January 25, 2011, 2:17 PM — Why was Eric Schmidt suddenly demoted as Google's CEO ? There are as many opinions as there are analysts, but I think the reason is clear: Google is worried that it's suffering from Microsoft syndrome, and thinks having Schmidt step aside may be the cure.
What is Microsoft syndrome? There are several symptoms. One is when a tech company becomes so successful in a market and grows so quickly that it overlooks potential new markets. Another is when a tech company gets so large that it becomes increasingly difficult for it to innovate.
To understand why Google has begun to suffer from Microsoft syndrome, you have to take a look back at Schmidt's tenure there. He was hired in 2001, when Google was privately held, still relatively small and run by two brilliant engineers who knew a lot more about Internet search than building and running a successful, profitable company.
Schmidt, who had previously been Novell CEO and Sun CTO, was brought on to bring business discipline and focus, establish a clear business plan and then put it into effect. As he has frequently said over the years, he was brought on to provide adult supervision.
He's certainly done that, and turned Google into a profitable powerhouse that's dominant in search. Without his guidance, it's unlikely that Google would be as successful as it's become.
But on his watch, Google missed the next big thing --- social networking. Facebook, launched in 2004, became a worldwide phenomenon , and according to the Web-tracking site Experian Hitwise, became the most popular site on the Internet for 2010 among U.S. users , with 8.93 %of all U.S. site visits, compared to 7.19% for Google. (To be fair, though, if you add in all of Google's sites, they beat Facebook , with 9.85% of visits.) Google's own attempt at social networking, Buzz, was poorly designed and indifferently received, and it's rarely used.