For analysts and industry pundits, Christmas comes but four times a year with the release of quarterly figures. This quarter, the two names at the top of the list are Google and Microsoft. Both have exceeded expectations – in fact, both have beaten what is generally regarded as an unusually strong quarter overall. The battle is joined for our hearts, minds and wallets.
The raw figures highlight the differences between the companies. Google raked in $0.8bn, of which around $50m were profit. Microsoft's revenues were more than ten times as much at $9.2bn, and kept nearly $3bn. That's 30 percent margin, compared to Google's six percent – on the face of it, an unassailably strong position.
Google is the feisty young bride in her honeymoon period. She has small but gorgeous figures and a bright future, but it's too early to say how she'll develop into middle age. Microsoft is the dowager duchess managing huge estates. Like Chaucer's forceful, wide-hipped Wife of Bath she's had many marriages and outlived them all, effortlessly absorbing their inheritances. She knows the game.
Yet the game is changing, and change rarely favours the incumbent. A wise man isn't dazzled by looks or force of personality: he looks ahead. Google is doing well in key areas – it is producing interesting products that exceed expectations, it's responding well to security concerns and it has many options for growth in corporate and personal data management, and in Web services. That's on top of its core business of targeted advertising, at which it excels. Lastly, it's comfortable in a cross-platform world.
Microsoft is making heroic efforts in security, but its other options seem less sure. It isn't doing well on its headline deliverables – Longhorn remains uncertain – and its cross-platform strategy is imperial disdain. Tellingly, its efforts to move people to a subscription licensing model have largely failed: the latest figures have projected income from these down by 80 percent on earlier predictions. Ballmer rants on about cutting the cost of hardware: Google couldn't care less. Mobile, games, entertainment – Microsoft is actively exploring all these, but what looks like aggression can easily shade into desperation.
The bottom line: take the long view. It's not just a beauty contest -- which Google would win outright at the moment -- but a question of who's better equipped to prosper in a world where the Web has taken over from the PC. Age, experience and cunning beat youth, looks and innocence: Google is young and pretty, but it would be a foolish suitor who overlooked its considerable guile. We look forward to a long and most interesting relationship.