Why Microsoft is afraid of Google?

How do innovations at Google threaten Microsoft?

Microsoft CEO Bill Gates says:
"Google Inc. is fierce competition for Microsoft Corp., but the software giant does not fear the race and plans to upgrade his search technology in the next six months."
and,
"We are not afraid of Google, but there is intense competition between us. Google is our main competitor, brilliant people work there, but Internet search engines are still in a terrible state compared to where they could be."

Gates says that he has respect for the people who work there, but search can still be made a lot better than what Google has already achieved.

Microsoft and Yahoo already have been investing heavily in search, hoping to narrow Google's lead in the field.
According to Nielsen/NetRatings survey for U.S search requests:
- 45% -- Google
- 23% -- Yahoo
- 12% -- Microsoft's MSN

Gates denied that Microsoft intends to acquire[buy] Google or other leading Internet companies.
ummmm, this means MS is thinking about it, but who told them that Google will even think about it?

But the central challenge to Microsoft goes beyond corporate reorganizations, Microsoft's success has been due in large part to its realization two decades ago that control of the operating system on personal computers would give it a great amount of leverage over PCs. Most companies in the 1980s saw the operating system as a pure commodity product, but Microsoft understood that it held the keys to the kingdom.. It's because of the dominance of the Windows operating system that Microsoft has been able to become so strong.. The dominance of Windows means that if you're a developer of a major software application, you need to deliver a product for Windows.. This means software developers must use the programming capabilities provided by Windows — its application programming interface, or API.

But many in the computer business have long believed that the core platform could be moved to a higher level, that technology gurus could establish a web-based platform that runs in the browser and is written in the language of the browser rather than the language of the operating system.. They work equally well on Windows, Mac or Linux, and that's bad news for Microsoft.

This was the dream of Marc Andreessen [co-founder of browser company Netscape Communications] and others back in the mid-1990s when Andreessen boasted that the web would reduce computer operating systems to nothing more than 'a poorly debugged set of device drivers' and this is why Microsoft responded so aggressively to the threat of Netscape after Bill Gates issued his famous memo warning of an Internet 'tidal wave' that threatened Windows. Netscape didn't succeed. Microsoft managed to thwart Netscape's attempt to establish a new platform on the web.

Key points against Microsoft:
1. When a company takes years and years to come out with a new operating system, it's obvious there is a problem.
2. While [Bill and Co.] refuse to break up the company, they should. They are too big to be creative. They need a company for the operating system, another one for the Internet, and another one for application software.
3. Since they have Cash on Hand of about 37-billion, they should do their loyal stockholders a favor: Pay a quarterly dividend.

Who's Afraid of Google? Everyone
It seems no one is safe: Google is doing Wi-Fi; Google is searching inside books; Google has a plan for ecommerce.

Google is turning the internet to an operating system, which drives Microsoft crazy and embarrassed, see the following:
Signs of panic inside MS: When one of Microsoft's key operating system engineers defected to Google last year, Microsoft CEO Steve Ballmer threw a chair across an office and vowed to kill Google.

The migration of applications from PCs to the Net is already happening - and it's key to Google's future. But the likelihood of a Google OS depends on what Microsoft accomplishes with its new OS, Vista.

The computer industry is a mature industry. In the developed world, virtually everyone has a computer. So Microsoft, to continue growing, needs to find new ways to expand its market, which is why they want to get into games, wireless and business-software markets. In these areas they're generating substantial losses. To the extent that Google becomes a dominant player in the Internet market, it blocks an opportunity for Microsoft to expand.

Why Microsoft and other giants are afraid of Google's ever-expanding agenda:
http://www.wired.com/wired/archive/13.12/google.html