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Everyone loves a good battle. And no market segment has experienced more bellicosity than the operating system arena.

For the last two decades, Microsoft Windows was the undisputed, dominant player with 90% of the desktop OS market share. Today, Microsoft Windows is still the most widely deployed operating system. But its dominance is no longer undisputed.

Microsoft faces an array of formidable challengers including Apple, Google and Ubuntu. Google’s initiatives over the last two years have obviously attracted a good deal of attention – just as they are meant to do.

The recent media coverage and talk of the looming battle between Google’s Chrome OS and Microsoft Windows 7 and Office 2010 conveniently ignores two important facts: 1) the Chrome operating system doesn’t ship until sometime in 2010, and 2) when it does debut it will initially run only on low-cost Netbooks, a miniscule if rapidly growing part of the market.

Other considerations are not as easily answered: What tangible, material impact will this rivalry have on customer deployments? Will Google’s entrance into the Netbook OS market really force Microsoft to slash prices and cut into its Windows profits, the heart and soul of its business? And who besides the press, Google and Microsoft really cares?

It is abundantly clear that Google and Microsoft — each of whom dominates in their core markets – are desperately attempting to encroach on one another’s turf. Google is a convincing leader in the search engine and online advertising market. And Microsoft continues to be the market leader in operating systems and office productivity applications. The sparring has been exacerbated and honed by the ongoing economic downturn. Hence, the series of recent one-upmanship maneuvers. Microsoft announces it’s moving up the release date for Windows 7 and Google responds with headlines of its own about directly competing with Windows. Google said it will partner with top OEM manufacturers like Acer, HP and Lenovo to port Chrome OS onto their Netbook platforms by the second half of 2010. Microsoft counter-punched by releasing details about some of upcoming Office 2010 applications becoming untethered.

Microsoft is aiming straight for Google with its new Office Web Applications. Microsoft Word, PowerPoint, Excel and OneNote are heading to the cloud in scaled down versions of the immensely popular software that will be browser based and completely free. And although details have been sketchy at best, sources within Microsoft indicate company intends to meld the Office platform across traditional PCs and servers, the Internet and smart phones.Microsoft did release new details about Office at its Worldwide Partners Conference (WPC) in New Orleans last week.Among the disclosures: Office 2010 – due out in the first half of next year – will include a free Web edition and it will finally offer interoperability with the Mozilla Firefox and Apple Safari browsers. The Office 2010 Web edition will also incorporate “lite” versions of Word, PowerPoint, Excel and OneNote. Microsoft will likely release more details at its Worldwide Partners Conference (WPC) in New Orleans, this week.

Microsoft and Google continue to circle each other like the battle scarred veterans they are –looking for the weak spot and the right moment to attack, hoping to score a direct hit and encroach on the other’s turf in a meaningful way – e.g. stealing sales and market share.

In truth, neither company has drawn first blood, although not for lack of trying.

 

Google vs. Microsoft: A Historical Perspective

The rivalry between Google and Microsoft dates back several years. Both covet what the other has and both have met with limited success in their attempts to extend their empires beyond their core competencies and revenue streams. While Microsoft has for the last few years been unceasing in its efforts to penetrate the online search engine and advertising market, it still derives 50% of its revenue from the Windows and Office platforms.
Microsoft’s Bing search engine debuted earlier this year to generally positive results. In fact, Bing is Microsoft’s best effort to date but it remains to be seen how much impact it will have on Google.

For its part, Google launched its first serious offensive strike at Microsoft’s dominance in the operating system and applications arena in early 2006 with Google Apps, a set of web-based and desktop applications. Google Apps consists of Gmail, Google Maps, Google Docs & Spreadsheets and Google Calendar. The company continues to bolster the functionality of the platform, and in 2007-2008 added Standard and Premier offerings that incorporate remote and mobile access capabilities, email migration tools and stronger online technical support. The Standard version of Google Apps is free and the Premier version lists for $50 per seat.

Microsoft & Google by the Numbers

From a financial standpoint, both Google and Microsoft remain healthy, although like every other ITfirm, both have felt the effects of the continuing economic crunch. So far this year, Microsoft has laid off 5,000 employees; this is the first substantial layoff in the company’s history. More worrisome for the Redmond, Washington giant is that its Quarterly Revenue and Quarterly Earnings Growth fell into negative categories (See chart below) from the 2008 to the 2009 third quarter ended March 31. The company hopes that Windows 7 (due out on October 22) and Office 2010 will spur sales and revenue and reverse the decline. At the same time, Microsoft knows it must diversify and so it looks to the Web and the emerging cloud computing market, where companies like Amazon and Google dominate.

