Google Takes the AI Lead from Microsoft at Google I/O, but it May Be Short Lived

To say Google knocked it out of the park at Google I/O this week would be an understatement. After Microsoft caught Google sleeping with OpenAI, ChatGPT, and Copilot but failed to capitalize on that lead due to underfunding marketing, Google took advantage of Microsoft’s poor execution and hit back hard. 

It reminds me of how Netscape and Microsoft fought years ago and how Netscape’s poor execution gave Microsoft the opportunity to cut Netscape off at the knees. While I’m not expecting this dire of an outcome for Microsoft, it again showcases that Microsoft is massively underfunding its marketing efforts, allowing competitors like Google to eliminate Microsoft’s time-to-market advantages. 

At Microsoft Build next week, I expect Microsoft will hit back hard, but if it doesn’t fix the marketing funding and execution problem, Google’s excellent performance could significantly reduce Microsoft’s future AI opportunities. Fortunately, Google isn’t exactly known for marketing either, but it has a huge advantage over Microsoft in that Google has a massive smartphone stronghold. I think that smartphones will be preferred over PCs for AI because we are more likely to have our phones with us all the time. 

Smartphones vs. PCs

One thing was very clear at Google I/O which is that a smartphone could have far more AI potential than a PC. This is not only because you are more likely to be carrying it, but because you can connect your smartphone to your car to give it or a boat, RV, truck, or even a motorcycle, AI capabilities. You just can’t do any of those things with a PC now. They showcased adding Max, Peacock, Angry Birds and other applications and services to cars all enhanced by AI at the event. 

In addition, with the device AI-enabled, a smartphone can see and hear the world. It can identify sounds you hear and objects you see on command, it can help you find your glasses in a cluttered room, help you assemble things (IKEA may become more popular), and it can provide you with critical information on how to use or fix something just by pointing your camera. With Google’s previewed Smart Glasses, it can comment on what you are looking at.  

Smartphones have lagged PCs in terms of interfaces, but AI is able to close that gap significantly. For instance, Google announced Project Gameface where your face becomes a mouse that you control by making faces. In addition, I expect that someone using this feature will unintentionally create some really funny YouTube or TikTok videos. (I’m waiting to see if anyone has the guts to use this feature in public). But creating interfaces for the phone creatively in this fashion could make the PC redundant for some types of gaming. 

When it comes to translation, AI in the phone makes more sense than AI in the notebook because you are more likely to have the smartphone when you are talking to someone. In addition, for getting questions answered, when using a PC, it’s easier to pull out your phone and use the phone’s camera to connect the now visually oriented AI to what you are asking about than bringing up another app on the PC. 

Wrapping Up: Microsoft vs. Google and Build

While I expect Microsoft to hit back hard at Build with its own set of impressive features, the big problem is that it never pulled off the smartphone. The Microsoft Duo phone, my favorite phone of all time, didn’t get much support, used Google’s Android as its OS, and seems to have been forgotten while representing a tiny portion of the smartphone ecosystem.  

Certainly, Microsoft could match Google’s execution on features and capabilities, but if people prefer the smartphone platform for an AI over the PC platform, as I expect they will, Microsoft is screwed. But Microsoft has surprised me before and there is an opportunity to create the device that will replace the smartphone and that will be a path forward for Microsoft. We’ll see next week. 

Finally, it should be noted that Qualcomm, by being dominant at the high end in smartphones and with the most performant part for PCs (the Snapdragon X Elite), they could win no matter which way the wind blows. This will be a fascinating market event to watch.  

This is just the beginning of the AI roll out. We haven’t begun to see what will be possible. 

(Oh, and Microsoft had a chance to create this. Why it didn’t do that and own the high end of the digital assistant space I can’t explain). How much do you want to bet Google has something like this in the works?