Google rise, Microsoft demise: Forrester boss

Stan Beer
Thursday, 03 November 2005 11:00

IT Industry - Development

Research group Forrester's CEO and chairman, George Colony, has revised his previously downbeat view of Google, saying the company will create a new economic model for software use based on advertising.

In Colony's view, in future most of the applications software sold today by companies like Microsoft and Oracle will be web-based, free and funded solely by advertising.

"Forrester has predicted that Web pages will get replaced by programs — we call this executable Internet (X Internet)," says Colony in a report titled The Google Future. "In the future, when you click on your bank's site, servers will download a program to your computer, not static pages. Once that program is installed, you will be able to "converse" with your bank, run financial models, analyze your net worth — do much more than you could have with old Web pages.

"Google will be the company that leads this revolution. It is already writing programs like Google Toolbar and Google Desktop Search that run on your computer but blur the divide between your desktop and the Internet. And they are very powerful programs. Do a test. Search in Microsoft Outlook for an email from a friend — for me the search took 21 seconds. Then try the same search in Google Desktop Search: 5 seconds."

According to Colony, Google is leading a software pricing revolution. "Google's programs are free, funded through advertising and syndication. This is a prescient move. I foresee a world in which even enterprise applications like financials, ERP, and supply chain software will be advertising-funded," Colony said.

"So here's Google's playbook: 1) have the best search; 2) have more of the world to search than anyone else through the digitization of university libraries, earth images, maps, etc.; 3) attract the most advertising and syndication; enabling the company to 4) give all of its software away for free; which enables it to 5) change the rules and economics of the software business and define the future through its pioneering work in X Internet."

Colony advised large corporations to get Google executable Internet programs onto their corporate desktops. "Google Desktop Search, Google Toolbar, and Google Maps will drive productivity. In addition, this move gets corporate IT ready for a world in which free executables will begin to proliferate. IT staffs will learn to incorporate Google's programs and application programming interfaces into corporate Web experiences," he said.

As for Microsoft, the future is about to change - and definitely not for the better, according to Colony.

"Vista (formerly Longhorn) had better be fantastic, and Microsoft had better be able to re-spark its culture of derivative innovation," said Colony. "Bringing back stock options may be the first stop on that journey — as a way to re-attract the best and the brightest. I predict that Microsoft, under attack from advertising-funded software (and other factors like open source), will lose its monopoly-driven 25% net profits over the next several years, having to settle for 13%-15% nets (still astronomical compared with the average for most large corporations).

"The coming of executable Internet fundamentally changes the software and Internet landscape. Microsoft is an obvious loser. The closed, centralized architectures of Oracle and SAP will get a bunch of new salesforce.com-type challengers over the next five years. Amazon, AOL, eBay, and Yahoo! will be stuck with old Web-style experiences — not as easy, fast, and customizable as the executable Internet experience. That is why Google may be so dangerous for its Internet brethren — it knows programming and they don't."

Colony is convinced that Google is about to assume the new mantle of IT king.

"In the past year, Google has proven to me that it is way more than just a great search company. It can jump into the program game — and play under a completely new set of rules: executable Internet and free. Unless Larry and Sergey lose focus and the company's charter devolves into esoteric pet projects, Google is going to change the world."