It is an open secret that Google is a live threat to the Desktop giant and that Microsoft indeed feels completely threatened by the search giant. However, compared to Netscape, Google has had several advantages on its side.

One is the availability of bandwidth that makes the Internet the primary source of content and not just a medium to seek information. The distinction between content and information must be made clear. Content is what drives business. People pay attention to content and people don’t want to pay to seek information.

Then, the next advantage is the resource base. There are smart people at Google doing their jobs with not having to invest in Customer Management routines. Most of Google’s success lies in its ability to automate the processes that do not generate revenues but increase head count. The whole of the AdSense program is an automated system that searches for keywords and posts matching ads from an ad server. Clicks get detected, the dollars flow in.

For Microsoft, that is where the hit comes. Its core products need to be supported. There have to be staff laid out for back end issues. There have to be call centers, support centers and the like. The OS is a huge monolithic piece of complex code and you have to service anyone who pays to use it. Google can continue to dabble in its ‘beta’ products, free from the shackles of support management.

That is what hits Microsoft hardest. But that is where the key lies. Automate your processes. Resource utelization must jump to a higher level. Outsourcing has to kick in. It has to take the initiative and think out of the box to create a web-based business model that can let the dollars flow in.

Recently , Steve Balmer , in all his characteristic boisterous style was commenting over the 4 cycles of a successful business model – get an idea , build it up to a critical mass , milk the idea to all it is worth and create a new offshoot that provides another revenue stream. He said that Google is in the 3rd stage. Milking a great idea that struck the masses. Been there, done that. Also, it is to be seen how much Google can continue to rely on the single source of all its revenues – advertising. The search giant is spreading its wings with the acquisition of YouTube and a company that puts ads on Computer Games.

Looked from that angle, Google is going the same way as Microsoft. While the OS giant is taking its core product on to different gadgets, Google is taking its core idea of targeted ads to different medias. The attempt to sell ads on radio and print too confirms that. The point is, Google does not see Microsoft as a competitor, since Microsoft has not been able to provide a half-good alternative to the targeted ad business model. Important questions to ask at this point are, does Microsoft need to think out totally? What I believe is that Microsoft has to seriously start working on a platform that lets content creators distribute content on a subscription basis and checks piracy.

Lot of options are open here. One would be to acquire a la UTube and the like in the online gaming arena and the other technology media. At the same time , they have to invest in a competent advertising system. Like the old days, they can’t just do a Netscape to Google, because Google has a firm business model in mind and relies on none of Microsoft’s technologies.

As for Microsoft, one thing I believe they have going good is their focus on CRM and Enterprise Software. Thas is one area where at least for the time being Google is not present. However, the world is different now. If Google takes over SalesForce.com, Microsoft will have a lot more to worry about.