Microsoft is now worth more than Alphabet | Hacker News Reader

Microsoft is now worth more than Alphabet

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209 pointsBhilai178 comments

As a long term investor, I'm worried with Google. All the bills are paid by ad revenue, a single horse. Then there is this bubble of claims that they have the best engineers and work environment yet this has not produced any other business equivalent to the ad business. Then they have a reputation of creating awesome tools that then get killed in years, enterprise customers don't like this unpredictability. Microsoft on the other hand is the master of supporting old platforms, I've seen some really old apps (from the 90s) run on the latest OS's. Enterprise loves this and that is were the money is. The only clear strength I see on Google is that they are masters of advertising and I see how they sell to developers that there way is the way to go. That is a good HR strength since they will always have a pipe of engineers that want to work for them.

Microsoft's killing of products and services is actually more prolific than Google. In fact, two more products were just killed today (Groove iOS and Groove Android).

Imagine how profitable Google (as in the division of Alphabet) would be if they eliminated all the distractions other than the cash cow ad business.

Ads are Google's business model, but they make their major money from a few different leading products : Search, ad platform(both internal and external), YouTube, Android.

All these Google platforms have lost my decade-long patronage recently due to inability to find what is needed (google thinks it knows me better than myself) and personal-info-commodification.

Do you have a reference for these claims?

Search and Youtube seem to be ad hosting platforms, and "ad platfom" seems it would be from ads. The Android ad revenue slice seems to be missing from Google.

Google's "other revenues" (mostly Cloud and Play) was $14B as of their last 10-K, growing at 40% YoY. That pales in comparison to their advertising revenues, but if you just had an isolated business (not part of Alphabet) with $14B in revenue growing 40%/year, that would be a pretty attractive stock.

(For comparison, HP Enterprise has about $28B in revenue with negative growth and is worth $23B. At current growth rates, Alphabet's Cloud segment will surpass HP in revenue in 2-3 years.)

IIRC Azure is bigger and growing faster than GCP, so valuing MSFT more highly doesn't seem crazy.

Uh, corporate gmail? They have to be making non-ad money off corporate Gsuite products (gmail, calendar, drive:docs/sheets/slides).

I've been at companies that have used other forms of internal corporate email, and all of them are worse. Open source/roll-your-own, On-prem Exchange, Cloud-based Office365, what have you... all of them suck.

lots of companies use google, but I still don't think its even close to their ad revenue.

to any curious, you can do `dig example.com MX +short` to see their mail MX records.

example:

    dig stripe.com MX +short

Interesting. Did you glance at the latest Google I/O? There are a ton of things on the horizon that will continue to keep Google very relevant and generate money. For one, I'd like to point out Waymo. Autonomous transport seems like a pretty big business. From my perspective, Google has the lead in AI right now and it shows in all the products that they're beginning to push out.

A lot of engineers work on ads teams. I heard it once before, but search is Google's core. Without search, their ad-serving isn't very profitable. Everything else is a moat around it - Gmail, Drive, Calendar, Chrome. Most media companies are built around the advertising model.

I can't say that you're wrong. Enterprise software does generate a lot of revenue and Microsoft does support it fairly well. Microsoft has also had some wins as of late.

A lot of Google's revenue comes from ads, but I wouldn't label it a "single horse". It's really a stable of horses if you're counting YouTube #2 most visited site and the other revenues its generating from it's G Suite, people paying for Drive, cloud services, etc.

I may be blinded by my bias toward Google products, but it's also crazy that I don't use a single Microsoft product at the moment -- I don't boot my old PC with Windows. I don't own an X-Box. I don't own a Surface. I don't use Word or any of the Office software anymore. I don't use Azure or VS Code as my editor as a software engineer. However, I do know a lot of .NET developers.

>>Enterprise software does generate a lot of revenue

Enterprise is just the tip of the iceberg.

Almost anybody who can't afford to buy Apple's expensive products(Which is like everybody) has to buy Microsoft.

Also with the latest hardware goof ups, the top end customers could be soon going to Microsoft.

Kind of interesting to see Microsoft & Amazon 'passing by' Google lately, considering how much more earning power they have than either of them.

Even if Amazon didn't spend a dime on R&D the most they could've earned on operating income is ~$26B, if Microsoft zeroed out their R&D they could've had about ~$35B.

Meanwhile, if Google decided to go full-profit last year they would've had on the order of $42B.

Clearly some investors don't believe in Google's moonshots.

So far have any worked out?

No one will ever know because those products were killed off...

Gmail and Android can be considered moonshots, completely separate bets from the cash cow search product. They have both been enormously successful and been the starting point for new revenue lines (the whole GSuite for businesses, the Play Store)

Next moonshot which looks extremely promising is Waymo

Not unlikely, but as well; both the stock discount and the moonshots have to do with Google being so dependent on one source for its income (ads) as others here have noted.

That's not a very good accounting comparison.

If Microsoft had zeroed out their R&D last quarter, they'd have produced $12 billion in operating income. Your $35b figure includes a fluke quarter.

