Strategic moves between Microsoft & Google

Have you heard of a strategy called “Besiege Wei to Rescue Zhao”? This ancient Chinese strategy is dated back to 354B.C and all it says is something very simple but extremely significant – “When the enemy is too strong to attack directly, then attack something he holds dear”. You can read more about this strategy at this URL: http://www.chinastrategies.com/List.htm (Strategy # 2 in the link).

Is n’t this exactly what has been going on between Microsoft & Google for the last few years? Let me elaborate – You must have been familiar with Google Docs (the web-based word processing and spreadsheet software that is attempting to compete directly with Microsoft Office). What can be the intention behind coming up with such a product? Is it purely for financial incentive? There are hardly any corporate customers using google docs for their business needs. Here is what an industry expert thinks

Sridhar Vembu, CEO of AdventNet, which runs the Web-based application suite Zoho, has calculated his competitors' revenue per employee and profit per employee and has come to a startling conclusion: "We simply don't believe Google has the rational business incentive to go deep into the business/IT software category." According to his study, Google makes more profit per employee ($214,000) than enterprise software giant SAP makes in revenue per employee ($199,000).

So what's Google up to? "It is in it to put Microsoft on the defensive on its home turf, so that Microsoft's offensive capability on the Internet is diminished," Vembu says.

In other words, Google is not attacking Microsoft Office because doing so would increase Google’s profitability, but rather it is doing so to damage Microsoft’s focus and capability to attack the businesses Google really cares about. It is Google’s strategic move (Threat) to deter Microsoft from making further advance into its core “search” business.

Microsoft responded back with their own strategic move – by announcing BING, a direct competition to Google’s search engine. Google, in turn, responded back with another strategic move, Chrome Operating System (OS), a direct competition to Windows. This game is expected to continue for a while with a series of such strategic moves.