Though Google considers Microsoft it’s number 1 competitor, Microsoft does not. In Microsoft’s 10K 2007 filings, it lists Google, among AOL and Yahoo as it’s online competition, while online business segments (MSN; Live) only account for about 5% of Microsoft revenues. It’s bigger competitors are Hewlett-Packard, IBM, Sun Microsystems, Apple, and Lunix. .
Microsoft’s OS, Server and Mobile segments create combined $15 billion in quarterly revenues, while online business only accounts for ~5% of that revenue. Microsoft largely operates on different business fronts from Google. “We generate revenue by developing, manufacturing, licensing and supporting a wide range of software products for many computing devices.â€
Microsoft and Google have different business models. Google is focused on organizing world’s information and improving ways people connect to it, while Microsoft is concerned with developing software, services and solutions that help individuals and business “reach their full potentialâ€. The purposes of both companies are distinctly different and so are their corporate structures. Google is about letting people access information created by others and allow third party advertisers monetize their information. Microsoft is about making and processing your own information and presenting it to others.
$15 billion in transaction purchases and subscriptions slow down Microsoft structure from adaptation to online business model, which is distinctly different.
Google relies on internet and their data centers as the platform. Microsoft relies largely on personal computers as the platform. Two platforms dictate their approach to business and thus Microsoft is simply not build from the inside-out for the internet.
Microsoft’s display advertising is focused on helping publishers monetize their content, like Google, but Microsoft also has a competing platform – MSN. This creates a conflict of interest and puts Google at an advantage, since Google does not create any content at all. Microsoft online business segment works as the content provider and application provider, while Google is only an application provider. Google is partnered with largest content providers which compete directly with MSN. The MSN conflict of interest blocks Microsoft from entering into partnership with the same content providers, who would not want to outsource monetization to the competitor.
The main points are
- Microsoft’s $15 quarterly billions revenues come 95% from computer applications, while only 5% from online.
- Google’s $5 quarterly billions come 99% from online advertising.
- Google is build for monetization of internet content. Microsoft is build for monetization of desktop applications through direct sale and subscriptions.
