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"In the Google case, what's fascinating to me is that although you can characterize Google as a search compete, there are two very significant things that happened at Microsoft [as a result]. One was the recognition of advertising as an economic engine," Ozzie said. "And the other was services-based infrastructure. Once the realization was made by different groups that every product would have a services component, you go back to the company's platform roots and figure out what kind of platform treats the services layer as a system."
Google is beating MS with online services, which are inferior to the core Office programs. That's gotta hurt. Their only way to compete head on would be to devaluate their most lucrative product lines. Now that we're dealing with a kinder, gentler MS are they up to the challenge?