10 Ways Google Is Trying To Kill Microsoft

ballmer schmidt slide

Perhaps the most exciting tech battle to watch: Google’s (GOOG) intensifying clash with fellow titan Microsoft (MSFT), as the two square off in almost every major line of business.

Click here to see 10 ways Google is trying to kill Microsoft →

The latest: In the last few months, each company has launched a direct attack on their arch rival’s most important business. Most recently, Google announced that it was developing a desktop operating system, Chrome OS, and Microsoft launched a new search engine, Bing.

Google’s success or failure with its operating system attack will be particularly interesting to watch, as it’s Google’s first attempt to disrupt Microsoft’s most important business. Redmond has enjoyed many years (and billions of dollars) on top of the operating system market with DOS and Windows, and besides Apple, no one’s been able to obtain share in the consumer market.

But Chrome OS — starting with cheap, mobility-focused netbooks — promises to be fast, simple, and — important — free to gadget makers, which are already facing paper-thin margins on netbooks, and pressure to cut costs. If Google can make a great user interface and link easily to cloud services like the Web, Google search, GMail, and Google chat, then the Windows juggernaut could be at risk.

Why does that matter? During Microsoft’s last fiscal year, Windows contributed 25% of Microsoft’s revenue and 53% of its operating profit.

Meanwhile, Microsoft is attacking Google’s biggest business, search. Its most recent product launch, Bing, is a good product that’s been just a modest success so far: Microsoft’s share of the U.S. search market was 8.4% in June, up from 8.0% in May, according to comScore.

Perhaps more important: It looks like Microsoft is close to finally signing a search and advertising partnership with Yahoo. While that takes one of Google’s enemies out of its sights, it means that its lone major rival will have more resources and motivation behind it.

Why does this matter to Microsoft? Because it’s burned through billions of dollars over the last few years trying to be a big player on the Web, and it will have great hopes and expectations for its deal with Yahoo. And for Google, because search generates more than 90% of its revenue, and funds many of its unprofitable, maybe-Microsoft-killing projects, such as Google Apps, Chrome OS, and Android.

But those are just two of the many fronts in Google’s war with Microsoft.

Click here to see 10 ways Google is trying to kill Microsoft →

Operating Systems

Google's offering: Google's newest challenge to Microsoft: Chrome OS, coming in 2010.

Microsoft's offering: Windows, sold on ~90% of consumer PCs.

What's at stake: Much more for Microsoft than Google. Windows represents some $11 billion of annual operating income for Microsoft, about half its total. Google is hoping Chrome OS will disrupt Microsoft and might make Web based apps -- like Google Docs and Apps -- more plausible for more people.

Edge: Microsoft, as Chrome OS is not even shipping. But when you have 90%+ of the market, it's hard to go anywhere but down.


Google: Google search owns 65% of the U.S. search market, according to comScore, and makes up more than 90% of of Google's ~$4 billion quarterly revenues.

Microsoft: Microsoft re-branded its search engine as Bing in June. Spending $80 million marketing the service, Microsoft's U.S. search market share climbed from 8% to 8.4%. Microsoft CEO Steve Ballmer says he's going to spend 5%-10% of Microsoft's operating income over the next five years on search. That's about $10 billion per year. And a deal with Yahoo could boost Microsoft's share near 30%.

What's at stake:
Search advertising is a huge market and is crucially important to Google, as it helps fund all of the company's money-losing products, like Chrome OS, YouTube, etc.

Edge: Google.


Google: Google finally took GMail out of beta this July. 146 million people use it each month, according to ComScore. (Google is also trying to get companies to use its email service via Google Apps.)

Microsoft: Hotmail has 343 million monthly users, according to comScore. (Microsoft also has an email server business, selling Exchange licenses.)

What's at stake: Traffic and some ad revenue. Mail drives a ton of traffic to Google search for Google and MSN for Microsoft. E-mail is also the easiest way to get people to use that company's other products, such as IM. (And corporate Exchange servers make Outlook/Windows and Windows Mobile a little better.)

Edge: Microsoft. Size matters. But Microsoft needs to catch up on the user experience front for Hotmail/whatever it's called these days.

Office Applications

Google: Google Docs, which includes word processing, spreadsheets, and presentations. Google Apps, which includes email and calendar hosting.

Microsoft: Office, which includes Word, Excel spreadsheets, PowerPoint presentations, Outlook, etc. Office 2010 coming next year. And server products like Exchange.

