Google Out-values Microsoft – Web Over PC?

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Google rose to a market capitalization of $249.9 billion per share on Monday, October 1st at the close of New York business day while Microsoft had a valuation of $247.2 billion on the day. While the lead will likely be back-and-forth for a while, it shows something significant in the way the business of computing is changing.

Google is a Web-based company, the majority of whose value is online and without physical product or traditional sales volumes while Microsoft is, of course, largely valued for its intimate ties with the PC and the software the company sells to operate and work on those PCs.

Although the two companies often work together or in parallel, they are opposing in several respects. Microsoft owns the Bing search engine, Google’s nearest competitor, and contracts with another competitor, Yahoo. Microsoft dominates the office platform with its Office suite of software for business and home use, but Google empowered that suite’s closest competitor, Open Office, through its encouragement of the Linux-based open source community.

Both Microsoft and Google offer cloud-based services and applications, MS through its Windows-based server platforms and Google through its own popular app suites (Gmail, Drive, etc). Many of these apps directly compete, though Google clearly dominates in measurements of user bases for them.

So seeing the two coming head-to-head in competition for the second-largest technology firm in terms of value (Apple still leads the pack by a good margin), means that some things are changing quickly in the IT business world. MS is a powerful company, of course, but it’s a company that many analysts believe is on the wane as it struggles for continued relevance. Other companies in similar predicaments have either totally re-tooled themselves and re-emerged as new concepts or have slowly died on the vine as the IT fruit production passed them by.

So far, Microsoft has failed to gain a foothold in the portables market (tablets, smart phones), failed to gain a significant place in cloud computing (Amazon and Google dominate there), and its Office suite is slowly bleeding off users as cheaper, often better alternatives emerge.

It will be interesting to see how things play out over the next couple of years and, I predict, Google will out-value MS in the coming months repeatedly and eventually take firm grasp of the silver medal as Microsoft falls to third.