New York Times is certain that the competition between Google and Microsoft is much more fierce than we might think.
"A measure of how seriously Microsoft takes the challenge came last Thursday when it announced that its spending would rise sharply next year, about $2 billion higher than previous estimates. Much of the extra money, analysts say, is going to meet the threat from companies offering advertising-supported Internet services and software, led by Google."
"How far Google can eat into Microsoft's software franchise is uncertain. But Microsoft fears that Google could become a kind of operating system of the Internet in the same way that Windows is the dominant operating system of personal computing."
Google has a great advantage in front of Microsoft: all their products are free, up-to-date (because they are online) and easy to use. But the transition between desktop software and online applications won't be easy for most users. So it's hard to imagine Writely as a competition to Microsoft Word.
Microsoft has the advantage of the operating system monopoly and of a large conservative user base. After losing the search war, the next battle for Microsoft is internet advertising.
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