, and has instead long been its much more expensive product offering, Office.
If Google is attempting to parlay its underdog status into some sort of puffer fish role, in forcing Microsoft to compete on many more fronts than search, then the insincerity of these efforts is pretty transparent to most of us. And it will fail. I use MS Word and Apple’s Pages, but would not even consider using Google Docs. As a web app, it delivers a far poorer user experience at the point of my absolute maximum requirement for efficiency and dexterity. Google’s Chrome browser isn’t much better than Firefox, and as I’ve pointed out frequently, Android is a duplicate of Microsoft’s own floundering efforts in the mobile space with little improvement.
Microsoft is likely snickering (I know I am) as it watches Google’s many flailing attempts to strike it in different arenas. Particularly so in Operating Systems. Slapping a GUI onto Linux, particularly when said GUI developer is Google — a company apparently bereft of UX designers — is a cynical, me-too play that will alienate the Linux Community and pale in comparison to OSX.
According to Yahoo Finance! on MSFT and GOOG, Microsoft has 3x the revenue and 20% more cash reserves than Google. That’s an amiable war chest and revenue stream that means it’s unlikely that Google can cause Microsoft to spend itself into oblivion. Google, on the other hand, is moving in too many areas and executing poorly in most of them.
If Google truly wants to hurt Microsoft it needs to double-down on a sincere effort to unseat Microsoft Office and Exchange and thereby dominate the ways in which we communicate at work.  Otherwise, much as the Soviet Union really collapsed due to radical downward shifts in the price of oil and lack of access to credit, Google may suffer from a decline in CPC advertising and all of the air will spew out from its puffer fish act.
In May Day parades, the Soviets would invite Western leaders to the review stand, as bombers and missile launchers would run circles past the parade ground. These Westerners would return to their peers wide-eyed with parables of impressive arrays of weaponry and massively inflated estimates of actual force sizes. Unlike during the real Cold War, Google’s foe is not self-invested in grandiose estimates of its enemy’s fortitude and the rest of us are quite aware that in many cases, such as the ill-fated Orkut and other flailing products, Google’s emperor has no clothes.
And unlike our former evil empire’s round-faced leader, Ballmer is under no pressure for Perestroika.
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