Google, Apple & EBM (Everyone But Microsoft)

A lot of press today about Eric Schmidt, CEO of Google and alumnus of Sun & Novell, joining the Board of Directors of Apple Computer.

Everyone is a buzz with implications of what happens if these hot hot hot companies join forces against Microsoft. As you can tell from my sarcasm, as usual, I think the press is sensationalizing a fairly mundane corporate event here, just because putting Google & Apple in the title of articles gets readers these days.

Don Dodge potentially gives this idea more credit than it deserves, but provides a really thorough explanation on why we shouldn’t count our merger chickens before they have hatched.

Of course, if you look closely at any two big internet players these days, you can find synergies:

  • has a lot of traffic
  • The Safari browser has 3% marketshare and growing
  • iTunes is the winner in the online distribution of music
  • Google is the winner in market share for natural search
  • Google paid search economics are currently the best available
  • Google Video is a player in the nascent digital video market

However, this announcement has a lot more to do with the fact that Steve & Eric run in the same circles, have a lot of common friends and beliefs, and of course, Google & Apple are both great consumer internet brands. It looks good for Eric & Google to be on the board of Apple, and it looks good for Apple to have Google & Eric on board. Simple.

What is interesting to me, however, is how much better Google is doing handling the mantle of “Leader of the EBM Club” (EBM = Everyone But Microsoft). This has been a dangerous baton to hold, and many formerly strong companies have been destroyed this way. But Google has learned a thing or two about how to proceed here, and it is interesting to watch the next round of the “let’s try to topple Microsoft” game.

It’s different this time, of course. Google & Yahoo both are giving Microsoft fits, so the three-way dynamic is immediately more interesting. Success by new entrants (MySpace, Facebook, YouTube) keep changing the game. The resurrection of Apple continues to astound veterans. And as eBay has shown recently, the other internet powers will weigh in and influence this game. This is a very exciting time to be in the Internet space.

I remember in the late 1990s when Netscape had this mantle, and completely failed to appreciate the responsibility. They largely shunned Apple. Their arrogance got in the way of a deal with AOL (ironic, given the later merger).

There was a time when Netscape had all the market share you could want, but Microsoft clawed their way into a significant minority (25-30%). Then with one deal (the infamous AOL deal to use Internet Explorer), they flipped to majority marketshare and never looked back.

I bring up this story because shunning Apple was not about marketshare, although at the time Macs were still disproportionately strong in Internet market share because they come with networking out of the box, and because Macs were strong in the university & high income demographics (early adopters of the web).

Apple is the Grandpa of Microsoft battles of yesteryear. It is still a thought leader on imagining a world where you DON’T need a DOS/Windows PC. Their audience, though small, are thought leaders – disproportionately represented by the creatives, the journalists, and the executive ranks. They are also cooler than most.

By linking their name with Apple, Google in some ways gains a small, but powerful ally. Like a chapter out of The Lord of the Rings, it makes people think maybe this new champion will succeed against Microsoft where others have failed. The prophecy fulfilled.

The baton is passed.

I’ll post another time about why I think the question of Google vs. Microsoft is likely the wrong one. The Google ethos isn’t about killing Microsoft. In the end, this is much more about future growth opportunities for Microsoft than any type of defeat. But in our market-based economy, growth is power, so it’s worth talking about… another day.

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