Update, Novembre 6th: This post has been updated to reflect some comments following its post to Digg, shown as one of the top stories under Tech Industry News.
The news tipThe source: A small note on MarketingPilgrim refers to the Boston Globe own reference to Fred Wilson's summary of an HipMojo blog post entitled "Google To Boast Larger Market Capitalization than Microsoft in 2010" (wow! talk about blogs and cross-pollination!) stating in a very prophetic tone that at the actual rate, Google will have a larger market cap than Microsoft by 2010.
"Could be a peak into a crystal ball", Fred WilsonThe stock graph accompanying the article compares MSFT and GOO. Not too revealing for now...
My theory of evolutionSeveral months ago (Feb. 2005) I blogged about (in French) my own theory of evolution from IBM hardware supremacy up to Google information-age domination. The graph bellow emphasizes what I meant at that time:
- 1960-80, The Hardware era: In the 60s, IBM ruled the computing world with their hardware. Naturally, they also provided the operating system and most applications.
- 1980-94, The OS era: The 80s clearly brought Microsoft to the forefront. They didn't bother about the hardware (I remember running MS DOS and Microsoft Flight Simulator v1.0 to "certify" the machine was truly an IBM PC compatible clone). Quickly, Microsoft took the realm of the applications running on their OS, and in mid 90s the infamous "The Internet Tidal Wave" memo turned over Microsoft attention toward the Internet. See the two part article from BusinessWeek on the topic: "Inside Microsoft" part1 and part2. Microsoft was challenged by newcomers such as Netscape. Clearly, OS is not important anymore: applications are.
- 1994-2001, The Big Extinction: Then eBay, Yahoo! and Amazon grew up to Internet mega-star levels. This period was also the era that ended abruptly in 2001: the Internet bubble. Extremes, chaos, broken dreams... but also lots of innovation. Many didn't survive, a some passed beyond the extinction point and fewer stand-up today. Now what? We care less about applications, more about connectivity (it's all about the hyperlink model) and access to information and services.
- 1998- ,The Information Age: Google's mission "to organize the world's information and make it universally accessible and useful" is becoming a reality. First, a web search engine, than news, images, books, maps, database, payment, and recently, videos from the rising star YouTube and while being at it, why not bring some softwares to make it easier to control the information: Blogger, Picasa, Writely (now Google Docs) and Spreadsheet, and a lot more. Do we care about hardware, OS's and applications? Much less than before!
- 2006- (still to be named): I can't go without saying something about Web 2.0, not as much about the technology, but about the philosophy of Web 2.0. So far there is no clear dominant player. Some would say it's starting to look like an echo wave of a tsunami. I would argue we are more mature, more serious about it and generally more cautious about the potential outcomes. There seems to be actually no player who could dislodge Google. Nevertheless, the concepts of Web 2.0 serves as a strong enabler of new innovations:
- Network as a platform: allowing mashups
- User empowerment: you own your data, anywhere, anytime, anyway
- Architecture of participation and democracy: I'm a human being, not a cookie.
- Richer user experience: if I can use it online without hassle, why install a software?
- Social network aspects: "the power of many"
- Network as a platform: allowing mashups
Can Google succeed as an innovative company?When a company raises to the point of becoming a religious icon, there is always room for heated debates. Proponents of both all horizons refer to "stolen" innovations and "takeovers". Although they didn't invent the remedy to heal cancer, both companies often innovates in their own ways by repackaging existing technologies into new, easier and better products. In this respect, Google seems to have a cultural advantage over Microsoft.
Company maturity and volumeMicrosoft is much more "mature" than Google. So are IBM, Oracle and Apple. Remember at one point IBM had cash flow, market cap, sales force, consulting services, everything Microsoft have today, yet, depending on the financial indicators, IBM has been shadowed by all the companies mentioned above.
The mathsIf you speak fluent "finance", read carefully the original article from HipMojo and you will understand the mathematical aspect of revenues, profits and P/E. That's one interesting point of view and a very well articulated post!
My own conclusionWhen I read MarketingPilgrim's note I immediately thought about my two top-of-the-list book: "The Tipping Point" from Malcolm Gladwell and "The Attention Economy" from Dr. Thom Davenport . In my opinion, the "tipping point" passed somewhere around the second quarter of 2005 when the sheer volume of "attention" shifted from Microsoft to Google, as shown in the Google Trends below:
The example above highlights Google Trends view, which is based on the search frequency of Microsoft and Google. Other tools can be used to get similar insights: BlogPulse by Nielsen looks at blog buzz for up to 6 months. Still, the trend is there: check out Microsoft, Google and Apple.
In my mind, there is no doubt Google will economically surpass Microsoft. And I'm not alone, as my running poll shows:
|666 votes total|