<
 |
| Bill Gates, left, chairman of Microsoft, and Eric Schmidt, Google’s chief, find their companies battling over technology and talent. |
By STEVE LOHR
New York Times
Published: May 10, 200
The Microsoft– Google rivalry is shaping up as a titanic corporate clash for the ages.
But cost and efficiency was all he focused on. The design was not updated, the color selection remained black and only black. Eventually, the single-mindedness caught up with the company. In 1925, the Ford share of the American market had fallen to 45 percent, from 57 percent two years earlier. By then, Alfred P. Sloan Jr., the managerial maestro of Detroit, was president of General Motors and its sales were surging.
“Henry Ford was so in love with his brilliant idea that he refused to change,” said John Steele Gordon, a historian and author of “The Business of America” (Walker, 2001).
General Motors was well on its way to becoming the world’s largest carmaker. Yet as early as the 1950’s, the Japanese challenge to Detroit’s auto supremacy was quietly getting under way. The architect of the Japanese ascent was a production engineer, Taiichi Ohno, who worked at Toyota. In 1950, Toyota manufactured 13,000 cars, barely a day’s production for G.M.
| Multimedia |
 |
 |
Mr. Ohno had to devise an efficient way to manufacture a variety of cars in small production runs. He turned that adversity into an advantage, using rapid tooling changes, constant quality improvements and just-in-time parts delivery to steadily improve the cars.
Once again, the corporate giant was complacent, and late to see a fundamental shift in its industry.
“G.M. did not take Toyota and the Japanese seriously until the 1980’s,” said Michael A. Cusumano, a professor at the Sloan School of Management of the Massachusetts Institute of Technology and author of “The Japanese Automobile Industry” (Harvard University Press, 1986). “By then it was really too late.”
History, then, suggests that past success is often an anchor holding a company back, and that Microsoft is at risk from the Google challenge. “The wind is really behind Google, and Microsoft’s main tool for navigating the future is the rear view mirror,” said Paul Saffo, a director of the Institute for the Future, a forecasting consultancy in Silicon Valley.
Microsoft bristles at being cast as a laggard. In a meeting last week with online advertisers and reporters, Bill Gates, the Microsoft chairman, portrayed his company as a force for healthy competition in Internet search. “We will keep them honest,” Mr. Gates said of Google. And he vowed to catch up. “I think this is a rare case where we are being underestimated,” he said. Microsoft certainly has plenty of money to finance any competitive foray, with $35 billion in cash, while Google has about $8 billion.
Indeed, the incumbent-challenger narrative — which portrays the incumbent as an endangered species — may not apply this time. Microsoft has adapted nimbly to big challenges before.
Apple introduced point-and-click graphical computing with the Macintosh in 1984, but Microsoft caught up and became dominant on the desktop with Windows.
In the mid-1990’s, Netscape Communications posed a threat because the Internet browser might undermine the importance of Windows. Microsoft came up with its own browser and rebuffed that challenge, partly with tactics that violated antitrust laws, a federal appeals court ruled.
“Microsoft has responded every time in the past,” said Mr. Cusumano, who is also the author of two books on Microsoft.
Now comes Google. It is offering or developing as free Web-based services e-mail, word processing and other programs that could replace Microsoft desktop programs and eat into Microsoft’s lucrative software business. But that is by no means certain.
Google is cagey about its strategy. When Netscape was flying high, some of its executives talked of making Microsoft irrelevant — a strategic blunder, according to Silicon Valley lore.
Google’s chief executive, Eric E. Schmidt, is a veteran of past battles with Microsoft, and he has no intention of making the same misstep. He speaks mainly of Google’s limitless potential and ambitions, embellished by intriguing remarks like the one recently that Google is “building the systems and infrastructure of a global $100 billion company,” many times its current yearly revenue. Some clues about Google’s plans could emerge today, when its executives hold an annual media day at its Silicon Valley headquarters. Google now makes virtually all its money by selling advertisements linked to its enormously popular Internet search service. Microsoft and Yahoo are desperately trying to close the gap with Google, the Internet search and ad sales titan.
If Google stumbles, it will be seen as the company unable to move beyond a single stellar success.
Since the future is so often the pattern of the past with some twist, what is the expert view? “I’m a historian,” said Mr. Tedlow of Harvard. “Ask me in 10 years and I’ll tell you why what happened was inevitable.”
1 | 2 NEXT PAGE
Source: New York Times
