Bing and Chrome OS: What if it's all bluster?

In the final scenes of Twilight's Last Gleaming (1977), which history may yet restore to its rightful place as one of the dumbest movies ever made, the President of the United States (Charles Durning) learns from a renegade general-turned-prison escapee (Burt Lancaster) that the whole point of the Vietnam War was a geopolitical bluster intended to convince the Soviet Union that the US was crazy enough to engage in World War III if it had to. After the President is told this Earth-shattering information by his kidnapper, his own cabinet conspire to assassinate him to prevent the information from being revealed in a press conference. This despite the fact that the real world was already entitled to The Pentagon Papers in paperback for several years, though readers clearly preferred Jaws and The Exorcist.

It is no "eyes-only" confidential secret that bluster is a very effective political and marketing tool at the disposal of anyone who can afford to use it. So you're safe from any assassination attempts from the likes of Joseph Cotten or Richard Widmark. Meanwhile, anyone reading Betanews on a daily basis over the last few weeks might get the impression that World War III is about to be triggered by the volatile mix of Google and Microsoft, or that at least some of us here who may have stayed up too late to watch Twilight's Last Gleaming on AMC may think so.

That ol' Steve Ballmer tenacity

In listening to Microsoft CEO Steve Ballmer's often-extemporaneous comments yesterday before the Worldwide Developer's Conference (for a moment, you can just see Ballmer substituting for Charles Durning), I was reminded by one of the all-time masters of bluster and bombast that not every project in the software industry is entirely "user-focused." Sometimes a company is willing to undertake a crazy, risky, costly, and perhaps fruitless project for an indefinite period, simply to demonstrate to its competitor that it's willing to go the distance.

I came to that realization when Ballmer made the following remarks late in yesterday's talk to the company's development and production partners, when he began alluding to his competitor the way AMD typically alludes to Intel:

The day we can't turn our great ideas and tenacity...into success, you'll go sit at somebody else's partner conference. So you can count on us for that. If ever there was evidence for that, it's the Bing itself. Man, oh man, have we taken a lot of abuse. And we're still just an itsy, bitsy little piece of the market. But man, we've got a little mojo. We've got a little innovation, we'll keep goin' and goin' and goin' and goin' and goin' and goin'.

And you might say, "Steve, what does this have to do with us?" This isn't...Bing search, it's not the center of most of our partners' worlds. But it has two things to do with you: Number one, it's as good a demonstration of our tenacity and commitment as anything you've ever seen, including Windows 1.0...and number two, it's my chance to tell you you should set your default search provider to Bing.com.

When Steve Ballmer gets worked up, he's like Joe Biden: Nothing stays secret, and nothing is held back. In making his "interesting" comments about Google Chrome OS later in the keynote, he went on to say that folks who use PCs only use Web browsers 50% of the time or less. Very sincere, very direct, probably even correct...but not necessarily what his colleagues may have wanted him to say right that moment.

A few years ago, when Microsoft premiered its Zune MP3 player, I asked NPD analyst Ross Rubin what market conditions Apple's iPod would have to present for Microsoft to give up the chase. He responded that Microsoft wouldn't give up. It doesn't have to, he said -- Microsoft doesn't need to "win," to win. It could maintain third place or even worse indefinitely; all it needs is a toehold against Apple, nothing more. Simply remaining a factor, staying in the conversation, will mean both success and profit for Microsoft.

If you use that case as a template, Microsoft doesn't need Bing as a tool to conquer Google (at this rate of growth, Bing could match Google's usage share in nine years). Ballmer said it himself, and very plainly: All Microsoft requires is to be able to demonstrate its tenacity against a major market player.

What's his objective? Google's business model is centered around online advertising, and every business it has organically grown or successfully grafted onto itself, extends that business model outward. It's based on the (unproven) theory that advertising alone can float an enterprise -- a theory which doesn't seem to be working for print media concerns that were too slow to adopt new media. As long as Google's model continues to expand, its existence threatens Microsoft, whose business model is based around more conventional sales and subscriptions. Google's expansion absorbs portions of Microsoft's base.

So Microsoft needs a stopgap, a way to convince advertisers that Google isn't the only game in town. But it can also use a diversion, a way to keep Google fighting a limited battle that it may eventually win anyway, but at less of a detriment to Microsoft. The existence of Bing gives Google an irresistible objective, something it can expend its resources to eradicate. Microsoft cannot afford Google continuing to expand the viability of the revenue stream for what will effectively become ad-supported software -- a game changer with Microsoft as the victim rather than the instigator.

Another old rerun

With that template still in hand, it's easier to come to the realization that Chrome OS, announced last week, has a certain Bing-ness to it. Any practical analysis will tell you that even Google has a slim chance, if any, in gaining serious traction against Microsoft in marketing a real operating system. As many Betanews readers have already commented, just how successful should one expect yet another flavor of Linux to be?

But perhaps like Bing, Chrome OS doesn't need to "succeed" to succeed, and maybe that's the whole point of it -- the real reason for its creation. All through history, Microsoft has been able to change the game, and thus change the rules, to its advantage -- tying the Web browser to the operating system when it was useful to do so, divorcing it from the OS later for the same reason. It's by changing the game that Microsoft throws competitors off theirs. As long as Microsoft has this kind of clout, it threatens Google whose business model could teeter off its delicate balance the moment Microsoft reorganizes the underlying principles of operating systems and PCs. It's through its strong partner ties that Microsoft, more than anyone else, is capable of doing so.

So Google needs Microsoft to stay the same, to not change Windows, to make Windows 7 into "Vista II," and to stay conventional so that Google's fruitful, if precarious, business model can continue its growth unimpeded. One might think Microsoft would threaten Google more if it were to capture more advertising revenue; but in a way, even Bing validates Google's principle that advertising can be the stream from which all good things flow. It's the competitive business model which diverts revenue from that stream.

Thus Google ekes out a toehold in operating systems, if in name only. Its objective is to keep Microsoft on its regular course. And if something else Ballmer said yesterday reflects how he truly feels, Eric Schmidt and other Google executives may have reason for their own optimism:

We're going to invest in continuing to attract new customers, despite the economic downturn. And we're going to keep what I would call the Same Old Microsoft Approach, long-term, tenacious, and partner-centric. Long-term, Lo-ong-term, Lo-o-ong-term! Look, you [partners] come here, and I know what you have to do. You have to sit there and say, "On anything they're doing well, are they going to keep it up? And on anything where they're not doing well today, are they just going to keep at it 'til they get it right? Or are they going to go home?" We don't go home. We just keep coming and coming and coming, tenacious, tenacious, tenacious, tenacious.

Google's continued success as an online advertising generator requires Microsoft to direct that redundant tenacity towards staying the same, not changing the game. Bing can be tenacious if it wants to be, but at this rate, it's no game changer. So Chrome OS is Google's bluster, an irresistible objective for Microsoft's resources and Steve Ballmer's testosterone.

By that logic, there's no revolution going on here at all. Five years from now, Betanews will be talking about #1 Windows and #5 (or greater) Chrome OS. Ten years from now, Windows and Chrome OS bringing up the rear. But both companies will be essentially where they are now, no matter how much the economy has scaled up or down. And when that happens, I'll happily remind you that this really is like a very late, very old, slightly bad movie. And I won't be looking over my shoulder for signs of a sniper.