Microsoft's trailing four quarters figure, with R&D zeroed out, will jump to ~$47 billion once the present quarter is reported. Google's trailing four quarters figure will be similar, around ~$48 billion, assuming their present quarter is close to the prior three (which are at about $36b together, with R&D zeroed out).

I tallied those amounts using the before-tax operating income, both companies reported adjusted losses in Q4 because of the tax overhaul

>Google’s demotion is undoubtedly only temporary.

I think so, the revenue trend for Google is too strong. Google passed Msft in revenue in FY2016 I believe.

But the public perception around Google has taken some hits, and Microsoft has reformed its public image.

>Still, this is big news for Microsoft who has shifted focus under the leadership of CEO Satya Nadella

Hope so, I've been bullish on Nadella.

The surface line is the first time I looked at a PC and went: "OK, that's a cohesive computing unit". Like, overall I've always been a Windows/Linux/FreeBSD guy, and despite hardware being very power, there's never really been slick, cohesive option excepting the occasional HP Envy, Thinkpad X1 Carbon, Dell XPS 15, etc.

The entire Surface line (hardware wise, RT was a software fluke) has been slick though, IMO.

I've really come to admire Satya Nadella as a great CEO.

This was a good HBR ideacast interview with him:

https://hbr.org/ideacast/2017/09/microsofts-ceo-on-rediscove...

To really get my respect he needs to kill off ads in the Windows start menu and the pervasive Cortana surveillance.

To really, REALLY get my respect: I would like to see Microsoft be a pure, best-practice software company. Do GREAT things independently of Windows. Make native Mac applications that are truly great. Make a better Mac application than Apple can. Make better iOS apps. Be a champion of Linux. and so on. Strive for greatness on every platform, embracing that platform's uniqueness.

IMO: Outlook on iOS is a better email client than Apple Mail.

I think Microsoft IS doing great on other platforms, and even open-source stuff. Of course I'm blinded by having a fanboy level love for them.

Except Windows 10. Reading Raymond Chen's blog, I was always led to believe Microsoft wanted to give the user the power, no matter what, even if it mean shooting yourself in the foot. Windows 10 seems to be the end of that. Stop taking away my power as a user Microsoft. I paid for the damn computer, don't act like it's your property.

VS code is on that list already

Haha. Really?

Microsoft actually ports their software to Mac, using native APIs and idiomatic software design, for the platform:

http://mac.softpedia.com/get/Business/Microsoft-Office-2011....

Meanwhile, Apple brings the exact same software as is on macOS to Windows, with no thought to integration:

https://www.windowscentral.com/sites/wpcentral.com/files/sty...

I wasn’t aware that this was an old school Apple vs Microsoft debate. But alas.

I don’t know if you’ve actually used the latest Office for Mac. It’s better than the older versions, but it’s still obvious that MS isn’t fully proficient in macOS development. For starters, the interface doesn’t respect the scaling settings on my 5K iMac. I’d expect that sort of shoddy UI from Steam or something.

The fact that iTunes for Windows is trash doesn’t change this fact at all, so I don’t knkw what you’re getting at.

Two large changes for better in Microsoft:

1. 2006 Bill Gates stepped down as a Chief Software Architect

2. 2014 Satya Nadella became CEO after Ballmer.

Gates was good CEO but he was not a good Chief Architect. He had the knowledge, the intelligence and skills, but he had no ability to do good high-level choices. Chief Architect needs to know when to sacrifice in details to get the whole slightly better.

Microsoft is not known for innovation,but they should have been able to do gradual refinement better under Gates. Microsoft was really starting to crumble under the completely unprincipled approach to large scale architecture.

> Microsoft is not known for innovation

um, okay.

They aren't. Almost most innovation they've tried to implement in the market have gone underappreciated or forgotten. That means they're "not known" for their innovation. I don't think Nokinside is saying Microsoft is not an innovator.

Then again, most of their money comes from products that are specifically borrowed concepts, competitively forced into dominance, with more purchase incentives than their competition, and before other companies could even get a foothold. So maybe that's what Nokinside meant.

Either way, I'm not surprised when people kick Microsoft for a lack of innovation. Nadella's focus on increasing innovation at Microsoft alone is evidence that they haven't been doing enough.

Please make comments that actually contribute to the discussion. If you don’t care to defend your stance, don’t say anything.

>Microsoft is not known for innovation

Can't really agree on this point. Microsoft has historically done a lot of research and innovation, what they weren't really good is making a product out of that and bringing it to market.

Microsoft is now worth more than Alphabet. Fixed that.

Alphabet includes Google but also all their other companies. I wonder how many of these included companies are not profitable entities at the moment but future investments and dragged Alphabet's value down a bit.

I don't know. I'm just sayin'.

Non-profitable companies under the Alphabet umbralla are, as the name suggests, bets. Investors in stock usually take that into account and price in what they think the potential value that they can generate is.

I find this inline with my own positive vs negative views of microsoft over time.

I spent a good part of my early career in the 90s building products on windows and both fearing and admiring microsoft - but mostly fearing and hedging my skills on linux.

