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Microsoft is in such a powerful position because the PC operating system is at the center of most users' experiences with computers. As the Internet becomes more of an essential part of the computing experience, if anything else from a network becomes a central link in the user's experience, that poses a challenge to Windows and software programs like Office, which has higher profit margins than Windows itself. Google does not prevent people from using any particular operating system on a PC, but if the functionality that users engage with is driven through a Google experience rather than something controlled by Microsoft, that harms Microsoft.

Microsoft Vs. Google

As Google expands its base, it might harm Microsoft. But Microsoft has a much broader product line. It's sitting on 90% of all computers around the world and Google has a long way to catch up. It may be very difficult for Google to fight with Microsoft at all the fronts and it would be a vague assumption to believe that Google will win in all the territories.

But if we see this in a broader perspective, any successful Internet and software company is a threat to Microsoft. Microsoft is in a uniquely dominant position in the industry. Anything that attracts a significant amount of use or activity is potentially a threat to them. Microsoft is a threat to, in some ways; virtually everyone in the industry and likewise everyone is a threat to Microsoft.

It is not the first time some new innovative company like Google has challenged the Microsoft dominance. In 1990s, Netscape tried to give Microsoft run for its money in the historical 'brower war', in which Microsoft emerged as a clear winner.

Google is a different kind of competitor, but Microsoft has dealt with a pretty wide range of competitors before. So, it is on a higher learning curve. Microsoft has always been a good competitor, it will figure out ways to replicate the features of competitors' products. The products won't necessarily be better, but they will be adequate.

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* Contributed by -
Nipun Jain & Manvendra Singh,
Class of 2006,
Amity Business School, Noida.