This is my back-of-the-envelope (Michael Porteresque) competitive map (click to enlarge) of the search business, now that Microsoft's Bing has officially launched. (See my prior post about Bing here.) As the map will show, I am not an expert in competitive search. Nor do I know if Bing will be successful. But, as a person who appreciates good strategy, and loves to watch cash-rich, brilliant companies compete (in one of the largest and fastest growing markets in the world), I offer the following takeaways from the newest search duel:
1. Google is vulnerable, not because they are not a great competitor (which they are), but because any product or service with a switching cost of “zero” is vulnerable.
I love Google search. Click. Click.
Hey, now I’m trying Bing! I love Bing, too.
Click. Click. Now I’ve forgotten about search completely and am watching a dancing baby on YouTube.
See my point, oh fickle reader?
Furthermore, Microsoft thinks it has found some real weaknesses in the Google fortress: 25% of search clicks involve returning to a previous page (suggesting frustration), and people don’t find what they want about half the time.
That said, Google search is still pretty darn good, and the company has been brilliant in building superstructure around its core (Picassa, docs, blogger, etc.). This has created some element of friction in switching, so the cost isn’t really “zero.” But it’s not enough yet to stop folks from trying Bing, especially folks like me who still have lots of computer territory occupied by Microsoft, and switch between Microsoft and Google regularly (e.g.—I’m typing this in Word and will paste it into Blogger; no sweat).
I read an analyst who said something like “Microsoft doesn’t understand the lead Google has in search.” Now I just need to find the old quote by the auto analyst who said Toyota didn’t understand the lead GM had in automotive.
2. Unlike Microsoft Search and Yahoo—which seem to me to be “me-too” products, a hard-to-sustain, unprofitable competitive position in Michael Porter’s world--Bing appears to be a truly differentiated offering. If so, that gives Bing a real basis for competing.
3. Bing is hardball, in the sense that Microsoft is going after Google’s core search business. Everything else at Google is noise compared to search. That’s called commensurate response, since Google (with its Docs) has gone after Office, one of Microsoft’s crown jewels.
4. Every additional share that Yahoo loses in search makes them less expensive to Microsoft—a marriage that will almost certainly happen. (Logic: Yahoo is an undifferentiated Google and is rapidly losing value. Yahoo is more valuable to Microsoft than anyone else.) Which is why I said that Steve Ballmer is a genius: he attacks one foe and drives another into his arms with a single move. Bartz and Ballmer are saying exactly the things—“You’re ugly” and “So's your mother”—that two star-crossed lovers always say before they fall into each other's arms. (Please refer to Shakespeare’s Taming of the Shrew for additional competitive insight.)
5. The genius who built Bing also honchoed Yahoo search. Quelle coincidence! (Like my French?)
In the very early pages of Competitive Strategy, Michael Porter suggests a tantalizing possibility, saying that sometimes companies can compete in two ways simultaneously. Hmmm. He says it's hard, and tricky, and not for the faint of heart, but. . .Bing makes a splash and builds some share. Yahoo continues its death spiral and sells to Microsoft (better late than never). Now Microsoft wires together three search engines and has a third of the search market, with a differentiated product. Not to mention a long, long horizon and lots of cash on the balance sheet.
Of course, Google won’t be sitting still. As Marissa Mayer said, search is still a very young business. And you can bet really smart people who get paid to do this for a living have mapped out steps 3, 4 and 5 on a white board in a war room somewhere west of the Mississippi (the Continental Divide? West Shoreline Blvd?).
For the rest of us: This is Coke vs. Pepsi, 21st century style. It’s smart people doing great strategy, it’s a blast to watch, and net-net, everybody ends up drinking more soda. Let the games begin.
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