A major point of concern for MSFT has to be the huge shadow being cast by it’s Mountain View competitor. Although Microsoft has nearly double the market cap and superior technology to it’s little competitor, it’s one step behind strategy, has proven a fruitless approach to delivering any type of value against the Google brand in most competitive markets. Further, their inability to create any type of hype around the release of their products, have left them watching from the bottom of the mountain as Google continues to grow.
Microsoft released Virtual Earth, a significantly more robust web based mapping site – in comparison to Google’s product(s). The only downsides were, being a web based plugin, it required the Internet Explorer browser to properly render the 3D graphics, and had a limited proprietary API. Virtual Earth takes the ball as the superior mapping product - http://www.spatiallyadjusted.com/2006/11/07/google-earth-vs-microsoft-virtual-earth-3d-revisited/ – However, Google with their broad vision (to be nice) built some very interesting and key differentiators: 3D warehouse, Google Maps API, and most recently My Maps. These differentiators – when leveraged against their Adsense platform - have proven more engaging to customers and to the spite of it’s competitors, has driven traffic / popularity against their mapping products, built on profitable Adsense revenues, and promoted their real entry into local markets.
While MSFT tossed millions into paying developers to build their entire 3D cities (the quality of the output shows they have the best product), GOOG turned to it’s community (which had already created thousands of mashups against the web based Google Maps product) and got them to volunteer to build their cities. According to Google, millions of users create 3D models and share them through the Google 3D Warehouse. Google has created something more than just a mapping product – they have created a community of map enthusiasts, developers and have reached audiences en-mass, encouraging everyone to input the data key to the future of their local initiatives.
Google Earth is the bread and butter of Google’s line of mapping products, Google Maps it’s web based “little big brother”. Bloggers have begun comparing the Earth platform to the Second Life platform suggesting Google is attempting to create a virtual world in which avators may interact and learn more about our world.
How can we lump Google’s line of mapping products and compare them to the singular Microsoft Virtual Earth platform? Very simply. Everything comes down to data, the ability of developers to integrate this data into their products (viral spread of the platform to new use), the accuracy of that data (trust), and the cash cow: the ability of users to actually make use of that data in a controlled fashion when they want it (access).
I would argue businesses require this Geographic Information for analysis, planning and etc’s as they apply it to solve process, supply chain, marketing or etc functions. In a very simple sense, business will pay tons of money to understand how they can make better use of geography – and ultimately – this cost will be passed on to the consumers who are actually making use of the goods or services these businesses produce (or other businesses etc). GOOG and MSFT, realizing the untapped digital value of geography, are attempting to drill into these geographic markets. They are largely doing this through their mapping and location platforms.
We’ve started to see a strategy shift in the Big Co’s of the digital economy. Globalization / Global market reach was a major driver behind the internet of the ninety’s – and is what built Microsoft and Google. But now, they are global – and they can’t get much more global without serious economic changes in the underdeveloped parts of the world. Hence, they see a huge growth drivers in local markets. But how much money can really be spent over the internet on Local markets? Well, for someone like me, almost 95% of my disposable income is spent on local goods – and I’m sure this is also the case with most people.
Again, and back to the Map product debate, in the area of providing local information to map users Microsoft is the clear winner. Simply put, the interface to deliver the information is clear, easy to access and generally looks great. I find Google Maps very difficult to find local information in. The map interface is clear but nothing jumps out at me.
However Google takes a much different approach to going local, and again, they have tapped the masses and infact, have allowed their users to create local content that matters by themselves – all the while using Google’s web based map technologies. As Alex Iskold points out in his read write web article (Google The Ultimate Money Making Machine: http://www.readwriteweb.com/archives/google_the_ultimate_money_making_machine.php)
“Google - through its text ads strategy - has managed to weave itself into the very fabric of the Web. In doing this, the company freed itself from even Internet geography and became ubiquitous. By empowering companies and individuals to publish Google ads on their sites, Google solved the unlimited supply and demand problem in one fell swoop.”
And here Google goes again, doing the exact same thing with it’s mapping products (not to mention talk). They released their API for free, told us to have fun with it and gave us a fully usable model of the world to do anything with. Then came cheapgas.com a Google Map based wiki style mash-up providing information on where to find the cheapest gas closest to where you were (has only recently diverged from a mash-up site).
