Umm, Google is not the biggest software company in the world. Microsoft and Cisco, to name two off the top of my head, are both bigger than Google by revenue and market cap.
Microsoft used to be the biggest software company in the world; not anymore. Google innovates; microsoft doesn't innovate anymore. Search is to the web what window is to the desktop. The desktop is dead, everything is on the web now. Goog controls 60% of the search market share; MSN barely controls 10%. Microsoft is doing everything possible to catch google in search; goog doesn't care about PC operating system.
IBM has a market cap of $160 biilion, and $100 billion revenue, but who cares. When was the last time IBM did something to make your life easier?
Cisco designs, manufactures and sells Internet protocol (IP). That's not software; that's IT.
Sure, Microsoft today is not the force it was 10 years ago. But to say that "Microsoft doesn't innovate anymore" is a bit far-fetched.