When the first domino starts falling…
October 14th, 2008No, I’m not talking about the financial melt down, the credit default swap crisis or why the US government wants to buy bad debt with my money. I’m talking about bigger news here!
Bloomberg announced over the weekend that Google signed a $500k contract with the City of Washington D.C. to replace Microsoft Office on all city computers.
I know it sounds pretty lame on the face of it: $500k is very small money for Google or for D.C. for that matter, so why do I consider this big news?
For a few years now, Microsoft has been rightly scared of the chess game opposing them and this piece of news is one of the first indicators of what could be an crutial inflexion point in the technology industry, leading among other things to the end of the Microsofy empire as we know it.
Microsoft’s revenue model is heavily relying on its partnerships with large organizations and with OEMs to license MS software (whether Office, Windows or else) and Google has been working very hard to bring the pieces together making this model obsolete. How? By offering software as a service with the applications and the data accessed and stored remotely “in the cloud”.
Microsoft is not challenging Google’s vision, quite the opposite, they have been playing catch up for some time to build their capability in services - not an easy thing to do when most of your revenue comes from licensing software.
The impact of this new model is much greater than the demise of Microsoft as a business, it marks the end of the Microsoft era, meaning of the PC as we know it: if most of your work is accessible and stored remotely, all you need is a window of access into the cloud. This really leads us to rethink the usefulness of the PC and what other forms could these windows take.
I won’t ramble too much on this because I’m really not saying anything very new here and many people have already said it better than I could. So I’ll go back to my original point: why is this Bloomberg announcement big news? It’s a sign that this futuristic picture that I and many others have depicted is not SciFi. It’s happening here and now.
In disruptive innovations, we always look for signs of a major event that could mark an inflexion point, leading to accelerated change. My view is that this weekend’s news could be this sign: the first domino has fallen.