Jakanden
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Joined: 11 Nov 2003
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 Posted: 05/21/04 - 16:07 Post subject: Google, Microsoft Take Battle to the Desktop
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By Lisa Baertlein
May 21, 4:00 PM (EDT)
SAN FRANCISCO (Reuters) - Google Inc. and Microsoft Corp. <MSFT.O> are staking claims on each other's core markets.
But even as Google aims for the desktop and Microsoft turns to Web search, industry experts question just how heated the clash between the No. 1 Web search company and the world's largest software maker will get.
Google is reportedly working on a downloadable file and text software search tool, code-named Puffin, that will attack a weak spot in Windows -- which runs on more than 90 percent of the world's personal computers -- by making it easier for users to find information stored on their desktops.
Microsoft, now building its own search engine to challenge Google's lead, is said to be working on a way to include search technology in Longhorn, the next version of Windows slated for launch in 2006.
Google, which is preparing for its much-hyped initial public offering, declined to comment on its plans, first reported by the New York Times on Wednesday. Microsoft, sticking to its usual mantra that it has no plans at present to extend search technology to the desktop, also declined comment.
Although some reports predict a to-the-death clash reminiscent of the Microsoft-Netscape browser war, analysts and industry players cautioned that it's too soon to tell how a Google and Microsoft confrontation would play out because the companies have different goals and territory to defend.
"I don't know how inevitable the collision is," said Idealab Chairman and Chief Executive Bill Gross, founder of X1 Technologies, a Windows search tool, and developer of a predecessor product called Lotus Magellan.
Gross underscored that Microsoft makes most of its money from sales of its Windows and Office software products, where Google depended on Web ads for 95 percent of its 2003 revenue.
"Microsoft is looking to protect the operating system and their control of the desktop. Everything Google does on the desktop is about protecting their Internet advertising," said David Thede, president of dtSearch Corp., which with Argo Technology powers the free Terra Lycos HotBot Desktop toolbar that allows users to search the Web, e-mail and PC files.
"I have yet to see a real clash of interests between Microsoft and Google," Thede said.
Microsoft has signaled an aggressive move into Web search, and its MSN Internet division is enjoying the fruits of advertising delivered through Yahoo Inc. <YHOO.O> unit Overture Services, a Google rival. Microsoft's plan to build search and other Web-based functions into Windows could crimp traffic to Google and hamper its value to advertisers, analysts said.
Google since last year has been testing a deskbar that allows Web users to plug search terms into a box in the Windows taskbar, which is often located at the bottom of the screen.
The company also sells a machine that helps companies search their own data in corporate networks and Web sites. Further, it is testing a new e-mail product, dubbed Gmail, that offers far more free storage than is currently offered by Yahoo or Microsoft's Hotmail.
To effectively challenge Google on the Web search and advertising fronts, Microsoft would have to match Google's massive infrastructure that is widely believed to include more than 100,000 servers -- an investment analysts said it may or may not choose to make.
Industry players said a move into desktop search would be an intelligent and natural extension of Google's business, but not without challenges -- chief among them being how to make money from the effort.
Most providers of desktop search, including X1 and dtSearch, focus on corporate users who are used to paying around $100 to $300 for software. Scores of other software makers are in the business of providing tools to quickly locate information on PCs, and the landscape is littered with the corpses of companies that have failed.
Google users are accustomed to getting free services in exchange for ads. While Web-search advertising has been a home run for Google, its Gmail product that delivers ads based on the content in e-mail has sparked a storm of protests from privacy advocates and may not be as lucrative.
Industry observers believe Google will offer a free, ad-supported desktop product, which could spawn a whole new set of privacy issues.
"An individual can easily make their own decision about whether they want to give up privacy. In a corporation, an individual can't make that decision with corporate data," Gross said. (Additional reporting by Reed Stevenson in Seattle)
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