Brampton Factor: Are Google, IBM and Microsoft really rivals?

silicon.com is proud to introduce a new monthly column by long-time contributor and Devil's Advocate Martin Brampton. The Brampton Factor will seek to dig deep on the big issues in IT. Today he looks at the rivalry between Google, IBM and Microsoft.

People talk a lot about a clash of the titans between Google and Microsoft. Perhaps surprisingly, Microsoft dismisses this and says instead that IBM is its main rival. The reality is more complex and more interesting than the bare headlines suggest.

In fact, these three companies have radically different business models, and also vary greatly in their corporate psychology. This is a reflection of both the radically different ages of the three and the sharp contrasts in the background and outlook of their top executives.

Google is, of course, the newest of the three and is run by a pair of very clever young-academics-turned-businessmen. Much of the background work for Google was done at Stanford University, which actually owns the PageRank algorithm, although Google has exclusive use of it until 2011. The computer architecture adopted by Google was first developed as the founders scrounged every bit of computer power they could find around Stanford.

The thinking at Google is very much influenced by the ethos of top US academic institutions. Emphasis on individual inventiveness and freedom to spend time on pet projects is characteristic of the company. Searching, Google style, is tightly linked to the bizarre academic specialism of bibliometrics. Yet emphasis on the academic and technical side of Google can distract from the truly innovative element that has made the company immensely wealthy.

Before Google, the internet was moving out of its academic origins and many people realised that communities with common interests would have commercial potential. At the same time, much emphasis was placed on the huge numbers of people who could be attracted to popular sites. Advertising related primarily to traditional banners with large price tickets on the big search sites.

Google turned the logic upside down, realising that money could be made more effectively by taking advantage of knowing what people were looking for, and selling small advertisements to the highest bidder in that area. Many of Google's sales come in just a few cents at a time. Nonetheless, those cents add up to 99 per cent of Google's huge revenues.

Microsoft is very different. Formed by a man who chose to drop out of university, it was characterised by the idea of the gifted but undisciplined programmer. From very early times, Microsoft set out to dominate the software business, and much of its history stems from that principle. Indeed, the company's revenues still come primarily from the quasi-monopoly Windows operating system.

The leading executives at Microsoft always seem to have been driven by two factors: a desire to get a piece of any large amount of money changing hands in the computer business, and a near paranoia about possible rivals. With its dependence on sales of very large volumes of software, Microsoft is always vulnerable to the possibility of a shift in the mode of computing. No longer young, Microsoft struggles to retain its image of innovator and rebel.

Older again, IBM is quite distinct from the other two. During its rise to dominance, it was notoriously a company of white shirts and dark suits. Its top executives are less visible than those of Microsoft or Google and fit a more traditional mould. No doubt gifted, the company is very much in the mainstream of corporate management and its goals are no different from many others - they revolve around maintaining a huge and disparate revenue stream that includes a significant level of profit.

Since the dark days when IBM looked in danger of falling apart, top executives such as Lou Gerstner turned the company away from reliance on hardware and software to being primarily an immensely capable services company. Products still bring in significant amounts of money but services, especially those delivered to other large corporations, is now the bread and butter for IBM.

So, on the face of it, the three giants scarcely impinge on each other. Google lives on advertising, Microsoft on software sales and IBM on services. We have to look at the logic of how each can extend its own position to start to see the potential conflicts.

As Microsoft aims to extend its grasp into new software fields, it comes up against IBM mainly in the area of corporate software infrastructure. IBM has a generally excellent reputation for building robust and scalable software in this sector. Microsoft seeks to compete on price and by leveraging its dominance in operating systems. That is an unwelcome threat to a useful revenue stream for IBM.

However, IBM is steadily gaining experience in a highly effective response. Increasingly IBM is turning its software products over to open source. Given the radical reduction of in-house capabilities by most corporates, open source development tools are frequently an effective vehicle for securing large services contracts for IBM. This approach can be steadily widened into other areas. Although the short-term revenue losses are painful, sales and marketing costs can also be reduced, and IBM can use specialist expertise to drive up services revenues, something Microsoft has not seriously tackled.

IBM has also been adept at promoting technologies that undermine Microsoft's position. For some years, much emphasis was placed on Java. More recently, Linux has been the focus of attention. And it is in this area - challenging Microsoft's position - that Google is seen as a threat by Microsoft. While Google's key innovation is its advertising model, its computer architecture is also alien to Microsoft.

Google uses a highly server-centric computing model, with huge numbers of machines working collaboratively. Nobody is sure of the number but it may be in excess of 100,000 and all of them are running a cut-down version of Linux. Google has been prominent in the development of Mozilla's open source web and email clients, at least partly in a bid to bolster up vendor-neutral internet standards.

While Google presently has a vast and robust revenue stream from advertising, its future is likely to involve constant research into the big ongoing questions of search - with experts estimating that only five per cent are solved. Google can retain its strong position provided it can continue to lead with technology and maintain a positive public image - both significant challenges, especially with growing concern over the amount of users' personal information Google holds.

IBM does not look to be seriously threatened by either Google or Microsoft, and so far Microsoft's iron grip on its operating system revenues does not seem to have been shaken. So we may well see all three continue to glower at each other with very little real impact. If there is radical change, Microsoft looks easily the most vulnerable of the three.