Google's Schmidt dismisses Microsoft at his own peril

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Eric Schmidt, the former CEO and current executive chairman of Google, doesn't appear to be taking Microsoft seriously.

In an interview with All Things Digital, Schmidt said that the Apple-Google platform rivalry is “the defining fight in the industry today.” The two companies, he said, are part of a “Gang of Four” of technology platform leaders, which also includes Amazon and Facebook.

When asked whether Microsoft should be included in that group, Schmidt said no. “It's a well-run company,” he said, “but they don't make state-of-the-art products.”

Reading that exchange, my mind jumped back to a now-famous anecdote involving Microsoft CEO Steve Ballmer and an engineer named Mark Lucovsky, who defected to Google in 2004. When Lucovsky announced his departure from Microsoft, Ballmer reportedly threw a tantrum. “Google’s not a real company,” he said, according to a court statement by Lucovsky. “It’s a house of cards.”

The quote underscores how Microsoft didn't take Google seriously right away. The launch of Bing arrived far too late to be a serious threat to Google Search, and by the time Microsoft overhauled its Web browser with Internet Explorer 9, it had already lost a hefty chunk of market share to both Google Chrome and Mozilla Firefox.

Granted, Microsoft has a history of being late to all kinds of markets. The fact that Microsoft was slow to overhaul its mobile operating system and to dive into tablet software is probably what Schmidt is driving at. Still, I think Schmidt is making a mistake by underestimating Microsoft.

Microsoft, at least, has a sense of what the future holds for consumer technology. In a letter to shareholdersthis week, Ballmer explained that Microsoft is now a devices and services company, and that its goal is to offer content and services that work across phones, tablets, PCs and televisions. When necessary, Microsoft will make its own hardware to further that goal. Although none of Microsoft's individual products are state-of-the-art, the unified ecosystem that Microsoft is building is on the cutting edge.

Google, meanwhile, seems like a company that's fumbling for a vision. Google fell into success with Android phones simply by offering the only credible alternative to Apple's iPhone, but has yet to come up with a tablet that can challenge the iPad. Chrome OS has barely made a dent in the laptop market, but more importantly, it seems like a product from a completely different company than the one that makes Android. Google TV has gone nowhere; it took Google more than two years to add a built-in music and video store to the service. The Nexus Q came out of nowhere and was indefinitely shelved before it even launched. For all Google's talk of “ more wood behind fewer arrows,” the company still seems to be throwing ideas at the wall.

Instead of dismissing Microsoft, Schmidt and Google would be wise to take inspiration. As Microsoft knows all too well, the companies you don't worry about are often the ones who tip the balance of power.

This story, "Google's Schmidt dismisses Microsoft at his own peril" was originally published by TechHive.

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