In the 00's microsoft seemed almost like a non-player and their products mostly legacy.

But since windows 10 and my recent experience building on Azure I've been pleasantly surprised and find my view of them back on the positive side.

I'm particularly impressed with Azure -- a few years ago I wouldn't have thought they could have created a competent alternative to AWS ..and here they are.

They are very different companies culturally -- attract different kinds of people. MS is better in business, Google better in tech. In MS you would have to fight for the permission or space to make something better if its already bringing in enterprise money, where 'making better' could mean well known bugs with possibly easy fixes. At Google it used to be ok to make something better to scratch one's itch, or just because it really ought to be better.

Good to see someone from Bhilai on HN community?

He's not from Bhilai, he IS Bhilai!!! :P

I'm puzzled why "Proven"s comment is dead? What they wrote seems accurate. There is no reason why this comment should be downvoted, and certainly no reason why the comment should be dead. This is what they wrote:

      Simply speaking they actually make more products people like to use.

      Google essentially has just one, and it’s based on diminishing user privacy to the maximum extent possible.

      MS collects user data but so do Ubuntu and CentOS... not to the extent Google and FB do it.

That is absolutely true. Microsoft has a huge range of products. It produced three of the most profitable products in history:

Microsoft Windows

Microsoft SQL Server

Microsoft Office

For awhile, circa 2005-2015, there was some thought that Microsoft's products were going to be replaced by online equivalents, and was a contributing factor that held down Microsoft's stock at that time. But it is now clear that Microsoft's products are going to survive. Partly, Microsoft has adapted to the online world, and partly, large enterprises are more comfortable with Microsoft's model, rather than Google or Zoho or Wufoo or any other online replacements.

Microsoft Excel remains the default lingua franca of business. Google Docs and Spreadsheets has not replaced Office.

And SQL Server continues to have a huge number of fans, even in a world full of very good open source databases.

>certainly no reason why the comment should be dead.

probably shadow banned. take a look at his comment history.

HN actually has a feature so people with a certain amount of Karma can vouch for a comment like that and make it visible.

I got rate limited somehow and I can't figure out a way to even know what comment(s) / discussions kicked it off or how to remove it. Almost 5000 karma. Pretty frustrating.

Welcome to the club. You can't remove it on your own. Gonna have to grovel to a mod to convince them you can be trusted with more than 5 comments/day or whatever it is.

It's been a long time since Google just had one product. I'm sure anyone here could name a dozen.

Why say things that everyone knows to be false?

Depends on the point of view really.

Google's single product: you.

I don't understand this. I spent $100 on a Google VR headset recently. It has no tracking or weird crap that would count me as a "product". What are you talking about?

Google has a lot of products, period. Many of them have ASPs in the hundreds of dollars. Google sells real products.

Look at this chart and you’ll see what he means:

http://ritholtz.com/wp-content/uploads/2017/11/cotd52602.png

you really can’t compare them to microsoft

If you want to say that Google gets most of its revenue from ads, say that. It doesn't mean it's okay to say random falsehoods.

While anecdotal, I only know one person that still uses Microsoft office, and that is just for Excel. Everyone else is libre office or Google docs. I grew up on office but once they introduced that stupid ribbon menu I ditched it. Apparently I was not the only one.

The ribbon menu is quite excellent and makes office usable again. I know so many people that use office, it's also the standard suite in my workplace and probably most others that aren't startups. I much prefer latex and git for doing editing but word is quite functional.

The ribbon menu introduces problematic issues in newer versions of Office for add-ins. Add-ins can't effectively update controls for non-active windows via the COM interface. For instance, if you have a text-box within an add-in Ribbon menu, a non-active window will not display the appropriate text for that window.

Well, to be honest - it's not exactly a Ribbon issue. It's an issue with Ribbon moving to an SDI interface with Office 2010. Office 2007 worked fine, 2010 and later bomb with the aforementioned issue (at least as far as Office 2013 - last I worked on Office Add-ins).

> While anecdotal, I only know one person that still uses Microsoft office, and that is just for Excel. Everyone else is libre office or Google docs. I grew up on office but once they introduced that stupid ribbon menu I ditched it. Apparently I was not the only one.

That's highly anecdotal. It's probably not much of an overstatement to say that a large fraction of the economy literally runs on Excel notebooks.

work at large company. can confirm.

Also anecdotal: The ribbon menu made me switch back to MS Office (and thus Windows) for private use.

I recently made the switch to Budgie Ubuntu as my main desktop, god I hate libre, almost as much as I hate Google docs. Office 365 is much better. I’m forced to use Google docs at work :(

Sounds like: http://www.azquotes.com/quote/1399476

It's partially why there's 1001 food delivery apps meanwhile EHR/EMR software is still a joke.

While I agree with most of your points, this one seems arguable:

> Microsoft Excel remains the default lingua franca of business. Google Docs and Spreadsheets has not replaced Office.

Google Docs, Sheets and Slides have taken over the education market from elementary school through college, and for many businesses Google's offerings have become interchangeable with Microsoft's. Outlook and Excel still have a strong hold on larger companies because Google hasn't matched features, but Google Docs are much easier to share and collaborate with coworkers.

