Competing on Business Models: Google vs. Microsoft
Google and Microsoft are two of the biggest names in the tech industry. They are also some of the closest competitors in todays market. Their product portfolios are almost identical but, they employ completely opposite business models. Google benefits primarily on its search engine to sell user data which allows it to sell targeted ads to its users. This may seem less intrusive but, it is actually much more intrusive. Google uses this business model across all of its product portfolio, from its cloud-based services YouTube, Google Docs, Drive, Maps Photos, to its operating systems Android, and Chrome OS.
Google has been making big moves over the past years. They introduced G Suite, its own business suite which bundles Gmail backed email accounts, Google Drive cloud storage, Docs, Sheets, Slides and many other products. They do not sell enterprise data however they monetize the product suite more directly, using set price per user. Google has also made a huge investment into the smartphone industry very recently by acquiring a huge part of HTCs mobile division as well as licensing their intellectual property portfolio for $1.1B and implements Androids software. All these investments Google are making to control and better its product ecosystem to create more of a user-friendly experience. These investments and improvements of their product portfolio put a lot of pressure on Microsoft. Microsoft started out as an Operating System provider when Bill Gates and Co created the first iteration of Windows back in 1986. They later offered their own Office Suite, and attempted to compete with Google by creating Bing, and are one of the leaders of console gaming with their product line of Xbox consoles. Microsofts issue stems from their dominance of a slowly dying market sector. As consumers move towards cloud-based computing, most of Microsofts competitive advantages are in the decreasing standalone PC-based computing. Google has struck multiple deals selling affordable Chromebooks to schools which is a potential indicator of where the market will shift.
B. Decision Maker(s)
Chief Executive Officer: Satya Nadella
Executive VP, Microsoft Cloud and Enterprise Group: Scott Guthrie
Executive VP, Business Development: Peggy Johnson
Executive VP, Corporate Strategy & Operations: Kurt DelBene
C. Problem Statement
As consumers are trending towards cloud-based computing, Microsofts competitive advantage is under risk of being seriously damaged, which will jeopardize their business models sustainability.
1.Expand their cloud computing platform, Azure, to consumers instead of strictly enterprise.
2.Create a closer ecosystem where there is a seamless user experience from one app to the next.
Different app developing teams work together to create a fluid transition from one app to a service.
Create cross-functional teams that provide new processes and ideas.
3.See what worked with direct competitors in igniting innovation and implement similar programs.
Apples No Limit approach to innovation, which allows them to come up with ideas freely.
Google: 70% of employee time on core competency, 20% on related projects and 10% on learning new skills/working on side projects.
4.Introduce Chromebook-like computers that run a cloud-based Windows version at a cheaper price-point.
This will allow the company to compete with Googles Chrome OS and allow it to leverage its strong relationships with existing OEMs.
5.Implement a new corporate culture of experimentation and innovation by redefining incentives and scoring metrics.
Implement a corporate culture similar to Zappos.
E. Action (Recommendation)
Based on the analysis, Microsoft should work with alternatives 2 & 4; create a more tightly-knit ecosystem with seamless user experience between products and introduce Chromebook-like computers that run a cloud-based Windows version at a cheaper price-point.
Googles success stems from the seamless transition from one service/product to the next, Microsofts success in replicating that experience will help the company create a sustainable growth pattern that will help it combat Googles and Apples respective ecosystems. Introducing standalone products/services is not a weakness, yet it is a threat since users would be able to consume other, more competitive, products. Focusing on creating a fuller-ecosystem will enable Microsoft to get some much-needed traction and become more competitive.
Chromebooks have been a disruptor in the PC market and only continue to get larger. Microsoft needs to carve out and control Googles dominance in the category with more than ad campaigns and high-end Surface tablets. When Microsoft first introduced its Surface line it quickly became popular but, only becoming less popular as time goes on due to its price. If the company can replicate a similar, yet more controlled ecosystem for its new product line that would mean big trouble for Google. So far Microsoft hasnt had a response to Googles Chromebook and they are in good position to do so. Microsoft must move in this area swiftly and utilize its already great relationships with OEMs to encourage the new cloud-based Windows.
1.Introduce a new software development strategy/team where product managers and teams on independent projects work together.
a.Office 365 and Azure Cloud Storage teams work together to ensure there is a consistency between products.
2.Create a team devoted to researching and keeping up to date on Googles Chrome OS.
a.Acquire key employees from Googles Chrome OS development team to use their knowledge and experience on Microsofts OS.
3.Use former Google employees in the development of new OS.
4.Work with key OEMs to simplify their supply chain process and give them different perspectives on their products.
5.Similar to Googles marketing strategy, target school districts and universities with its new product.
a.Use big events, like sporting events, to promote your products as you can capture a guaranteed large audience.
6.Hold monthly and quarterly product group meetings where all cross-functional teams evaluate the progress of other cross-functional teams, this will ignite a friendly competition between the employees and advance the companys initiative.
i.Like in the steps, Microsoft should have monthly and quarterly meeting. Microsoft should compare its yearly market share of the cloud-based OS category against Googles Chrome OS and all other competitors after product deployment and quarterly after deployment. Based on the early success of the Surface, Microsoft will expect to see immediate results of their new Chromebook-like product. This is based on the Surfaces success and the lower price of their new product.