Google, for its part has yet to loosen Microsoft’s hold in the rich operating systems and office productivity suite. Google Chrome is free and as such does not generate any revenue for the company but that may change because Netbook sales are poised to explode over the next 12 months and could provide Google with the needed momentum to establish itself as an applications provider.In the meantime, Google hopes that the good news from its latest financial earnings (see chart below) and its aggressive high profile marketing strategy will generate a buzz and create pent-up demand for Chrome in the run-up to its 2010 debut.

 

Performance Criteria – Q3 2009

  Google Microsoft
Market Cap: $135 billion $206.7 billion
Profit margin: 20.6% 25.9%
Operating margin: 32.6% 37.1%
Total Cash: $19.3 billion $24 billion
Debt: $0 $2 billion
Return on Assets: 14.2% 20.3%
Return on Equity: 16.% 42.5%
Annual Revenue: $22.7 billion $60.4 billion
Annual Net Income: $4.6 billion $22.5 billion
Quarterly Revenue Growth: 2.9% -5.6%
Quarterly Earnings Growth: 19% -32.2%

***Editor’s Note: Google’s fiscal year coincides with the calendar year, while Microsoft’s fiscal year begins on July 1. The above figures represent Google’s most recent second quarter ended June 30.

 

Future Prospects

What does this posturing and verbal sparring mean for corporate and consumer customers? In the near term, Google and Microsoft’s dueling headlines and pronouncements will have very little impact on customers in terms of platform commitment and purchasing decisions. The ongoing rivalry does mean that neither company can relax or relent for a Pico-second. Each must continue to deliver first-rate, full featured, bug-free products that deliver ease-of-use and integration and interoperability with existing applications and platforms. And both companies must stick to their announced timetables and deliver on their promises, lest one or the other exploit the opportunity.

Microsoft can’t afford a repeat of the lack of backwards application compatibility that plagued its much-maligned Vista desktop. At the same time, Google’s hopes for penetrating the applications and OS market rest on the functionality of its offerings beyond the simple basics that are adequate for Netbook sales.

Ultimately, corporate and consumer customers will demand and receive high performance products at a reasonable price – or they’ll simply sit on their wallets.

The biggest winners in this ongoing war may be the end users. And isn’t that a refreshing change?

For the second year in a row, IBM AIX UNIX running on the Power or “P” series servers, scored the highest reliability ratings among 15 different server operating system platforms – including Linux, Mac OS X, UNIX and Windows.

Those are the results of the ITIC 2009 Global Server Hardware and Server OS Reliability Survey which polled C-level executives and IT managers at 400 corporations from 20 countries worldwide. The results indicate that the IBM AIX operating system whether running on Big Blue’s Power servers (System p5s)  is the clear winner, offering rock solid reliability. The IBM servers running AIX consistently score at least 99.99% or just 15 minutes of unplanned per server, per annum downtime.

Overall, the results showed improvements in reliability, patch management procedures and an across-the-board reduction in per server, per annum Tier 1, Tier 2 and the most severe Tier 3 outages.  Among the other survey highlights:

  • IBM leads all vendors for both server hardware and server OS reliability as well as the fewest number of Tier 1, Tier 2 and Tier 3 unplanned server outages per year. IBM AIX running on the System p5s had less than one unplanned outage incident per server in a 12 month period. More impressively, the IBM servers experience no Tier 3 outages. Tier 3 outages are the most severe and usually involve more than four hours or a half-day worth of downtime and can also result in lost data.
  • HP UX also performed well though HP servers notch approximately 25 minutes more downtime than IBM servers, depending on model and configuration – or just under 40 minutes per server, per annum downtime.
  • IT managers spend approximately 11minutes to apply patches to IBM servers running the AIX operating system, which is again, the least amount of time spent patching any server or operating system. The open source Ubuntu distribution is a close second with IT managers spending 12 minutes to apply patches, while IT managers in the Apple Mac OS X 10.x. Novell SuSE and customized Linux distribution environments each spend 15 to 19 minutes applying patches.
  • IBM also took top honors in another important category: IBM Power servers and AIX experience the lowest amount of the more severe Tier 2 and Tier 3 outages combined of any server hardware or server operating system. The combined total of Tier 2 and Tier 3 outages accounted for just 19% of all per server, per annum failures.
  • Microsoft Windows Server 2003 and Windows Server 2008 showed the biggest improvements of any of the vendors. The Windows Server 2003 and 2008 operating systems running on Intel-based platforms saw a 35% reduction in the amount of unplanned per server, per annum downtime from 3.77 hours in 2008 to 2.42 hours in 2009. The number of annual Windows Server Tier 3 outages also decreased by 31% year over year and the time spent applying patches similarly decline by 35% from last year to 32 minutes in 2009.
  • This year’s survey for the first time, also incorporated reliability results for the Apple Mac and OS X 10.x OS platform.  The survey respondents indicated that Apple products are extremely competitive in an enterprise setting. IT managers spend approximately 15 minutes per server to apply patches and Apple Macs recorded just under 40 minutes of per server, per annum downtime.