The threat to Microsoft

Joe Wilcox (Jupiter Research) explains why Microsoft considers Google a threat:

The real threat remains the Web and how a vendor like Google has found a new way to exploit the Internet's utility beyond Windows.

Search is one of several mechanisms (fast data connectivity is another) that could catalyst alternative platforms. Search would give tremendous utility to portable devices connected to the Internet or home or corporate networks. With so much computing focus on information and so much information stored somewhere else (meaning not locally), ubiquitous search could unify the utility of many disparate types of devices.

So like Microsoft integrated the browser into Windows to fight off the threat posed by the Web, so the company is looking to tie the utility of search to its operating system. Because any technology utility where no Windows is required threatens Microsoft's core franchise.

The threat is much larger than just Google. It's about the future of Windows as the dominant computing platform.

Microsoft has been fighting this battle for many years. They worried about the rising power of handheld devices like Palm Pilots and cell phones, so they launched Windows CE. They worried about the additional functionality being built into game consoles, so they launched XBox. They worried about the rise of entertainment devices like TiVo and Replay, so they launched Windows Media Center. They worried about the threat from web-based applications, so they launched IE and MSN.

The latest shining star is Google. It's popular to talk about the search war as involving just two players, Microsoft and Google. In fact, the search war involves many players: Google, Yahoo, AOL, Microsoft, Amazon, and many smaller firms. And, the search war is only one front in the broader war Microsoft must fight to continue its dominance.