Gmail Themes Gives Google Perceived Momentum

Google announced today that Gmail themes are available for users starting now.  Annie Chen was the Googler chosen to spread today’s news (the file name was called skins, but eh, skins, themes, you say to-mato..) Annie was kind enough to point out that you’ll see a link under “Settings” once your account receives the upgrade.

Two things are important about this announcement:

1)  This was rumored months ago in Garrett Rogers’ must read blog, Googling Google.

2)  Google continues to take on Microsoft on Redmond’s home court.  Remember that Google’s first big differentiator besides good-to-great search results was an uncluttered interface.  But with the search advertising and search query segments nearing monopoly levels for Google, the company is attacking Microsoft’s home turf.

Themes, user interfaces, operating systems and applications are what Microsoft brought to the table, especially if you actually bought the argument that Internet Explorer was part of the operating system.   But in the most recent chapters of Microsoft’s history, founding father Bill Gates sailed off to philanthropic waters, the company’s anticipated Vista operating system was a critical and commercial failure, a bid to buy Yahoo! fell through and companies began attacking the stranglehold that is Microsoft Office. Under intense attack, Microsoft announced that Office-like applications would be available online.

Critics were already saying Zoho and Google Apps were erstwhile challengers to Microsoft Office.   The company’s cash cow helped Microsoft to $37 billion in current assets and a 29% profit margin — net.   The decade old Google, the company supposedly poised to take over the world, has just over $17 billion in current assets and a 23% profit margin. And the financial news for Microsoft isn’t old potatoes.  Third quarter results were $15 billion in revenue and $4 billion in net profit.

Microsoft had 3 times Google’s revenue and 4 times Google earnings in the period ending September 30.

Yet Google is regarded as an innovative and stylish, a cool place to work with a market cap over $80 billion.  Sounds neato, except the Microserfs helped their empire to a market cap nearly twice that.

Rumors of Microsoft’s demise may be exaggerated.   Mainstream media says Google Apps is a credible alternative to Microsoft Office, Linux is attacking the server market while Firefox goes after the browser market and Apple nips at Redmond’s heels with brilliant ads that parody parodies.

This is what happens when a company grows too big to effectively maneuver.   None of the companies mentioned here are small, but all have one thing Microsoft doesn’t:   public perception of momentum.

Instead of the next cool Firefox plugin or Google treat like Gmail themes, the public awaits the next version of Windows with an attitude seemingly of “How will they screw this one up?”  As cheaper or free alternatives spring up to take on Microsoft products, the company suffers most of all from a public relations issue.

This is the same type of issue that caused Dan Quayle to be ridiculed while he was Vice President, the same issue that caused AAA to lose on all fronts to auto makers, insurance companies and even oil companies and the same hubris that knocked Xerox for a loop that took most of a generation to recover.

The issue is not really product quality or value.  After all, people still subscribe to AOL’s dialup service.  The issue is perception of momentum.  Google has won hearts and minds.  Microsoft has won wallets, but that won’t be enough to sustain the giant company if margins begin eroding.  And for those of you keeping score at home, Microsoft still controls the operating system, browser, spreadsheet, word processing and online email markets.  Too big to fail?  Ask 91,000 employees what they’re doing to punch up the listing ship they sail.

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