There is little doubt that Google’s ambitions in organising the information space are as gigantic as Microsoft’s in the software space. The recent announcement about Gmail (offering free, ad-driven, web-based email with 1 GB of storage and integrated search built-in) sends a strong message to those who thought that there was an opportunity to be the Google of email. If we assume that software and information are pervasive in our world, the two companies which have to want to continue to dominate these two spaces are Microsoft and Google.
Of course, Google is a long way away from achieving the kind of monopoly has in key software verticals. But the ambition is there to see. Google is following the classic Microsoft strategy – embrace and extend. The fun will start in the coming months as Microsoft launches its own search engine. As it seeks to move from software to information, Google will try to move beyond search into other markets (like email and perhaps, the desktop). This will be an epic contest. The ones who will have all to lose in this – Yahoo and AOL.
Google is leveraging what Bill Gates said a few days – that hardware seeks to be free, along with bandwidth (the free hardware point is something Michael Kanellos disagrees with). For Microsoft, the value lies in software. For Google, the value lies in the services that it provides.
Some other views on this:
Writes WSJ: “Google Inc.’s announcement that it plans to launch a new Web-based e-mail service signals an aggressive step into the home turf of portal giants Yahoo Inc. and Microsoft Corp.’s MSN, threatening to plunder bedrock users from the portals and likely forcing big changes in their e-mail services…Google, no doubt, will change the economics of free e-mail. Mr. Rosing said it has no plans to turn Gmail into a paid service in the future and believes it can support it handily using the same type of targeted text ads now seen on its search-results pages…Search-page advertising companies like Google and Yahoo’s Overture unit are hungry for more Web pages on which to display this increasingly popular form of online advertising. Gmail offers Google a huge new source of Web pages for these ads. The idea is something that Yahoo could conceivably try to duplicate.”
NYTimes: “Google will offer consumers better access to searching their own e-mail and could well upset the industry balance by offering free access to services that previously were available only by paying a monthly subscription fee…The standard industry practice is to offer tiered e-mail services, providing only limited storage free and charging higher fees to users who want to preserve a larger number of e-mail messages for capabilities like online storage. Google, by contrast, is planning a service to be supported by advertising that will permit its users to store very large amounts of mail at no cost…One internal Google study put the operational cost of maintaining e-mail storage at less than $2 a gigabyte, enough to preserve tens of thousands of messages of typical length.”
Danny Sullivan (Search Engine Watch): “Mixing ads with email isn’t new. Free services have long earned by inserting ads into the footers of emails that their users send. But some users might be disturbed by the concept that Google, even if only in an automated fashion, would be essentially reading their mail in order to know what ads to place…Google’s not unique in offering web-based mail search functionality. Yahoo Mail has a similar feature, for example. But the ability to store so much of your mail at Google may give its service a huge advantage if search-based mail reading takes off.”