Berkowitz also spoke about the challenge I have discussed often, on my own site and here at Seeking Alpha, about Microsoft being both the technology provider and the service provider. His approach to that challenge is to think of his group as acting as one of the best and most innovative users of underlying Microsoft technologies (like any other ISV or ISP), having no special advantage by being part of the same corporation. That way when he gets to run his business like the services and advertising companies he competes with. And then when he gets some sort of inside-baseball advantage, such as seeing into the “corporate vault” as he called Microsoft labs, it’s just a bonus.
One of the most interesting exchanges came when conference chairman Danny Sullivan asked him to compare and contrast Microsoft, Google (GOOG) and Yahoo (YHOO) in terms of its search services. Of course he was careful not to name the other guys in his answer but implicitly he set up an interesting juxtaposition of the three in terms of their strengths:
• All three have great partner communities and wide, broad audiences
• All three have great technologies
• All three can afford to invest in their research/development backbones
• Microsoft and Google also have the necessary wherewithal to invest in the infrastructure that will be needed for the next generation of services
• Only Microsoft has the diversity of business models (i.e., not just an advertising model like Google) and breadth of search-sidebar technologies to really give the next generation “consumer” the total experience
I liked his analysis of the challenge; it makes a good way to look at the three companies as IT investment opportunities as well.