How Google Clobbers Microsoft
However, these two companies are by no means doing equally well. Let me explain how Google(GOOG) is sucking the lifeblood out of Microsoft, and it's going to get a lot worse in the coming quarters and years.
Microsoft grew revenue year-over-year by 7% and adjusted EPS by 6%. This compares to Google, which grew revenue (exclusive of Motorola) by 21% and adjusted EPS by 20%. In other words, Google is growing three times as fast as Microsoft.
Microsoft is in the midst of the biggest worldwide computing boom in history, with billions of people around the world starting to afford computers -- whether residing in their hands, laps or on their desks -- for the first time. So why is Microsoft growing so slowly, hardly keeping up with more commoditized old-world businesses?
Google, that's why.
Ask yourself this question: How many people do you know who have switched from a Google product to a Microsoft product in the last year? Two years? Ever? Exactly, me neither.
Let's mention four major product areas where Google is beating Microsoft:
1. Productivity software
Microsoft Office is Microsoft's biggest profit center because -- you guessed it -- it typically costs a lot of money to use it. Some versions of the Office suite has cost as much as $450, although many people, including students, of course pay less. Google sells laptops for $450, and the software is provided for free for individuals and small businesses.
Everyone knows Gmail beats Hotmail. That's why almost all of your friends -- at least those under the age of 50 -- have switched.
Depending on whose market estimates you use, Android has around 50% market share, whereas Microsoft struggles to achieve 5%. This is the biggest market in the world, and Google is beating Microsoft 10 to 1.
4. Social media
In one year, Google has reached 250 million users, or one third of Facebook's. Yes, user engagement isn't quite there yet, but who thought one year ago that Google would even be close to 100 million by now? What does Microsoft have? A stake in Facebook. Better than nothing, but a relative embarrassment compared to Google.