You have to wonder if Microsoft execs were dancing the jig after hearing the news that business-minded Google CEO Eric Schmidt was replaced by 38-year-old co-founder and elusive search guru Larry Page.
Page may be a tech visionary who invented the algorithm for Google's search engine, but there is not a lot of confidence among industry analysts that he has the personality and business expertise to run day-to-day operations at a company of Google's size and stature.
"Schmidt was the most business- and market-focused guy they had," says veteran tech analyst Roger Kay. "Larry Page doesn't replace that business acumen, and Google needs to replace it one way or another."
Certainly any time there's a change in leadership at a company, it can be perceived as a victory for the competition. In this case, Microsoft -- one of Google's biggest competitors in various markets -- can take comfort that some of Schmidt's more enterprise-focused projects could fall by the wayside now that the more consumer-minded Page has the CEO seat.
What About Google Apps?
The Google Apps suite for businesses, which costs $50 per user per year and includes Gmail, Google Calendar, Google Docs and several other services, has not been a market share threat to Microsoft cash cow Office, but it did motivate Microsoft to change its business model. During the past few years, Microsoft has made Exchange, SharePoint and Office files available as a low-cost cloud service, originally called BPOS (business productivity online suite) and now called Office 365.
Would Microsoft have put Exchange and SharePoint in the cloud without pressure from Google or created ad-supported Office Web Apps as part of Office 2010 if Google Docs hadn't gained attention and users? It's unlikely, analysts say.
It's possible that Google will take its eye off the Google Apps enterprise movement with Page in charge, given his penchant for prioritizing search engines, YouTube, and the Chrome browser and OS over enterprise software and services.
"If Google lets Google Apps languish, even a little bit, it only benefits Microsoft," says Kay.
Since Thursday's announcement of Schmidt's departure as CEO, Page has not publicly addressed how Google's strategy may change when he takes the helm.
Google's One-Trick Pony Perception Problem
One criticism has dogged Google for the past few years: it relies too heavily on search and search advertising for revenue.
That criticism may be reinforced by the decision to bring back the man who last led Google in 2001 when it was a rapidly growing, but one-dimensional search upstart.
"With its reliance on search for revenue, a lot of people see Google as standing on one leg," says Kay.
If this perception grows, adds Kay, Microsoft can lean even more on its go-to argument that Google is an Internet company designed for consumers, and not fit to serve the enterprise.
Risk of Turning Off Enterprises
Part of the reason Page wanted to be CEO again, according to a Wall Street Journal cover story, is that decision-making at the company had become bogged down by bureaucracy. With this move, Google intends to return to its nimble roots to fend off fast-moving upstarts like Facebook and Groupon.
But Google is arguably too big to run like a startup, and a realignment toward the small could make any enterprise skeptical about Google's commitment to businesses -- which sounds like music to Microsoft's ears.
Nevertheless, industry analysts still believe Google will keep supporting its internal business group and investing in Google Apps. After all, Google's core business of search can't prop up the company forever.
"Google's business group gets good support overall," says Forrester research analyst Ted Schadler. "With Google's core search business under attack from Bing and Yahoo, I would expect them to keep investing in Google Apps for Business."
And Microsoft might not want to get too comfortable with the idea of Larry Page as the t-shirt wearing, Wall Street-oblivious CEO: Page may just be an interim leader as Google looks for another Schmidt, Kay predicts.
"I think they'll realize they need an operations person in that role and hire a COO with a malleable ego who can transition to the CEO," says Kay.
Shane O'Neill covers Microsoft, Windows, Operating Systems, Productivity Apps and Online Services for CIO.com. Follow Shane on Twitter @smoneill. Follow everything from CIO.com on Twitter @CIOonline. Email Shane at soneill@cxo.com.
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