Google is not a Software Company

Saturday, June 23, 2007

Like generals fighting the last war, business executives unconsciously seek to win the last paradigm shift. In the computer industry these paradigm shifts have been formidable, frequent, and ongoing. IBM was once the well-known king of computing, operating in an era in which hardware was expensive and labor was cheap, so IBM sold hardware and gave away software for free. The software, written on punch cards, was time-consuming and laborious to create. It was simply impossible to create anything like today's complicated operating systems or immersive video games in that environment. Then Intel and Apple and cheap home computers came along and the center of value shifted from hardware to software. It was suddenly easy to buy a relatively powerful computer but difficult to obtain useful software. A huge industry emerged from virtually nowhere to supply this emergent need, including such companies as Microsoft, Oracle, Autodesk, Ashton-Tate, etc. Billions upon billions of new value was added to the economy, as IBM, unable to keep up with the new thinking, slowly faded into the background.

Beyond software lies data. Just as software needs hardware to run on, data needs software to be presented on. Much data has traditionally been unavailable, locked up in private collections or physically difficult to access libraries, even if those libraries were ostensibly public. Or it simply wasn't digital yet. By "data" here I don't mean stacks of sales records, as in the old IBM days, but rather the totality of all content that people wish to share and present to others. "Content" includes word documents, KML-generated maps, mp3 songs, and YouTube videos. The introduction of the Internet has thoroughly transformed the relationship of data to software, just as the introduction of the integrated circuit transformed the relationship of software to hardware, so that software has now become very cheap or free, and it is the content itself, the "data", which has assumed the position of maximal value to consumers, displacing software exactly as software in an earlier era displaced hardware. Google seems to have grasped this fundamental point while Microsoft seems to have missed it. This may be what Paul Graham means when he says "Microsoft is dead"—it's dead in the same way IBM is dead, simply stuck in the last paradigm, unable to come to grips with the new world in which it lives, increasingly irrelevant.

A single worldwide Internet does not require multiple points of access, multiple on-ramps. Users dislike having to go to different places to find different things. It is much more convenient to have a single place at which to start in order to find everything, and Google is well down the path toward creating this universal portal. What is much more convenient usually wins in the long run. Google is not a data company per se—the world already provides plenty of those; in fact, we're all creating data all the time all day long—rather, Google seeks to be the world's great data-organizer, the single aggregator of all the exabytes of data being continually produced yearly by humanity. It is only in this light that its acquisition of YouTube and its acquisition of Blogger (among many others) makes perfect sense. Bloggers are providing data to Google for free, in much the same way that people searching on Google are spending their days entering data into Google's databases, for free, day in and day out. The most expensive part of the whole computing enterprise continues to be data entry, and Google has discovered how to get the world to enter data for free and love it in the process. Likewise, Gmail constitutes yet another method by which free data is created and entered into Google's databases voluntarily by the world. Ask yourself how many times a day you enter free data for Google into Google's omnivorous and secretive database.

Is there room in this town for two or more search engines, when one of them offers a smorgasbord of choices and connections, everything one could want from music to movies to books at one's literal fingertips, while the others are broken and fragmentary and only partially successful at best? It seems unlikely. It is often said that Google is an advertising company, but this again misses the point entirely. Advertising is merely the first mechanism by which Google has chosen to monetize the immense value that it is creating by becoming the world's single portal to the world's data. There will be others. Google does know exactly what you have been searching for and that knowledge has enormous value, both commercially to Google and to governments, both foreign and domestic. It will only be a matter of time until that tremendous value is unlocked.


Luther McLeod said...

Broad thinking MHA, and well done. Data is the crux. And appearances would appear to support you. But Google walks a fine line I think, all that volunteer labor may wake up one day.

Simplistic maybe, but should I be paid for my contribution to that giant database? Maybe I should copyright all my queries?

chuck said...

Yep, so what comes after data and its organization? The end point of the current evolution will contain books, schools, music, video, services such as home design, landscaping, custom made clothing, and other such things. The latter only wait on measurement technology. I can see the day when we have online selves, measured to precision, and complete with genetic and medical information. Hmmm, now there an opportunity for folks of a technical bent; we need machines capable of producing such data cheaply and quickly. And after Google finishes sending round its camera trucks they can send around soil specialists and geologists to sample everything. This country is going to get surveyed all over again.

Notice how many homes are just variations on a few templates? Future homes will be chosen online, customized by computer, and the parts priced, ordered, and delivered to the construction site where a crew of robots stands by to do the work.

So, what happens to the dirty necessities? Crops don't in neat rows by themselves, cow don't excrete bottles full of milk, and cement factories don't sprout from the hillsides. I see a time when the social divide between production and services becomes ever greater. Indeed, we already see vast differences in outlook between service occupations such as education, government, and Google as opposed to those who work with their hands.

