Already the most popular search engine on the Web and most-hyped initial public offering of the new millennium,
is now setting its sights on the desktop -- the domain of behemoth
Google soon plans to introduce a file and text search tool to help users locate information on their personal computers,
The New York Times
reported Wednesday. The Google software will primarily compete against Microsoft's own woefully deficient search function, which Bill Gates' company plans to improve with a new version of its operating system due out in 2006.
But analysts say the move by Google is unlikely to pose a serious threat to the world's largest software maker -- and may instead highlight the competitive challenges confronting Google.
"Is it a real threat? No, but it would be a bump in the road that Microsoft wouldn't necessarily want to deal with," Meta Group Vice President Steve Kleynhans said of Google's expected entry into the desktop search field.
Microsoft's new operating system, code-named Longhorn, is slated to include a new file system called WinFS that organizes data to enable faster searches on a PC. But if Google beats Microsoft to the punch, that could hamper other Microsoft longer-term strategies for Windows, Office and collaboration products, said Kleynhans, who covers end-user platforms for Meta.
Still, he and other analysts pointed out that PC search is just one component of Longhorn, which also will offer better graphics and better data-sharing across multiple applications. Probably more important to Google, however, is the potential inclusion of a Web search engine in the next version of Microsoft's operating system, which currently boasts more than 90% market share.
To appreciate the danger of such bundling, investors need only recall Netscape's demise after Microsoft bundled its rival browser, Internet Explorer, with its Windows OS.
"I think the strategy on Google's part is really rooted in the precedents of the past," said Tony Ursillo, an analyst at Loomis, Sayles & Co., who suggested more investor awareness of competition from Microsoft will hurt Google's valuation.
"You need to almost get into Microsoft's head and figure out where they're going as it affects your business and evolve your business there, or try to hit back at
Microsoft where they're vulnerable," Ursillo added. (His firm holds Microsoft shares.)
With its foray into desktop search, Google is doing both -- anticipating Microsoft's next moves and hitting the company where it's vulnerable.
Desktop search is "something guys like us have been beating
Microsoft up on for 15 years," said Tim Bajarin, president of Creative Solutions, a Silicon Valley-based market research and consulting firm.
"From Google's standpoint, that search engine they have is so powerful that to apply it only to the Web is a little shortsighted," he added. "They're solving a problem that has been a frustration for users all along, which is being able to search local content."
Bajarin speculated that Google may offer a PC search tool free to individual users, but charge companies an annual fee for a more elaborate search tool capable of sifting through corporate databases and servers. "I think there's a good business opportunity," he said.
But the window of opportunity before Microsoft jumps in may eventually close on Google, Kleynhans said. Microsoft is typically good at laying out its vision -- it initially disappoints but then eventually gets things right, he noted.
"I think Google is well-positioned to leverage its brand between now and when Microsoft is able to deliver something," Kleynhans said. "That doesn't mean they can hold onto it in the long run. Realistically, the search battle is going to go on for the remainder of this decade."
So, anyone searching for a quick resolution to the battle between the year's most-heralded IPO and the Redmond giant is likely to be disappointed.