Google's search business to be bigger than Windows
alleyinsider.com
alleyinsider.com
If they look a few years down the line they should definitely compete against Google.
And don't even get me started on Office.
Microsoft know that in the long term the role of the operating system might dwindle since a lot of the stuff people do is moving onto the web. Salesforce, zoho and google apps are examples of this. This is extremely threatening to them since their main competitive adantage lies in their desktop dominance. So they obviously want to dominate whatever they think might be the next big thing, and one of these happens to be search. And the 500 pound gorilla in that market happens to be Google. And the fact that Google is also trying their hand at an online suite that might replace offfice one day makes them an even bigger threat.
Note that I'm not saying that the desktop is obsolete, or that the one that controls search controls the world. I'm merely saying that Microsoft is looking at current trends which point towards a lot of data and functionality moving to the web, and are hedging their bets accordingly. As they should.
1. For no reason whatsoever your car would crash twice a day.
2. Every time they repainted the lines on the road you would have to buy a new car.
... http://www.netscrap.com/netscrap_detail.cfm?scrap_id=689
if a company is working in a market that is reaching maturity or decline, it should look for a new market where it can invest its effort
but the trick is simple, MS have certain competencies (skills) the new market must be a market where its competencies would be relevant ... the even trickier part is, the relevence must not be so obvious, the product can be completly different, but the needed skills could be same
for example, Dell is good at complex assemblies, so maybe dell, can start assembling cars, instead of PCs, because a car can be customized in ways comparable to a PC
of course this is just an example, but you get the idea
just how is bigger really defined?
the search business per se, doesn't really generate revenue in the same category as the ad portion.
if we're really talking about the revenue from the ad portion, then you need to consider what might throw a wrench in the advertising model being run by google. i can easily imagine a few that could have serious implications of the cash cow that's the google ad engine..
so just what is meant by "being bigger than microsoft"???
peace
IBM enjoyed 70% market share in the enterprise for 30 years. They thought it would last forever. Until the PC came along. But they didn't take it seriously and look what happened.
Microsoft knows as well as anyone that the days of thick clients and proprietary software are numbered. So they'll milk that cow as long as they can.
No one knows for sure what's going to happen, but with thick pipes, thin clients, open source software, and the upheaval of the "enterprise", I'd be planting new seeds, too.
My point in all this is that companies, the large ones, the ones that write the US$250M per annum IT checks, buy what IBM tells them to buy. IBM told them to buy Microsoft for a while, because writing that software themselves was a pain. Now IBM will look around for a cloud vendor to be their go to guy for cloud deployments. It is too early to say what this relationship will look like, but it is a certainty that whoever gets the IBM guys out pushing them, will be the enterprise monopoly in the future.
This is a SLIGHT oversimplification of the enterprise purchasing process for large organizations, but it gets at the fundamentals. And in any case, the negation is likely and sufficient to cause GOOG and MSFT trouble. That is, if IBM says NOT to buy Google or Microsoft cloud services, then they are non starters.
If you want to bet on a company that will ride the next enterprise upgrade wave, put your money on IBM. This is the only constant in the global enterprise IT market.
It is way to difficult to figure out whether Google can come up with a product that any large enterprise would want to use. That is, can they really innovate? I think open minded analysts agree that the jury is still out on that one. Equally vexing is the question of whether Microsoft can get their heads out of their butts long enough to create a product that conforms to the next computing paradigm? The only certainty is that whatever happens IBM will be supporting it, and THAT is where the money is. All US$100B a year worth!
And that is only likely to grow!
IBM never meant to give anything to anyone. They were as ruthless then as Microsoft is now. IBM, along with most of the rest of the enterprise world, never imagined the microcomputer as anything but a toy. They didn't even enter the market until 6 years after Apple.
In 1980, IBM was a hardware company. Today they are a service company. The makeovers in between were not painless and were not by choice. Just for not taking the PC seriously.
In 1980, you were as likely to find a job in a Fortune 500 company as anywhere else. Not anymore. New jobs are being created at a much faster rate by smaller, more nimble companies. After all, economies of scale don't mean as much in service economies. These smaller companies don't have the same decision making matrix as the enterprises and will use SaaS. Look at Salesforce.com.
Additionally, IBM has been a services company for over a hundred years. With the greatest service rendered at the Nuremberg trials in my opinion. Hardware has been a way for them to sell services for quite some time. That said, a review of their historical financials, will bear out the fact that they have made far more money on service and support than hardware. That is true if you zoom in per year as well by the way. The computer industry emerged around the 1950s, and IBM was the guy selling the most of them, it's true. But, take a look into their training, service and support contracts if you want to see some serious revenue growth charts.
As to your last point, it is the same point made by Microsoft fanboys in the 80s. It is, in a way, the original 'long tail' argument. It has merit, in that companies that can monopolize the long tail, as Microsoft has done, will make a lot of money. But the fact remains that even with its 'long tail' monopolization, Microsoft still generates less revenue than IBM. FAR less. Why? Because the smaller companies are not willing to pay as much as larger organizations. Which is why they choose Microsoft, it is cheaper, and it is good enough.
Now your assertion is that they will choose Google in the future, because it will be cheaper still, and good enough.
Consider, however, what happens as these customers get more and more frugal. Suppose everyone on the long tail thinks that your product should not cost as much as Microsoft's. Or let's suppose that they believe that everything you get over the internet should be ... say ... free. The amount of money that the monopolizer can generate goes down. But IBM's service and support contracts stay the same price for the big guys! That's the beauty of being IBM. You always win in the end.