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Ballmer doesn’t get Google’s Android Strategy!

by Sachin Balagopalan on November 6, 2008 · 1 comment

Microsoft’s rambunctious CEO is once again opining against the competition and is doing so rather loudly. This time he is speaking up against Google’s Android mobile operating system and is basically saying that he doesn’t understand their strategy. He made the following comments in Australia …

I don’t really understand their strategy. Maybe somebody else does. If I went to my shareholder meeting, my analyst meeting, and said, ‘hey, we’ve just launched a new product that has no revenue model!’ Yeah. Cheer for me I’m not sure that my investors would take that very well. But that’s kind of what Google’s telling their investors about Android,” he said.

Well he’s no doubt thinking like a software executive who is beholden to his shareholders and board of directors. The question is does Google really not have a revenue model vis a vis Android? They are giving the software away for free after all. I think to answer that question one needs to look at the history of the two companies. Microsoft is an an old traditional software company. The company was founded on the basis of selling packaged software for a profit - very simple and straightforward. When Microsoft was founded there was no web or the internet and there was no open source or cloud computing either. And Ballmer is from that era - one of the original guys at Microsoft. While they have tried to embrace the internet, open source and the “cloud” their DNA is still packaged software. Windows and Office are the two main revenue generators for them and while they may be talking about putting Office on the cloud they’re not there yet. Given that history I don’t blame Ballmer for not getting Google’s strategy.

Juxtapose Google and Microsoft you see apples and oranges. Google is a “new” company embracing new ideas and phenomena. First and foremost they are a web company. Secondly their DNA is search engine. Their main source of revenue is advertising based off their PegionRank technology. They have built a business around search. Since the beginning they have given their software away for free with one caveat - to serve relevant advertisements along with their free products. And that model hasn’t changed with Android. To suggest that they don’t have a revenue model is crazy. Their revenue model may not be the same as Microsoft’s but they still plan on making money and their shareholders understand that. Google’s strategy has always been to give the software away for free and in the process build a huge user base and leverage their massive search market share. Seems like that model has worked quite well for them so far!


{ 1 comment… read it below or add one }

Commodity Trading Accounts 11.07.08 at 7:10 am

this guy Ballmer is so funny!!!

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