Microsoft’s Unstable Triangles
Source1: http://searchenginewatch.com/article/2205504/Bing-Gains-More-Ground-in-Search-Engine-Market-Share-Yahoo-Resumes-Downward-Slide
source2: http://news.cnet.com/8301-1023_3-57523855-93/google-becomes-no-2-most-valuable-company-in-tech/
Over the past several years, as we’ve all realized, Microsoft, once the top of the tech world, has been in steady decline, pc sales are continuing to decline, the “Windows phone” smartphone operating system is battling Blackberry for a mere third place, it would seem only Microsoft’s search engine Bing is increasing in productivity, given its recent market share increase. but why are Microsoft’s technology sales decreasing while their search engine seems to be gaining ground on Google, the undisputed search giant for years? The answer lies in unbalanced network structure.
To simplify a network we think of a network as people, or in this case companies, connected to each other by social bonds that are either positive or negative, if they’re on good or bad terms respectively. A two person, or two node, example would be rather trivial, there would be either a positive or negative bond connecting them and those are the only two variations. To make this useful we use a three node example where everyone can have positive bonds to each other, negative bonds to each other, or two of either. At this point these networks become much more interesting because something that was not in the two node example emerges; stability. Let’s take for example a network with three nodes, where all the nodes have negative bonds to the others, in a real life scenario, this is subject to change at any time because, at some point two of the nodes will try to combine with each other to overtake the third, thus the network changes to one in which two of the nodes are positively connected to each other, and both of those companies or people, have negative bonds with the third. This new structure is stable so to speak, because without other factors it is unlikely to change any time soon.
But what do nodes and positive bonds have to do with Microsoft? well let’s start with what their doing right; Bing. Over the past several months Bing has been increasing in market share, at the expense of the longstanding competition Google and Yahoo, this search engine trio represents a three node network. Together, they control virtually the entire online search market, and when Bing first came around each of the three companies considered each other competitors, which is to say negative bonds. As in the example before if there are three negative bonds, it is likely that two will form a positive bond with each other to try to overtake the third, in this case the third is Google. Bing and Yahoo formed a partnership in the internet ad space game, and Yahoo’s search is run by Bing. This means Bing and Yahoo currently have roughly a thirty percent market share, and since their competition ended, they’ve been only increasing, because this new network is a stable one.
But then, why have they been continuing to fall from the top, why did Google’s value recently surpass Microsoft, making Google the second most valuable tech company in the world? Well it’s an entirely different network, though still with three nodes; mobile phones. The two big players in the smartphone operating system world are Apple with IOS and Google with Android, and try as it might Microsoft has been unsuccessful in truly establishing itself as a big player in the market. To understand why let’s look at the network; three nodes, Microsoft, Apple, and Google, and each one has negative bonds with the others, an unstable network if there ever was one. As Apple and Google battle on, it has become increasingly difficult for a third party to make a dent in the smartphone world, just look at Blackberry. But as most other tech companies are picking sides, such as Samsung with Google against Apple, Microsoft has chosen the harder path, by forming negative bonds with both Google and Apple, by way of creating their own operating system, Microsoft has made an unstable network, a move that so far has not helped Microsoft gain a stable foothold in the smartphone market, and only time will tell if it was a good move at all.
-MG