Google is Now Officially Bigger Than Microsoft


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Eight years after going public, Google's (NASDAQ: GOOG ) market cap has surpassed Microsoft (NASDAQ: MSFT ). This impressive feat was accomplished after a summer of gains. Since June, shares of the search engine giant have grown by more than 35 percent. The company was expected to take a dive after Apple (NASDAQ: AAPL ) announced that it will no longer feature YouTube and Google Maps as default apps in iOS 6. After a botched attempt to replace the latter, however, Google has reclaimed the spotlight.

During the first quarter, shares of Microsoft rose more than 20 percent. The stock has tapered off since that time, with a six-month low achieved on June 1. Microsoft quickly rebounded, but continues to experience minor fluctuations in its share price.

Analysts continue to argue over whether or not Apple -- the world's largest company -- will become the first trillion-dollar corporation. While the Mac maker faces an unprecedented level of scrutiny from investors who are wary of its future, Google seems to have finally hit a place of steady growth.

Google's success is an interesting mix of innovation, reiteration and refinement. The company makes the vast majority of its money from advertising, a business it cultivated just by building a superior search engine. Through search -- and the gradual implementation of other Web-based products such as Gmail and YouTube -- Google has been able to increase its traffic, retain visitors and expand its worldwide reach.

Google has benefited greatly from its mobile strategy. The company got into mobile before it became an important computing platform. By inking a deal with Apple and introducing its own mobile operating system, and Google Maps quickly took over the world of smartphones. Now that Google Chrome is on iOS and Android, its mobile browser might do the same.

In July, Google released its first branded tablet -- the Nexus 7. Featuring a seven-inch display and $199 MSRP, the Nexus 7 is regarded as the premier Android tablet .

Google is unique in that it can afford to stumble. While the whole world seemed to be disappointed by the fact that the iPhone 5 (Apple's flagship product) only sold five million units , no one cared that Google TV flopped . No one seemed to notice when Google quietly backed away from the Nexus Q, an overpriced media sharing device . Google's music initiative is trailing iTunes, Pandora (NYSE: P ) and Spotify, but investors do not appear to be worried.

For better or worse, Google is able to get away with these mistakes because its core business is very strong. The Android maker is not impervious; many worry that with the shift to mobile, Google's revenue will be reduced because the company makes more money selling desktop ads. Nonetheless, its strength cannot be denied.

That said, Microsoft is not to be underestimated. While many critics believe that Windows 8 represents the company's biggest gamble yet, the truth is that Microsoft has always taken gambles. With every new version of Windows, the company has made at least one change that users disliked. Regardless, people still upgraded. They got over their discomfort and made the best of what was available.

Windows 8 represents a change for the company -- and the entire industry -- because it is truly the first and only operating system developed for tablets and PCs. It will be a few months before investors know if this strategy is successful.

Even so, at the rate that Google is growing, it may be impossible for Microsoft to gain a significant lead over its dot-com competitor.

Follow me @LouisBedigianBZ

(c) 2012 Benzinga does not provide investment advice. All rights reserved.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing Stocks
Referenced Stocks: MSFT

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