Google's Success vs. Microsoft's Success

An investigation of Google’s success opposed to Microsoft’s success -

Corporations as big as Google and Microsoft have successfully ruled their respective markets. Google, the most visited web site, conquers the search engine market at 83% worldwide, while Microsoft, the most used operating system, currently dominates the PC market at 87% with Windows 7 and XP combined worldwide.

Even though these two markets are entirely separate, the curiosity for success of these two giant corporations becomes undeniable to us little humans who use products they provide every day.

Since both corporations are very much in the public eye, people are simply fascinated by them, similarly to moviegoers who idolize the movie stars in Hollywood. Both corporations have touched almost everyone’s life on this planet in one way or another. These two technology businesses are clearly doing well, continuing to innovate, and continuing to develop products successfully.

People commonly say that Google’s success is similar to Microsoft’s. For this research paper, criteria such as revenue, profit, market share,  and acquisitions will be the key criteria that make up the definition of success. The results of this research paper will show that Google’s success will be more similar, than different from, Microsoft’s success.

To start, the term “Success” needs to be defined. The following components are what define the success of a company.

• Revenue: Revenue is the amount of money that is brought into a company by its business activities.

• Profit: Profit equals the total revenue minus the total expenses. Profit is the money a business makes after accounting for all the expenses.

• Market Share: The percentage of an industry or market’s total sales that is earned by a particular company over a specified time period. Market share is calculated by taking the company’s sales over the period and dividing it by the total sales of the industry over the same period. This metric is used to give a general idea of the size of a company to its market and its competitors.

• Acquisitions: A general term used to refer to the consolidation of companies. An acquisition is the purchase of one company by another in which no new company is formed.

The above definitions were taken from investopedia.com to give the reader an instant reference. Applying all the above to both Google and Microsoft will help determine any similarities or differences of success between the two.

Before the above definition of success is applied to each corporation and used as a measure to detect resemblances and differences, a brief history of Microsoft and Google may give an enhanced perspective to the reader on the evolution of these two corporations. Their histories are summarized, starting at the time of their inceptions and ending in 2011.

Microsoft was born in 1975 when Bill Gates and Paul Allen formed a partnership. Their vision was to put a computer in every household. After being approached by IBM, Microsoft decided to focus on the development of a software platform. In 1981, Gates made a key acquisition of buying the full rights to an operating system called 86-DOS from a company called Seattle Computer for only $50,000 (Wallace and Erickson 202) Hard Drive. This acquisition enabled Microsoft’s software platform to be shipped with the new IBM computer. In addition, this key investment would become an industry standard and make Microsoft 200 million a year by 1991. In 1985, Microsoft released the very first version of Windows 1.0, which allowed the user to use a device called a “mouse” that pointed and clicked. From that point on, Microsoft would continue to acquire many other software companies, which helped contribute to their revenue, profit, and market share. They continued to drive their software as the standard platform for computers. In 1990, they released Windows NT, which sold 10 million copies in the first 2 years. Then in 1995, Microsoft released Windows 95, which sold a record setting 7 million copies in the first five weeks. In 2006, Microsoft began a new online marketing strategy called “behavioral targeting”. In 2010, Windows 7 sold seven copies a second, making it the fastest selling operating system in history. Microsoft was rated as one of the nation’s best employers in regards to healthcare benefits in 2010, as well as recognized as the #1 global workplace to work in 2011 (GreatPlaceToWork.com). Microsoft’s current financial revenue is 71.1 billion, with a profit of 23.5 billion, and 90,000 employees (Forbes.com).

Amazingly, Google’s inception, started 23 years later than Microsoft’s. In 1998, Larry Page and Sergey Brin set up Google as their workspace in a friend’s garage. Google’s vision was clear and simple, rather than focus on their bottom line; Google focused on user experience by delivering instant search results. The following year, they already outgrew the garage office and announced that the word “Goolgers” was defined as the people who work at Google. The two partners agreed on developing a unique type of culture for their new company. Food had to be a main priority. In 1999, with 40 employees, Google hired their first chef Charlie Ayers who normally catered to the band Grateful Dead. This illustrates their unique approach and care in regards to their employee’s well being. In 2000, Google formed a partnership with Yahoo to become its default search provider. This key acquisition made Google the world’s largest search engine provider, which contributed to revenue, profit, and market share. Google announced the very first search index that contained 1 billion web pages. In 2006, Google acquired YouTube for hosting videos. In 2009, Google, similar to Microsoft, began a new marketing Ad program called “behavioral targeting”. The most expensive acquisition came in 2011 when Google acquired a part of Motorola Mobility for 12.5 billion. Google’s current financial revenue is 35.8 billion, with a profit of 9.6 billion, and 28,768 employees (Forbes.com).