And what impact will robots have on labor? Robots are going to be another revolution. They aren't there yet for everyday labor, but they are coming. The key enabling technology for autonomous robots is going to be small and efficient units for generating electricity. I don't see batteries doing the job, but perhaps fuel cells will come along. Duplicating the functions of animal metabolism isn't going to be that easy.

What will online government look like? And where is Europe in all this? Last I heard Europe was trying to duplicate GPS and Google long after those trains left the station. Airbus itself was pretty much a duplicate of Boeing. It is a shame that so little innovation seems to come from a continent of 400 million educated citizens, even little Israel and Taiwan do better. There is something wrong there.

Luther McLeod said...

Great comment Chuck. The future?

loner said...

Just a few thoughts...


In my view, IBM was well-positioned to dominate the industry as the '90s began, but, as I've heard Larry Ellison (Oracle founder) put it, the people responsible for running it ended up giving a third of their company to Microsoft and a third of it to Intel by making bad choices. One provided software; the other provided storage. Personally, as one who worked with storage discs and wrote software in the '80s, I'm a lot more impressed with the improvements in storage. And, of course, Xerox, of all companies, gave away the Ethernet and the proto-GUI.

Cisco, a networking company, was for a brief period the most valuable company in the world. The chief accounting person where I worked at the time mentioned that to me one morning in early 2000. I'd been looking briefly at Sunday business sections for years as Microsoft and Intel approached the market capitalization numbers of the IBMs and GEs and then Cisco caught a wave that ended up being a bubble and shot past all of them in a matter of a few years. My response to him was to shake my head at the gullibility of "investors." We'd talked before. He was an agnostic. I was a heretic.

I spent a lot of time using Google to look for a decent picture of a particular rollercoaster today. No luck. I did find a lot of sites that posted pictures from the site of the amusement park at which the rollercoaster is located and I did find a lot of vacation pictures in which part of it could be seen. Some were even interesting. Data, I'm afraid, will always be, no matter how well-filtered and organized, mostly garbage in the eye of any given beholder. It's one thing to peruse a dictionary to learn new words and what they mean. It's quite another to use the same dictionary to try to find the correct spelling of a word you don't know how to spell.

chuck said...

Hi Loner,

Intel did memory, not disks. I suppose Larry was referring to the Winchester disk technology -- so called because its greatest early example had twin 30MB disk and was known as the 30-30 on that account -- that enabled IBM to dominate the field of storage for many years. But, just as IBM contracted with Microsoft for the OS, it also bought Seagate's 10MB 5.25" form factor disk drives for the PC/XT. So it looks like Seagate was the other IBM beneficiary.

I think IBM has been one of the great companies, one that has made tremendous original contributions to industry. I have always thought it had far more intrinsic value than Microsoft in terms of skills and innovation. Windows and Microsoft Office are ubiquitous products, but Microsoft invented neither application, nor can I see that Microsoft has made original contributions in other areas. What they have done is set de-facto standards and put computers on every desktop. Nothing to sniff at, but if not Microsoft it would have been someone else. If some evil spirit were to carry off the whole company and hide it on the backside of the moon, it would be sorely missed by investors but its technological niche would be quickly filled. Gates is no Watson.

Speaking of IBM, I do miss Bell Labs, their demise is a true tragedy. They are still around, of course, but with barf worthy blurbs such as

As part of the new Alcatel-Lucent innovation engine, Bell Labs is poised to help define the next generation of communications technology.

You just have to hope that Alexander Graham Bell is bound to his grave.

We'll cry over HP some other day.

loner said...


Duh! I thought I had something wrong, but I couldn't think what. It was Intel and, yes, memory that Ellison was speaking of. There was actually some real competition in the HDD market.

My days of formatting disks and creating disk arrays still haunt me I suppose. Data was always my thing no matter what I was doing and storage and backup always an obsession.

And, yes, once upon a time IBM and HP were something to behold. The last time I went down Page Mill Road was in 1997 and by then I'd had so much grief from a HP color laser printer that I had doubts.

Ever use OS/2?

chuck said...

Ever use OS/2?

No, I never did. There were a few guys I knew who used it, but not many. Then I pretty much went cold turkey on computers for eight years and when I came back the world was Windows and Sun, DEC was dead, and Linux was starting to make a move. Things might look a bit different if OS/2 had become the Microsoft/IBM OS, eh?

loner said...


What an idiot I am most nights. Memory (and network adapters) were gravy. Processors are what made Intel what it is and are the hardware component IBM let slip away.

I had a friend who swore by OS/2, but we went to clones for what personal computers we had relatively early (the business used a Prime right up to the end in 1994) and the only time I used OS/2 much was during the planned conversion of an application developed for it a few years later. NT and 95 versions of Windows had just recently arrived and there was little doubt left by then that IBM was going to be an also-ran in the operating systems for personal computers business.

I've been out, except to help out friends and family from time to time, for almost seven years now. Don't miss it. Not even remembering it from time to time lately. Don't remember ever using an operating system I liked less than Windows before NT, but who knows. Maybe there was one somewhere along the line.