That used to be true but it is no longer - Office 365 has a far higher revenue and growth rate than Google Apps - and when you are a corporate customer, it is far better integrated into your existing IT investments.

LibreOffice is now an excellent alternative for both business and home use.

Is it really?

I have occasionally tried open office and clones for a very long time and "adequate alternative" was the best impression I ever got and far from the worst.

Just to be clear, LibreOffice is not a clone of OpenOffice. It is OpenOffice -- the project was forced to change its name for legal reasons.

It was forked from OpenOffice after Oracle bought OO, and most of the core developers moved to LibreOffice https://en.wikipedia.org/wiki/LibreOffice

So, by any reasonable definition, Oracle's (and now Apache's) version is the fork, and LibreOffice is the main line.

LibreOffice is a continuation of the original development team, and the original code. The only thing they don't have is the name, which doesn't matter much in my mind. So why do you say that what's now called "OpenOffice" is the main line, and "LibreOffice" is a fork? What's your definition of a fork, exactly?

LibreOffice has never been an excellent alternative, IMO. It comes across as a mediocre port of a copy of Excel from 15 years ago.

Teaching users who are not great with computers and who know modern excel how to use some 1999-era LibreOffice Calc software is not fun. LibreOffice recreates the worst parts of menu/modal hell and it's not a place the modern user is good at navigating.

In every case I recommend Google Sheets over Calc these days. So much easier to teach, more intuitive design, and more simply interoperable with the outside world.

While I appreciate the colossal volunteer work that the LibreOffice people have done, I don't like it.

It is in essence the same as StarOffice from Sun, an office suite that wasn't even very good back in the Sun years.

I also think Hacker News lens might be focused on smaller companies and startups where Google Docs and G Suite have become much more prevalent.

I'm in touch with lots of accountants and they wouldn't change Excel for anything.

the truth is students and small companies just use google because it’s free for them. this dijesng apply to mega corps

The reality is that more than 4 million businesses use G Suite - including "mega corps".

versus 120 million office 365 users? and 1.2 billion office users.

https://www.zdnet.com/article/microsoft-office-365-now-has-1...

https://www.windowscentral.com/there-are-now-12-billion-offi...

The biggest public university (free) in my country gives office 365 for free to it's students.

I agree with your comment but as it stands the business market is MUCH larger than the education market. Most schools don’t use either or don’t pay much. Schools are seen as essentially a small vertical in the extremely large market. Just think of all the companies who pay for 20,000 microsoft licenses. A lot of the market you describe is free.

The education market is important to recruit future customers though.

The education market is a lot.more important than that .

Companies like Matlab, Autodesk prioritize getting young engineering students familiar with their products, so that the industry ends up adopting their products more willingly.

Just left a place with 17k+ G Suite accounts (K-12). They used free G Suite. Google is ingenious in how they are "certifying" educators on G Suite. The price for the tests are incredibly cheap < $50. They didn't even think of going with Microsoft, even though tiers 1,2 are free with tier 3 being $2 per user? for K-12.

State government is exactly the opposite. While not trivial standing up a shared AD tenet is easy/doable and gives you quick SSO in the cloud for .NET based web apps when everybody (logins) is on the tenet/AD. Quick being the keyword.

> Google Docs, Sheets and Slides have taken over the education market from elementary school through college

Which market? Surely not in Europe.

Until you need to do something hard. Then Excel and Word are easily the best tools.

I'd like to see multi-version financial forecasting models done in Google Docs. Or a complex mail-merge from Google Docs from a on-prem data store.

There's a difference between online tools that you can use in a pinch to enterprise productivity tools.

I might agree with regards to Google docs, but I would jump back to excel/PowerPoint the second my company makes it freely available to me.

Google offerings are good, but I frequently find myself wishing they could do more. I use docs/slides and sheets a lot more than Microsoft's offerings. But, that is because I am on Linux and a grad student. Also, a programmers job involves only rudimentary use of all 3 services.

But, when using those tools day in and day out, the small differences make quite a difference . It is similar to using blender instead of Photoshop. Sure, it does the job, but I would use Photoshop if my job depended on it.

Give Google a little more credit. They have 7 separate products with over 1 billion users each [0]. Search, Gmail, Android, Chrome, Maps, Youtube and the Google Play Store.

[0]: https://www.popsci.com/google-has-7-products-with-1-billion-...

Agreed, but they still make like 90% of their money from ads.

You're close. The number is currently 86% and has been falling over time.

https://abc.xyz/investor/pdf/2018Q1_alphabet_earnings_releas...

Oh. I stand corrected. Thank god all those PHD's are working on showing me ads. We're saved.

Those have strong user counts because they are free or significantly less expensive than alternatives. Search is free -- if they decided to charge anything for search, people would switch to yahoo or bing in a heartbeat. If they charged for chrome, that would be a red letter day for Firefox. Android would see a hard fork.

But among all the free search engines people choose Google. That has to mean something. It's true after all that competitors are only a click away.