Further, they have partnered with firms such as Apple and RIM to push their technologies to be the “defaults” in their mobile devices. They have done what they can to push their mapping infrastructure VIA the appropriate channels, and have left it up to the developers and users to build and use the local datasets.
I see a clear path for Microsoft to monetize their mapping products (tolls, recommendations, e-Flyer stuff, Windows Mobile …), but without true ownership of their data, the Google model is more difficult to monetize. However, the fact that end users can update the local data points goes a long way to providing more accurate data to users – and it still allows the Google to get rich off Adsense. A perfect example is the mywikimaps.com cheap gas mash-up where users are continually updating gas prices all over North America. This is something that Microsoft could do through some proprietary network, but it would be costly, and would only serve to copy something that exists, and works, at next to no additional cost to Google’s infrastructure. I think I’d rather the Microsoft route – but I do not see this being a strategic option for Microsoft in it’s quest to get local – it will cost too much, only satisfy one local market at a time and is too divergent from their strategy. This model cannot work in a scale against the almost uncountable local markets.
From a purely competitive standpoint, the winner is the company who can best monetize the local dollar – and no clear winner has been defined at this point. Ironically, the winner may be decided based on who can entice who to use their Ad product. However, I do prefer the way Google gathers information over the Microsoft methodology – but it will be interesting to see how the quality of the Google information holds up over time. For example, when I registered my firm with Google they sent me a confirmation letter in the mail and once I had completed a couple easy steps I could find my business on their maps and business directory. As long as I use Google for something, and that something continues to be better than the competition (Adsense), then I will keep my information up to date in their catalogs – and their Map product will continue to have accurate listings – but when the day comes where another firm can provide a more complete or all encompassing solution to me (Microsoft ??), I will stop updating their catalogs (or may do so less frequently or at a lower priority).
There are a lot of real dollars to be had in the Local space and I’d love see these firms earning these real dollars. The unfortunate truth may be that as we drill further into local, these Big Co’s continue to realize revenue against their more traditional revenue streams (Google Adsense, Microsoft Windows + Crossbow??). Innovation will probably continue to be built on top of these platforms to keep shareholders happy. The quest to provide all encompassing local information to users will probably continue to be a cash sink until the proper bolts are found to mount it to the good old “brick and mortor” business.
For example, I can see Google only entering local spaces where they can leverage their Adsense platform against their geo-coded datasets (which is an insanely massive dataset), when they can push froogle.com to the local street level (possibly via virtual earth), where it makes sense for an innovative marketing initiative (Google Security Search at Airports), and stumble into markets (cheap gas) where there is a tremendous demand for information created by their user base. I’m not to concerned about the divergence between their Maps site and the Earth Application. Again, it’s the information that makes these products useful, and there is no doubt in my mind they will be consolidated at some point in time. There is a lot of interesting stuff that can come out of their virtual world and it will be interesting to see what happens. I also wouldn’t leave cellular services out of the picture for Google – but I wouldn’t consider them a front runner – more of a partner – lets see what they can really do with mobile that Microsoft can’t.
Microsoft on the other hand, just have to keep pushing forward integrating maps into mobile, pushing their smart phone platform, and leveraging their already large business user base with a focus on what these users need to perform their local duties (especially traveling executives). One of the more interesting opportunities for Microsoft is in leveraging its existing channels (Expedia, Health, MSN …) against these local opportunities in a similar fashion to the froogle opportunity. I see RIM as Microsoft’s next target if they really do want to go local – in fact I see any company that refuses to make a Windows Mobile version of their device a target. They need to monopolize their operating system into the palms of users they way they did with Windows. They need to make their channels the defaults on these devices, they have to leverage their seemingly “normal” (bland) local service directory based on the location of the device on the earths surface, all the while keep their platform open enough as to not continue to be seen as an evil untrustworthy company.
The next 3-4 years are going to be huge for smart phones, and internet enabled devices. The bottom line is who ever gets there first, and can exert some sort of staying power will probably control our mobile channels. However, my prediction is local will be dependent on devices not on traditional desktop / laptop personal computers. The vast array of internet tablets for instance may allow a new level of integration between the kitchen, workshops, family members and friends that is unparalleled to anything we have today.
Finally, although Microsoft holds the superior technology and has a tight business user base yet Google holds the heart (and reflex finger movements) of most consumer users. It’s tough to call who will come out on top. Having said this, and as a techie MS pro, Microsoft will be tough to beat.
Let me know what you think.
Over and Out