Ever since it started to generate revenues at a dramatic rate, Google has been hailed as a kind of successor to Microsoft—on the basis of the idea that Microsoft was the giant of the PC era and Google is the giant of the web era. To put it another way, Microsoft dominated PC-based computing and Google dominates web-centric computing.

In terms of financial muscle it is indisputable. Once Microsoft attained its position of PC dominance, it could not be shifted by IBM or anyone else. Microsoft was sitting on a gold mine (2 as it happens, the Windows OS and the Office Software gold mines). It still works these seams, but it has never repeated these successes.

Google’s particular gold mine was not search itself but ad placement. Google didn’t invent the idea, but it did realize it in a very effective way—and in doing so became the dominant advertising force on the Internet. This coincided with the time that advertising was moving to the web at a dramatic rate, with advertising revenues increasing at about 30% per year (and they still are). This virtually guarantees that Google revenues will grow at that rate—and in fact they are growing faster.

In terms of software ecosystem, Google can also be compared to Microsoft, but actually there are many software ecosystems (IBM’s SAP’s, Oracle’s, etc.) so this is not such a distinguishing phenomenon. Nevertheless the inability of competitors to dent Google’s momentum (in its chosen markets) and the enthusiasm of its developer community is formidable.

To my mind there are two questions we can ask about Google:

1. Will it really establish a large user base for its “alternative” (web-centric, web 2.0 etc.) word processing, spreadsheet and other products (in 2007)

2. Will it retain dominance of search. (in 2007)

My answer to the first of these questions is “no”. It’s too early for many companies, even small companies, to depend on web-centric computing. The simple reality is that the web is not ‘always on’, so you need in-house PCs or Macs. Co-ordinating the in-house files with files located on the web is either too hard or too much bother for most businesses.

The answer to the second question is almost certainly “yes”, although it probably shouldn’t be. Google is very sticky as a search site. It is easy to standardise on it. But in my view Google search simply isn’t very good.

OK, it was/is a lot better than AltaVista, Lycos, Yahoo and MSN—which is why most of the web, me included, voted for it with their browsers. But last year was arguably the year of the social network and, along with many others, I subscribed to Del.icio.us, Digg, and StumbleUpon. These sites demonstrate the power of the people working together. In essence these sites are no different to Wikipedia, except that they have provided access to collective opinion rather than collective knowledge.

So if you are not familiar with them: Digg provides you with links to news stories and blog postings that are getting attention, StumbleUpon simply provides access to web pages that will probably delight you or interest you and del.icio.us provides a mixture of Digg-type news postings and quality reference sites. Personally, I was so impressed with the quality of Del.icio.us links that I now use it as an alternative search engine… and that’s the point.

Now Del.icio.us was not designed to be a search capability per se, but it turns out to be a good one. But I picked up the news recently that one of the creators of the Wikipedia has set up a company, called Wikia, to create a purpose designed user-driven search. If the design work is good it will get traction and if it does, I think it will take search traffic away from Google. So I suspect that Google’s dominance of search will get challenged.

However I certainly don’t expect this to dent Google’s momentum much. Most likely Google will pick up the ad business from Wikia or any other site that establishes a popular search capability.

A final note on Google. I have been hoping to see some genuinely new technology emerge from Google and, to my mind, it hasn’t really done much since Google Earth. With any luck there will be something to admire this year.