And I'm saying this in spite of being less and less happy with Google's search results lately. It has become very difficult to prevent Google from generalising queries beyond all recognition.

The stock market doesn't care about users, it cares about profits.

Android and Chrome and Google Play are unprofitable.

the data they collect on those platforms feeds back into improving their ad business. It does not make sense to look into "Chrome" as a business in itself.

> Google Play are unprofitable.

???

https://techcrunch.com/2018/01/05/app-revenue-climbed-35-per...

$20B in revenue.

sales != revenue.

with the 30% commission, it would be at most $6B. From http://money.cnn.com/2018/02/01/technology/google-earnings/i...:

> Alphabet posted nearly $15 billion in sales for the year from Google's "other revenues," which include cloud services and hardware products, like the Pixel phones and Google Home smart speakers.

Sales is, by definition, revenue. In this context, sales=revenue (although there is non-sales revenue, which is why the two words mean two different things).

I think you're getting at what is sometimes called "cost of revenue" and "net revenue" for businesses where it's important to report on sales channel costs.

Google doesn't break down the Play Store revenues this way, but for advertising there's a similar dynamic at play where it's "revenue" and "traffic acquisition costs"

Play Store sales != Google Revenue. Google gets a 30% cut, the rest goes to the app developer.

Even $6B is extremely far from the unprofitable claim.

This type of "cares about one thing, not the other" is close to be nonsensical:

Market is complex, there is not one thing or another can explain.

How is the app store unprofitable? Serving too many free apps?

It costs like ten dollars sometimes to rent a movie that probably costs them $0.30 to stream to me, they gotta be making some money

And how much does the studio charge to luscence the movie? Surely you didn't expect that was free?

Well surely it's not 9.70/user either

Also, it's on the same infrastructure as apps so they already have a good backbone for delivering it

I believe the Oracle lawsuit showed that Android and Google Play are both quite profitable. Contrary to popular belief, Android is not free. You can download and install AOSP for free, but "full" Android including the Google apps, Google Play Services and the Google Play store cost real money. And Google has sold billions of those. They might not charge much, but when you multiply by a few billion it can still end up being a big number.

On the contrary, by being free beer it means many OEMs avoid paying Java licenses and try to use Android instead, thus diluting the Java brand.

So it is not about the profit Android brings to Google, rather the money Oracle looses by OEMs not paying for licenses.

It's dismissive, simplistic comments like these that makes me sad for the HN community. Not only it this actually just wrong, Google's investment in it's various products have complex relationships with one another. The recent post about "commodify your complement" does a good job getting into this specific case

In use both companies products.

Os = Windows en android. Docs en Office Chromecast Xbox 360+ kinect Google Azure Google cloud for maps api

And in addition to the desktop offerings, they have Azure which has decent corporate penetration, and Xbox which fairly successful in homes. They really dropped the ball on mobile, but perhaps they will claw some back through Surface.

>MS collects user data but so do Ubuntu and CentOS

Wow, that wins the most disingenuous statement of the year. Ubuntu just asks for your system configuration, which you can say no to.

https://www.omgubuntu.co.uk/2018/02/ubuntu-data-collection-o...

Microsoft's data collection is far more insidious and can not be disabled.

https://www.computerworld.com/article/2968288/microsoft-wind...

Microsoft also collects:

- User contacts

- Calendar data

- Location data

- Keyboard input (keylogger)

- Microphone input (wiretap)

- Local files

- Installed programs

- How long you interact with programs

- Browser history

I hope you are aware you can vouch for dead comments?

> Google essentially has just one, and it’s based on diminishing user privacy to the maximum extent possible.

You seem to be defending Proven, so why do you think this is correct?

Google does not have just one single product. It may have only one "profitable" product through direct sales (adsense) but Google offers many popular services, Gmail, Google Hangouts, Google Drive, Google Play, 8.8.8.8, GCP to name a few. Not to mention, Google is the driving force behind a number of open source technologies, such as Android, Kubernetes, Golang.

The funny thing about this is that I don't really care about defending Google against Microsoft. I just think it's strange that you, nor Proven, are trying to be factual about this.

I just checked the market and as of 2:30 PM EST Google is now worth more than Microsoft.

Somebody should write an article about this.

yeah not sure why this was news worthy. Over the last couple of weeks, MSFT and GOOG have been trading places pretty often

They have been trading back and forth for a while.

Why is this suddenly news?

> Google’s demotion is undoubtedly only temporary

Why?

Simply speaking they actually make more products people like to use.

Google essentially has just one, and it’s based on diminishing user privacy to the maximum extent possible.

MS collects user data but so do Ubuntu and CentOS... not to the extent Google and FB do it.

For Google, there's also Android, Gmail, Google Drive and Google docs

Overwhelming majority of revenue for Google doesn't come from consumer devices and services... but rather, from advertising. Microsoft has tried hard to get into that arena, but it seems nobody can really edge out Google.

