The Wall Street Journal reported that today Google will launch Sidebar, a customizable program that will allow users to build unique content on their computers. While its functionality will probably be initially limited, it represents yet another small step by Google to wrestle control of the computer desktop away from Microsoft. Google previously moved onto the computer desktop with programs such Google Desktop Search and Google Toolbar. Sidebar will function much the same way, providing customized content from the Web, much like Yahoo! customizes content through a Web browser with its My Yahoo! page. While the concept of customizable Web content delivered to the computer desktop is not new, it marks yet another step by Google to claim more computer desktop real estate. The Los Angeles Times reported that Sidebar will include an updated version of Google Desktop Search. Sidebar will also feature a text editor and a "to-do list" function. The program is very much a beta-type program that can be scaled by Google to include other features in future releases.
Google is clearly moving toward to a suite-based approach to desktop applications. It is conceivable that in the next couple of years Sidebar will provide the foundation for a suite of desktop applications that interact with the World Wide Web to deliver dynamic content to the desktop, content that can be uploaded to the Web (e.g. Google’s Gmail), or downloaded from the Web (e.g. Google-delivered news and information). In the not-so-distant future, Sidebar could conceivably compete with Microsoft Outlook or Microsoft Word. It could become even more potent if Google bundles it with an enhanced version of Mozilla’s "Thunderbird," a free E-mail program that competes with Outlook. While I do not believe that Google’s hodge podge of search and content applications will effectively compete with Microsoft Office in the near future, they add an intriguing Web component currently missing from Microsoft applications. Microsoft applications such as Word and Excel can create Web HTML or XML content, and they download Help information from the Web, but they do not effectively sync with the Web. For the most part, they are static programs that rely on the user to create content. FrontPage is available for Web design and synchronizing, but the connection between Office and MSN/Microsoft.com is loose at best. Google’s approach is interesting, and much of the buzz surrounding Google now comes from Google’s alternative approach to content development and delivery. People are constantly looking for the next "Microsoft." This is a testament to the fact that, like it or not, Microsoft is monstrously successful, and that Microsoft does not have a monopoly on killer applications. Microsoft would do well to study and learn from current success technology stories such as Linux, Mozilla, and Google. I think that Microsoft and Google can coexist and thrive in their respective spheres, but computing would be even better if they continue to move into each other’s territory–Microsoft into dynamic Web content, and Google into desktop applications. The computer user’s overall experience would improve if these competing technologies do something greater than what they offer now.
Two questions come to mind regarding Sidebar’s potential. Is Microsoft really a has-been whose best days are behind it? And how will Google make any money if it keeps giving away free software programs? To the first, I have to admit that since I am grateful that MSN My Spaces hosts this blog, I can’t be too hard on Microsoft. I also have friends and family who work there, and I myself have consulted for Microsoft. Plus, I lived for many years in the shadow of the Redmond campus. The atmosphere at Microsoft’s corporate campus is extremely competitive. Its employees are brilliant, albeit conditioned to groupthink (I learned firsthand that conformity to the Windows paradigm is paramount to success). With so much money (over $1 billion in additional earnings generated monthly), and so many talented employees, I cannot say that Microsoft’s best days are behind it. Whenever it sees a challenge, Microsoft has always risen to meet it. It marginalized Apple/Macintosh. It beat Netscape. It trumped Sun Microsystems’ network computing. It overcame AOL. It is now meeting the Linux challenge head on, and in many cases, winning. Google, on the other hand, is a different animal. Microsoft will likely not be able to overcome the Google challenge. With $2.5 billion in cash on hand and another $4 billion expected through a secondary IPO offering, Google now has a sizeable enough cash hoard to allow it to gear up for an impending battle with Microsoft over computing dominance. I don’t think by any means that Microsoft will lose the war. I think more likely is that the two companies will learn to coexist, much as Microsoft (Xbox) and Sony (PlayStation) have an uneasy truce in the game console wars.
So, how will Google make any money? Through content, of course. The Google revenue model is far different from Microsoft’s. Microsoft earns revenues primarily through software licenses and service contracts. Google earns revenue from search and content delivery. By making its content delivery methods ubiquitous, Google extends its revenue streams. The two business models differ significantly, but both are compelling and lucrative. I decided to add MSFT to my list of stocks to watch. I will start it with an "Accumulate" rating. Buy shares, but don’t hold a large percentage in your portfolio. MSFT is now a slow-growth stock, but it holds great dividend potential because its cash reserves are growing exponentially. Plus, you never know if or when Microsoft will come up with "The Next Big Thing." I’m not one who believes Microsoft always copycats pioneers such as Apple. Microsoft is an innovative company and may hold the key to the next wave of technological breakthrough.