When comparing the Revenues and Profits of Microsoft to Google, both their revenues and profits display a large difference in their totals. Microsoft’s revenue of 71.1 billion and profit of 23.5 billion, are approximately double Google’s 35.8 billion in revenue and 9.6 billion in profit. Even though Google’s figures are half of Microsoft’s, Google is certainly very successful with a substantial 9.6 billion in profit. However, while both corporations are huge successes, Microsoft’s figures are greater than Google’s. This difference could be explained by the fact that Microsoft has been in business for 23 years longer than Google. This simple fact has created opportunities for growth over time leading to a greater number of employees. Therefore taking the age of each of these corporations into consideration it can be concluded that the greater volume in revenue and profit that Microsoft displays is no doubt to be expected. Yet it also illustrates a fundamental difference between Microsoft and Google, which lies in their overall size and consequently, their financial output.

When it comes to size, comparing Microsoft’s large global market share to Google’s, two completely different markets are revealed. The computer operating system market that Microsoft holds is a very different market than the online search engine market that Google holds.

Microsoft Windows Global Market Share – October 2011:

Google Search Engine Global Market Share – October 2011:

Charts provided by Netmarketshare.com and Realtimestats.com.

As mentioned in the beginning of this paper, the charts above display that Microsoft dominates the PC market with their Windows Operating Platform at 87% worldwide, while Google dominates the search engine market at 83% worldwide. The charts visually show the two different markets that Microsoft and Google dominate, and their main competitors. In the computer operating system market, Microsoft competes against Mac 7%, IOS 3%, Linux 1%, Android 1%, Java ME 1%, and other companies 0.3%, which all have a very minute market share when compared to Microsoft’s market share of 87%. Despite Microsoft’s and Google’s differences, Google’s competitors in the search engine market are Yahoo 7%, Baidu 5%, Bing 4%, Ask 1%, and AOL 0.4%, which all have little market share when compared to Google’s share of 83%. It is clear that these two companies are unquestionably different in regards to their specific markets. However, there is a striking resemblance: it is the fact that both Microsoft and Google dominate a distinct market globally. Each of them does so within the scope of their own respective marketplace.

To dominate a market globally, constantly acquiring other companies in the same market located throughout the world will only aid in conquering a bigger piece of the “world pie”. Acquisitions are another criterion used in this research paper to detect the similarities and differences of success. Google and Microsoft have both acquired many companies. Both have been motivated by a desire for greater market power. Both have bought out their competition using a business strategy that involves constant acquisitioning.

Total number of acquisitions 2000 – 2009.  Chart provided by BuzzInTechnology.com, July 3, 2010.

The chart above shows the total number of acquisitions from 2000 to 2009 by the top five corporations, Google, Yahoo, Apple, Microsoft, and IBM (Buzzintechnology). This chart also shows that Microsoft has the most acquisitions with Google coming in third. This chart does not include acquisitions from 2010 or 2011. However, Microsoft, beginning in 1981 and ending in 2011, acquired more than 247 other companies and partnerships (wikipedia). Similarly, Google has used this same type of acquisition strategy, by acquiring more than 100 partnerships and software search engine related companies since 2000 (wikipedia). When comparing the lists of acquisitions of both Microsoft and Google, it is clear that both corporations have taken the same type of strategy in the world of business technology by acquiring hundreds of companies over the years. These acquisitions are one reason why Microsoft and Google have gained dominate positions in their respective markets. It can be concluded that Microsoft’s and Google’s successes in the criterion of acquisitions resemble each other.

CONCLUSION

Within the scope of this paper it can be concluded that these two giants are more similar in their success than they are different. The table below reveals the result of each criterion that was used including a brief summary of each.

Further studies of other criteria should be conducted to further evaluate the similarities or differences in the success between Google and Microsoft. Other criteria to conduct such as, the quality of products, consumer satisfaction, email services, and company locations for globalization could be used and compared for additional research on the success of these two corporations. In addition, since both of these corporations have their own operating systems on cell phones (mobility), further research and comparisons could be done on both their mobility products.  Furthermore, additional research can be done by consulting a professional who holds a PhD or doctorate in business, for a professional opinion on the most important criteria for the success of a business.

In conclusion, it is important to realize that the topic in this research paper is essential because the world of entrepreneurs, and consumers of Google and Microsoft products, may find it interesting to know how these two remarkable corporations became so successful. What were actually the key areas of success that these two giants took to rise to the top of their respective business fields? Was it mainly marketing, acquisitions, corporate culture, perhaps some other business strategies or criterion not explored in this paper, or was it simply a great product or service? Quite possibly, this research paper has shed some light or ideas for entrepreneurs in business technology who are planning to become the next Google or Microsoft.

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