Of course, most of Google's devices and services funnel data into the advertising system... but they also do have paid services that are pretty popular, GSuite (Google Apps for Business), Google Domains, Google Drive Storage (paid storage above the 10GB they give everybody for free), and some others.

One thing that gets confused is that ads are a business model not a product or service.

MS got their foot in advertising, don't think of Bing as a failure at $5 billion revenue.

Even in advertising it’s arguable that Facebook has become stronger than Google. FB ads already command a premium over Google ones. While Google is still gonna be the dominant player for the foreseeable future, it’s definitely a risk.

FB may charge more... but you don't constantly see articles about how ineffective Google advertising networks are, and they own a lot more than just one advertising network.

Fb ads are partially over.

Source: ecommerce groups on fb

I can't understand why MS hasn't made an Adsense competitor, it'll be a fairer fight.

Plus YouTube which now serves over 1.7B hours of video a day. But then Google also has others climbing like Google photos.

Google has now the most popular smart speakers in addition even though came later.

https://www.zdnet.com/article/google-overtakes-amazon-in-sma... Google overtakes Amazon in smart speaker market in Q1 2018 ...

For Microsoft...there's Android

"Financially Microsoft is one of the biggest winners from the growth of Android as a platform, thanks to its wide range of patents."

https://www.forbes.com/forbes/welcome/?toURL=https://www.for...

They only make money on ads, though. Unless I'm missing something...

Google owns five of the top ten apps used on all smartphones. Not aware of any for MS?

Plus Google owns the top 2 web sites.

http://www.businessinsider.com/most-used-smartphone-apps-201... The 10 most used smartphone apps - Business Insider

Microsoft owns five of the top ten platforms used by enterprises. These enterprises pay them tons of money to make these platforms run, some spending more than $100M each.

sometimes i think people can’t comprehend of products that aren’t in the consumer sphere.

Hence their shock when they realized how Facebook makes money.

Loved in the Silicon Valley pilot when Gavin Belson sneers at Richard's app because it's for consumers not enterprise.

I think it's willful disdain for corporate culture, the last vestige of anti "selling out".

Ever tried Office Lens of Office?

> MS collects user data but so do Ubuntu and CentOS... not to the extent Google and FB do it.

They're working on it though.

I just installed Windows 10 for the first time on a brand new computer I bought. I was shocked to discover that I could not make an account on my own personal machine without "logging in" to a Microsoft service either with an existing or new email address. I looked up tutorials to skip that step but they all pointed to a button ("No account" or something like that) that was not on my screen, I swear. No button was provided to skip logging into a Microsoft account. Next, I had to give them my phone number for user verification. Also no way to skip that step. I had to wait for a verification code, which by the way failed, (got the message, they didn't accept the code), tried again, never got the new message.. figured out how to back out of that, then provided a proper email... Once set up, in making extra user accounts on the machine, they now differentiate for some reason between "Family" users and non-"Family" users.

This is on MY PERSONAL COMPUTER. I literally want to just be able to use Microsoft Word on the rare occasion that I am forced to use it, and I found myself having to fork over my phone number and make TWO accounts. (One for ASUS too for some reason.) I found the whole process of setting up Windows shockingly invasive. I even had to explicitly opt out of letting them advertise to me on my own personal computer, and sending my personal info to advertisers. Not on websites. There are ads on like.. the file explorer or something. I mean, what the hell? What is this a shopping mall kiosk? No, it's a laptop I bought and paid for! Why would I want ADS?

I dual-booted Ubuntu on it right away, who wanted nothing but my name and desired username, and provided extremely clear method to opt out of submitting my info to Ubuntu servers, and am happily using that now with no issues.

MS definitely want your personal information, they just aren't as good at getting it as FB. I wouldn't give them a pass on privacy, not with how Windows 10 is now organized.

I’ve installed Windows 10 Pro 1803 on two separate machines in the last month. Both with local accounts.

Could this be a Pro vs Home thing?

Anecdotal, but installed Home on my computer about a month ago and used a local account with no problem.

Running Windows Home here with a local account. Maybe you were tired or affected by a 1 in a million bug.

Nope, MS just uses some Dark Pattern (at least on home) to make it seem that way. The link to make a local account is not obvious.

> Nope, MS just uses some Dark Pattern (at least on home) to make it seem that way. The link to make a local account is not obvious.

I don't know how to prove it, maybe i should have taken a photo (but who cares right), but the link was not dark, it was _not there_. I was able to make a local account and switch to it after installation, but I was not able to completely the installation without a Microsoft account.

You don't have to believe me of course, but the screen did not appear exactly the same as in help tutorials I googled.

It’s very easy to miss, I’ve had to search around for it.

My fiancee just got a new laptop. They went from dark pattern to downright evil, the only option was to disconnect wifi, say you need a new address. Enter bullshit data and afterward it will create a local account for you. Fuck that shit.

It could also be a 1507 versus 1803 thing? The Out-of-Box installer experience in Windows 10 has changed a lot in two-and-a-half years (for the better). Not being able to find the option to use a local account was a common complaint with the 1507 installer (it was there, it was just so de-emphasized to be almost invisible) that was addressed in following OOB versions.