What's at stake: For Microsoft, Office is a cash cow that represented about 1/3 of the company's revenue last fiscal year and 60% of its operating income. For Google, the chance to break deeper into corporations and add another revenue growth driver.

Edge: Microsoft, as Google Docs isn't that good. But as Google Docs and other services -- even Microsoft's free Web-based office tool -- disrupt the Office giant, there aren't many directions but down for Office's business to go.

Social Networking

Google: In 2006, Google agreed to pay MySpace $900 million over three years for a search and advertising deal. Google is also leading OpenSocial, a social networking platform designed to weaken Facebook's grip.

Microsoft: In 2007, Microsoft bought 1.6% of Facebook for $240 million. As a part of the deal, Microsoft also agreed to pay Facebook ~$150 million for advertising rights.

What's at stake: Facebook has 250 million monthly active users to MySpace's 130 million users worldwide. OpenSocial is still mostly an idea. Social networking is extremely popular, but isn't a big business yet -- the hope is that it could be someday. (Or at least a crucial component in the online ad mix.)

Edge: Microsoft.

Portals and Brand Advertising

Google: The only portal Google owns that it sells brand ads against is YouTube. During Google's Q2 '09 earnings call, execs said YouTube will soon, finally, be profitable. They said it'll get there by serving a lot more pre-roll ads. Google won't break out YouTube's revenues, but figure they're around $500 million. ComScore says YouTube saw 92 million U.S. unique visitors in June.

Microsoft: MSN is the third most-popular major Web portal after Yahoo and AOL. Still, 93 million U.S. unique visitors came to MSN in June.

What's at stake: In 2008, the top two brand advertisers alone spent more than $4 billion on measured media, according to TNS Media Intelligence.

Edge: Google. Because they're so used to TV commercials, brand advertisers love Web video. MSN is adding premium video content as fast as it can, but YouTube is way ahead.

Web Browsers

Google: Chrome, launched in 2008. Has about 2% of the market by usage, according to Net Applications.

Microsoft: Internet Explorer, launched 1995. Has about 66% of the market.

What's at stake: At this point, mostly driving traffic to the browser's built-in homepage (if any) and parent company's search engine. In theory, Microsoft's dominance with Internet Explorer also gives an edge (or more relevance) to Microsoft Web technologies, like ActiveX and Silverlight.

Edge: Microsoft. Even Firefox has barely cracked 20% of the market, according to Net Applications, after years of pushing. Chrome will take a long time to be relevant to mainstream users.

Mobile Operating Systems

Google: Android, launched 2008. Shipping on a few phones, but still waiting for mainstream adoption. Sales modest, but a technically impressive operating system.

Microsoft: Windows Mobile. Shipping on dozens of phones from several partners, with distribution around the world. About 12% of the smartphone market late last year, according to Gartner. But a platform that desperately needs a major technical and design overhaul. (Microsoft also paid $500 million for Sidekick designer Danger, which has tiny market share.)

What's at stake: For Microsoft, some revenue it brings in from Windows Mobile licenses, and whatever business Danger does. For both, a back door into the mobile advertising market, which each hopes will be a big money maker in the future.

Edge: Push. In the next year, as mobile companies build Android into dozens of phones, we'll learn if it's a winner. Meanwhile, Microsoft has amazing tools at its disposal -- Windows, Xbox, entertainment products, Hotmail, money -- but needs to make Windows Mobile not suck.

Ad Serving, Ad Exchanges

Google: Google acquired DART when it bought DoubleClick for $3.1 billion in 2007. DART for publishers is the standard ad server for premium publishers.

Microsoft: Microsoft brought Atlas Systems into the fold when it paid $6 billion for Acquantive in 2007. Atlas has almost no footprint on the publisher side of ad serving. On the advertiser side, Atlas is bigger - probably 30% share vs Dart for advertisers' 70% share.

What's at stake: The back door into the online display advertising market.

Edge: Google.

Ad Networks

Google: ComScore says Google AdSense for Content reached 163 million unique visitors in June. That's about 84% of the total U.S. Internet population.

Microsoft: During the same month, 146 million unique visitors stumbled across the Microsoft Media Network, for a 76% reach.

What's at stake: A lot of money. Google doesn't break out its AdSense for Content revenues, but it does say that its syndicated search advertising business and AdSense for Content together generated $1.68 billion in Q2 '09. A Google rep also told us that the company pays its publishing partners ~$5 billion annually. Both companies also have mobile ad networks, which they're hoping will be big growth drivers in the next several years.

Edge: Push. Google's bigger now, but it got a big head start.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.