[Disclosure: AMD and Microsoft are clients of the author.]
This week Google launched their cloud gaming service called Stadia which is built on AMD’s processor and graphics platform. Given AMD also supplies core technology to both Sony and Microsoft, this should provide a faster port of console games that are cross-platform to this new service, as well as the promised support for PC games, giving the platform a strong first mover advantage.
The thing with gaming, however, is that it pushes the performance envelope as much if not more than workstations do and if you can do games in the cloud successfully, particularly First-Person Shooters, there is probably little else you can’t do because of the extreme performance requirements Games have.
Microsoft has also just rolled out their Windows Virtual Desktop preview. They haven’t rolled out their anticipated Xbox gaming platform yet but I expect it will be dovetailed with the Windows effort, potentially providing a broader service with huge overlaps to the Google offering. Done right, this would be similar in timing and potential execution to when Lotus came out with Spreadsheets first and Microsoft rolled over them with Office.
I think the edge for both these services, once they each embrace what the other provides, will come down not to technology – because both services should be very capable – but the depth of the bundle, funding and privacy.
Virtual desktop wars
There’s no doubt in my mind that if this were the 1980s and we were talking again about a firm like Lotus and young Microsoft, the outcome would clearly be in Microsoft’s favor. Or if this was last decade when we had young Google and DOJ/EU-crippled Microsoft couldn’t seem to get out of its own way that Google would prevail. But we’re talking the end of this decade and Microsoft is run by a cloud expert (Satya Nadella) that knows how to execute, while Google still seems to shoot itself in the foot fairly regularly (the latest examples are the huge 3rd fine from the EU and the catastrophic failure of Google+).
So, at this moment, Microsoft appears to be executing better than Google on most everything except the control of internet advertising…and governments are looking at that Google advantage seemingly wanting to end it.
So, right now, the Google advantage of being far more successful at providing free or subsidized offerings by using ad revenue is being offset by concerns over their potential violations of privacy and what appears to be a growing belief that they are behaving in an anti-competitive fashion. This is similar to what happened to Microsoft in the 1990s and was a large part of the reason Microsoft had difficulty executing in the aughts.
If you look at the technology, both companies have access to systems and partners that should allow near-equivalent apps and performance. Google’s success with the Chrome PC – and particularly Android – showcase developer support that rivals if not exceeds Microsoft. But not with games, where Microsoft’s Xbox and native Windows support should give Microsoft the edge with developers. This should be offset by Google’s edge in ad funding.
But if Google is constrained from using their one big advantage – access to ad revenue – as a competitive edge, this should give Microsoft a sustained advantage in the competitive effort. Much like a similar problem with Microsoft and the DOJ/EU gave Google an edge in the then-IE-dominated browser wars.
It’s interesting to note that when we began that process Microsoft had better than 90% of the browser market and recently they just acknowledged they lost switching to Google’s Chromium platform. This is a veritable showcase on how powerful a drag governments can be on even massively dominant companies (granted a good deal of the problem was Microsoft stopped investing adequately in the IE browser as well).
This suggests that while Microsoft’s advantages remain largely intact, Google’s advantages will increasingly be offset by government oversight – which should give Microsoft the edge once, and if, they launch a comparable capability to their Virtual Windows with Xbox gaming. That means providing it as a linked offering (as if it was another TV channel) rather than a wholly separate product (which they could also do).
What will define this fight isn’t technology or even app support (though Office and Xbox would seem to give Microsoft an advantage here, depending on how they build the service), but how badly Google is restricted from using ads and access to personal information to fund their effort. Microsoft will itself be gated by how far behind bringing out their own cloud game offering Microsoft is. Not to mention their likely (and valid) concerns about connecting the efforts together without damaging either as a result.
Looping in Amazon 5G
It’s also important to note that neither Google or Microsoft is currently dominant in cloud services. That’s actually more Amazon at the moment, and AWS will undoubtedly step in and has the power to disrupt this fight at any moment. But Amazon doesn’t yet have a truly comparable offering to either Stadia or Virtual Windows, which is where this battle will initially be fought.
Also, for a mobile experience – for either vendor but particularly for gaming – 5G is a requirement to address the latency and bandwidth at the edge issues (with 4G) that badly hurt virtual desktop performance.
This means it’s likely this battle can’t be determined until four things occur:
- We see what Amazon brings to the table
- 5G reaches critical mass
- Microsoft launches their own gaming offering
- Google launches their own complete virtual desktop
One thing’s for sure: by 2025 desktop hardware will look far more like a set top box regardless of whether you’re gaming or working, because it should now be clear that the future of the PC and game console is in the cloud. We just don’t know whether that cloud will be Amazon, Google or Microsoft’s yet.
The danger for PC vendors is that PCs look a lot like set-top box vendors in these out years, and I doubt any one of them wants to be Scientific Atlanta. Let’s face it: none of the remaining PC vendors are well-positioned for this change.
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