> I was shocked to discover that I could not make an account on my own personal machine without "logging in" to a Microsoft service either with an existing or new email address.

I installed a fresh copy of Windows relatively recently, and this wasn't something that I was forced to do.

I had that issue, then I accidentally scrolled down and found the button.. something silly like that. A lot of the installation UI hides the skip buttons unless you scroll about.

It can be done, MS just went way out of their way to stop you from doing it (and it is getting worse with each new "upgrade"). The button is there but, IIRC from the last time I had to do it, there's still like 2 more screens you have to go through and one of them tries to trick you.

One imagines Microsoft is intentionally trying to kill their Desktop OS, but has to keep being less and less subtle about it because the alternatives are so bad people are just putting up with it.

What if your laptop had no internet connection? Is an internet connection now a requirement to get a computer setup?

Search ads do not require the collection of user data beyond the search query to be profitable. it can be argued that they don’t violate user privacy.

You're right in theory. In practice - especially due to adsense, they HAVE TO track users at least to distinguish fraudulent clicks. At least, fraud was the initial reason for tracking.

> Simply speaking they actually make more products people like to use.

They may make more products that people do use, but that doesn't mean that people like using them.

Talk to an accountant about excel, and you might hear something about "pry it from my cold dead hands"...

And people have religious wars that put tabs/spaces to shame on Xbox VS Playstation

I dont really understand this. The race for hosting VMs/Containers is a great short term opportunity but there is no long term differentiation to be had. I suspect in 10-20 years Azure wont make much money . Meanwhile Windows and Office are still popular but not as compelling as they used to be. Xbox? I'm not sure why Microsoft is so popular with investors.

10-20 years is a looooong time for quarterly results focused “investment”

Differentiation is enormous amount of CAPEX required. Cloud is priting money and Azure is solid #2. I don't see both changing. (That is, profitable cloud and Microsoft's cloud position.)

VMs/Containers are just the loss leader to a whole set of differentiated services.

Computing started with dumb terminals connected to super computers.

Personal computing reversed the trend.

Now the trend is reversing. Computing is increasingly being offloaded to the cloud. Gaming, graphics, it won't matter if an app is ARM or x86, 32bit or 64bit or 128bit, windows, android, linux or IOS if it runs on the cloud, even part of the operating system can be handled off hand-held devices.

The only limit AFAIK is network latency. As network speeds, reliability improves and costs approaches zero, cloud computing would become more valuable.

If battery no longer an issue, cloud computing might wane. Until then, MS is right to bet on cloud.

I completely agree there is a big demand and a big market. The issue is whether providing these services is so profitable that MS deserves to be in the top few companies in the US. Is there really enough pricing power in Azure? Windows used to be strategically important. Outsourced hardware isn't.

I'm not knowledgeable enough to answer authoritatively.

However, buzzwords drive valuations.

Microsoft has a few buzzwords working for it ATM - blockchain, AI, and Cloud, Intelligent cloud.

Yes Azure's user experience isn't going to persuade anyone to choose it over the alternatives. It's a me-too offering that behaves like a compromise between internal factions.

Once you have a shared AD tenet stood up, a new web app with SSO/company user and group rights provisioning is just a Visual Studio wizard away...

Microsoft's cloud is not everybody's cloud. They have distinct advantages and are using them.

The race is not for hosting VMs/Containers ...it's for user subscriptions and enterprise lockin. Google theoretically gives away G Suite because they get better ad metrics the younger they understand a user.

I think most people really don’t understand the wide breadth and the real market of Microsoft as compared to other companies. Just look at these charts of income sources of each company:

http://ritholtz.com/wp-content/uploads/2017/11/cotd52602.png

Google is literally just Ads whereas Microsoft is very evenly spread. If it lost one area itd be fine in the others.

I think people have an exposure bias where they can only comprehend fo the consumer market. When in reality a lot of the consumer market is free and Microsoft is making a killing selling to businesses.

HN in general has an info bubble problem, where it looks to them like Microsoft is dying because trendy Bay Area startups all use Slack and Google Docs. But in the rest of the industry, Microsoft is huge and, if anything, getting stronger over time and not weaker. Microsoft products that HN has never even heard of, like Dynamics and Host Integration Server, still make billions in revenue.

Exactly. Honestly I've been telling people for the last year to buy MS stock. They are going for recurring revenue with all their business facing products, and it's working. The business world, outside of SV apparently, runs on MS products.

I think the most important thing is that the recurring revenue products actually doesn't suck. I think it's because it's operating in a competitive market, where switching is easier so it has to work well and also integrate well with other software. This is different from just leveraging lock in and just bringing out updates with less tangible benefits to force people to upgrade.

If you want a software monopoly trolling everyone with patents, by all means invest in Microsoft.

As a die-hard Excel lover ("you can pry it from my dead hands!") and recent convert to Msft Teams, I agree with you 100%.

> Teams

You don't miss Slack?

I can't speak for anyone but myself, but I can say I prefer teams to slack. The real-world use of both leads me to see little to no difference in my day to day use. But one has the advantage of being tied natively tied to my entire software suite.

