BUsiness & Office software: Is Microsoft for grown-ups and Google for kids?

While Google continues to grow in prestige and profit, there are signs that its halo is slipping. As a software and services provider to the enterprise, quality control and staffing issues are big problems for Google, and it’s driving some developers and businesses to Microsoft.

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Google has been on a tear for the past decade. It has risen from a scrappy little Internet search engine built on a cluster of cheap Linux machines to one of the world’s most powerful and profitable companies and, arguably, the most well-regarded brand on the planet.

During this same decade, Microsoft has seen its star fall nearly as far as Google’s has risen. Although never a wildly popular brand, by the late 1990’s Microsoft was to computing as Kleenex was to tissue — at least for the masses.

However, its anti-trust defeats in the U.S. and Europe have painted Microsoft as an ugly, petty bully, and its own product development and public relations failures with its flagship Windows Vista product has become one of the most infamous blunders in the annals of American commerce.

The two companies are now, of course, arch-rivals and are competing fiercely in Internet search, advertising, and software. Google is winning big in search, while Microsoft still holds a huge lead in software. But, these two spheres are colliding as the Internet evolves into a front-end software platform that will eventually relegate the operating system to back-end plumbing.

This process will transform the traditional business model for software and will expand the Internet into a more targetable and lucrative advertising platform. That’s why Google wants into the software business and that’s why Microsoft is trying to turn itself into an Internet company.

We’re now at an early crossroads in Internet applications, and honestly both Google and Microsoft are floundering and getting soundly outpaced by startups like Zoho and Force.com. Google Apps are simplistic, lack sophistication and standardization, and do not have as good of an online/offline sync as Zoho, for example. Meanwhile, Microsoft’s “software + services” strategy is barely recognizable since the “plus services” part has so far been half-hearted because Microsoft fears cannibalizing its cash-cow business, Microsoft Office.

Nevertheless, the situation is most acute for Google. The Web is its home territory and there are two disturbing trends that it must overcome if it wants to take its success in Web search and expand it into Web applications:

1. Inability to move software out of Beta mode
2. Challenges in hiring and retaining the best software developers

Let’s take a closer look at both of these issues.

Google is increasingly developing a poor reputation — especially among IT professionals — for perpetually leaving its programs in “Beta” mode. This is viewed as a cop-out that’s used to lower expectations and deflect criticism. After all, when there’s a problem with the software it’s too easy to simply respond, “What do you expect, it’s still in Beta.”

Even worse, the perpetual Beta issue is evidence that Google has problems with its processes, discipline, and organization. Google has prided itself on its decentralized structure that fosters creativity and innovation — and it’s clear that it has led to many successful new products and developments. However, that approach of slightly-organized chaos is also one of the reasons that Google seems incapable of taking a major software product the last mile to deliver a production version that it is willing to stand behind and guarantee its quality.

And, that issue of quality control also leads us to Google’s other major challenge — staffing. This may sound puzzling at first, since Google has been famously lauded as one of the world’s best companies to work for because of its employee-friendly approach that includes fringe benefits like free meals, free transportation, and the ability to bring your pet to work. And, it’s also true that while Microsoft was the most desired destination for many techies in the 1990’s, it has been Google that they have flocked to in the largest numbers since the turn of the 21st century.

Nevertheless, in 2008 new anecdotal evidence has emerged that some software developers are leaving Google because they want to create better products and are frustrated with Google’s lack of organization and lack of dedication to quality control. Meanwhile, some software engineers are even (gasp!) choosing Microsoft over Google when they get offers from both.

Google’s benefits — free meals, free transportation, and even laundry services — have always had a major appeal for students straight out of college. And, Google has hired tons of these students at entry-level wages over the past decade. The problem is that once the highly-motivated workers in this group mature and get past the outstanding benefits at Google, they ultimately want to create great products and get rewarded and recognized for their efforts in building lasting programs that are valuable to users. It’s become clear that some of them are not finding that at Google.

I’m not giving Microsoft a free pass here. When it comes to software quality, Microsoft does not have a stellar reputation. In fact, one of the major “innovations” that Bill Gates pioneered was the idea of releasing software that was good enough, even if it wasn’t perfect. Google’s perpetual Beta approach is, in some ways, just a variation of that theme.

But, Microsoft also has a well-developed, highly-organized internal structure that is almost the antithesis of Google. Microsoft knows how to run a product cycle to move software out of Beta, bring it to market, and stand behind the end product, and the company will likely apply this process to Web applications once they fully commit to it.

While lots of things will change with the move to Internet applications, the perpetual Beta will never replace the traditional got-to-market cycle of software, and pretending that it will is unsatisfying to both users and software developers.

Bottom line for IT leaders

Microsoft is a known entity for IT and the enterprise. The best IT leaders have learned how to manage the relationship with Microsoft, even when they gnash their teeth over the price of Microsoft software and the lack of alternatives. The advent of the Internet as a software platform is going to put price pressure on Microsoft and provide IT with more choices, and that will be a very welcome development in the coming years.

However, while Google has taken a huge lead in search and wants to make inroads into business applications, they will not be a major player in this category unless they can overcome their issues with perpetual Beta software and better organizing the talented developers that they recruit.