Could you please elaborate the features in Excel you have come to love.

Yeah. Uncool companies like MS, Intel and Oracle have shown repeatedly that they can survive and thrive in times of complete paradigm changes. This is something Google and Facebook still have to demonstrate.

Funny enough both Google and Facebook made the shift to Mobile successfully. Intel and Microsoft did not.

Intel and MS are consistently making a lot of money. Maybe they have missed a few trends but they are doing enough things right to be very profitable and have done this for a very long time.

Just wanted to add this. My perspective is skewed because my consultancy firm focusses on Microsoft, but most of the companies I've seen use TFS, C#, VS Enterprise, SQL Server, Skype for Business, and Azure (and usually git and Angular as well, as non-Microsoft technologies).

.NET Core has a lot of momentum, and a lot of people like the new approach, which seems to be to move faster and to break backwards compatibility.

Ironically, I'm not a big fan of Microsoft, but I can see how using almost exclusively Microsoft products helps integration.

And I really hope it stays that way. I have rejected jobs because they use Microsoft tools.

I dislike the Soviet-like brutalism of Windows and all the bloated software built on top of it. Interoperability is mostly non-existent and if it exists, is limited. Sames goes for configurability. That limits the amount of automation you can achieve.

You have absurd nonsense like software taking 1 hour to install (Visual Studio). That is unheard of in any other OS unless you are recompiling everything on your machine, which is optional.

Since everything is proprietary and closed source, if some dependency is discontinued you are on your own. And this happens often with Microsoft's own APIs.

On top of that, now you have all the telemetry fiasco, ads and nagware integrated directly in the OS.

Good job acting in your own self interest. Here's another great idea as good as investing on Microsoft: invest in a patent troll, or tobacco products for kids.

Note those charts are FY2016. With the growth of cloud, I suspect those ratios have changed considerably.

Do you have a new chart?

The pie chart is dividing revenue sources rather superficially, probably just from the companys financial report.

For example, surface is listed as revenue source, where pixel and other hardware products are not listed for Google.

And for ads, Google has display ads, search ads, YouTube, these are vastly different market. If we treat ads as one source, we might as well treat windows & office as one category: pc software.

In summary, the charts are not convincing to me.

The main point from an investor perspective is that if anything happens to the "ads market" landscape, Google as a whole will be greatly affected. For example, new legislation surrounding targeted advertising or use of personal identifiable information for marketing purpose could have a major impact on Google. And those are not some far fetch and unlikely scenario. Some government are eager to put some rules and barriers to protect user privacy and to limit what can be done with it (specially in Europe), and many consumers agree and also care about "their" data. Legislation is not the only risk, even technological breakthrough could shake the ad industry. For example, smartphone became a big deal in the span of very few years. It took Google and Facebook a couple years to adapt to shifting advertising revenue from web browsing to mobile browsing. If you remember some of the early financial reports from Facebook back in 2012, most of them were disappointing due to the fact that many of their users shifted to mobile browsing, and Facebook had a really hard time find a way to display ads on mobile that would result in a click. Their whole business was impacted and it took them a couple years to start growing their ad business again.

The main point is, if you only make money by selling 1 thing (which is Ads, regardless of what medium they use to show their ads), then if something actually happens to that source of revenue, the effect is major. The more diversified your revenue source is, the less likely it is that a single event will affect your company in a major way. Again, not saying Google doesn't have many products, and obviously, having search ads, youtube ads, mobile ads, (and more) as different mediums help mitigate some of the risk that could affect those individual products, but they are still very much exposed to the risks of a changing market.

Sure.

But you can apply the same logic to Windows (desktop + server) + office. Eg, Chinese government can decide tomorrow that they mandate all government PCs run Linux. And that wont distinguish between Office or OS.

As I already suggested, I am not disputing Google's reliance on Ads, but the pie chart is not convincing because of far more reasons than Ads.

You are right, and that's why diversity of revenue is a good thing. If tomorrow Office and Windows drop revenue by half, Microsoft as a whole wont drop revenue by half, and I guess that's the main point the pie chart is making.

But I also agree with you that the Pie Chart might not be completely accurate and might be oversimplifying the situation, but I think there's no denying Microsoft is one of the most diversified tech company out there in term of revenue.

I use only one product of Microsoft, Visual studio code But I use many products of Alphabet Inc , Google, (servers) Google docs, (servers) Google drive, (servers) Google keep, (servers) Gmail, (servers) Android, (client) Maps, (servers) YouTube, (servers) Tez, (servers) Play store, (servers) Google translate, (servers), ...

Many people don't realise it because almost all of them are available for free. Google products have very market.

Incase of Google, they have cost of maintenance almost for every product they develop.

But in case of Microsoft, they have less overhead.

Windows (client) Azure (servers) Xbox (client) Visual studio (client) Visual studio code (client) SQL (client) MS Office (client) ...

Microsoft also needs to push updates but, less than that of Google.

YouTube consumes too much of bandwidth, Same is the case with Play Store.

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