Last Updated 22 Jun 2020

Google vs Microsoft

Category Microsoft
Essay type Research
Words 1945 (7 pages)
Views 648

In today’s society many people are using the internet more and more to shop online, handle business transactions and surf the web for what interests them. Microsoft and Google are known to many people as internet giants. The two companies compete for business in the internet world by offering similar online business services. Microsoft also offers an array of computer products to consumers and businesses such as Windows 7, Microsoft office and MSN. Google’s main focus of business is its search engine that many people use today to surf the internet.

This paper will compare and contrast Microsoft’s and Google’s business model, financial management system and explain which company could better withstand a major recession and at the same time, compare their financial ratios and decide which two companies that would be better to invest in. Microsoft was started in 1975 by Bill Gates and Paul Allen who developed an interpreter for basics programming language systems that has contributed to Microsoft’s being so successful.

Microsoft is one of the largest technology companies in the world which specializes in developing and licensing computer software products such as Windows 7, Microsoft office, MSN and Bing. Microsoft’s management team is led by chief executive officer Steve Ballmer who also serves on the executive board, chairman Bill Gates, seven directors, and one chief financial officer which are all non-executive board members. The company has been known for its leadership style through its founder Bill Gates for donating money to many charities and helping the poor.

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Microsoft is also said to be an innovator for the new-age workplace where work is made to be comfortable, fun and inspiring so that all employees can enjoy doing their work and like to spend their time there as well. Bill Gates did not even finish college but his work ethics are being taught in schools through the world. Microsoft has an excellent track record for innovation because it keep coming up with new technology and devices every year (Datamonitor, a, 2011). On the other hand, Microsoft is in competition with Google and other internet companies over the use of internet search engines.

Google was founded in 1998 by two Stanford University graduate students, Sergey Brin and Larry Page. Google is an international technology firm that is concentrated on improving the way people get their information from the internet. Google has three core businesses search, advertisements, and applications. The search engine powered by Google provides information for millions of users every day. It must be determined that information reported to the Google search engine is beneficial to the user; a set of criteria has been developed to serve this purpose.

A common method of determining the usefulness of the page for the user is searching the document for keywords. Keywords must be entered to search on Google, and the documents are scanned to determine how often they appear. The more keywords a document has tends to indicate its usefulness to the user. Another evaluating principle for reporting useful pages is the ranking for the page and quality of the site. Websites receive rankings which reflect quality, relevance, and accuracy. Websites who have high rankings and numerous keywords are reported to the user first.

This method of obtaining information allows the user to access vital information in a matter of seconds. Search advertisements are used to further assist users, and to offer Google’s main products and services and provide valuable and relevant information for people who use the search engines for answers they seek. Google search engine is like Microsoft’s Bing search engine. Google also sells their product and services in more than 100 languages throughout the world. Google’s management team is led by a chairman Eric Schmidt, a chief executive Larry Page, a director of special projects Sergey Brin which are all executive board members.

They also have six directors that are non-executive board members. The company is a leader in that they provide people with valuable information. At the same time, however, Google is a slow innovator in its search engine technology. For example, its search engine has not shown major innovation despite the quality of Google’s searching technology that is absolutely dominating. However, as search engine technology advanced in the past decade the technological gap between Google and Microsoft has decreased more and more as we see with Bing (Datamonitor, b, 2011).

On the other hand, by using the financial ratio I believe that Microsoft would benefit more and be able to survive a major economic recession. Microsoft has five divisions within their organization such as Windows & Windows 7, Microsoft business, online services, server and tools, entertainment and devices. According to Datamonitor, a , “The company’s product under this division include Microsoft Office, Microsoft SharePoint; Microsoft Exchange Server; and Microsoft Dynamics ERP and CRM as well as Microsoft Office Web Apps, which are the online companions to Microsoft Word, Excel, PowerPoint and OneNote” (2011, p. ). This shows that Microsoft has many divisions and products that they can offer to consumers, businesses and investors. This also shows that Microsoft would be better suited to withstand a major recession due to the many products they have to offer unlike Google which only has search engines and advertising to depend on. Therefore as seen in the financial ratio Google has not made any money nor did it lose any money. Microsoft on the other hand, has made money due to the many products it has to offer. Subsequently, the profitability ratio can tell us a lot about Microsoft and Google performance.

The profitability ratio can tell us what each company’s revenue and losses were for the year. It can also tell us about both companies operating budget, debts, stocks, and investments. According to Microsoft’s annual report, “Windows Division revenue reflected relative performance in PC market segments. We estimated that sales of PC’s to businesses grew approximately 11% this year and sales of PC’s to consumers declined approximately 1%” (2011, p. 50). This demonstrates that by using the profitability ratio Microsoft was able to calculate their gains and losses for the year in the sale of PC’s.

This also shows that by using the profitability ratio Microsoft was able to project their sales of PC’s to other businesses. Therefore if someone wanted to invest company like Microsoft they should use the profitability ratio to determine a company’s return on assets and equity to see if it is a good investment. As we can see PC’s sales to businesses grew 11% while consumers PC’s sales weakened by 1% so an investor should put their money in business PC’s. After seeing the profitability ratio of both companies Microsoft would be the company to invest in because they payout more money and make more money per share and to each stockholder.

One can agree that Microsoft has done well over the years by them recognizing and using the knowledge base and technological base has been an asset for the company. Microsoft is one of the best companies when it comes to software and programming. Microsoft over the years has realized that their competitors can have an impact on market changes and with this knowledge it has allowed Microsoft to make the required decisions in the market place. The issues and concerns that Microsoft and other organizations face are technology changes and competition. Technology today has surpassed the technology of yesterday.

Yet, Microsoft has shown that they can meet these challenges in various areas by meeting these issues and concerns head on. Microsoft oftentimes has restructured some of their well-known operating systems, programs and software to keep up with the changing times. Recently, they have launched Bing and Windows 7. According to Microsoft annual report: Online Services Division (OSD) develops and markets information and content designed to help people simplify tasks and make more informed decisions online, and that help advertisers connect with audiences.

OSD offerings include Bing, MSN ad Center, and advertiser tools. Bing and MSN generate revenue through the sale of search and display advertising generally accounts for nearly all of OSD’s annual revenue. (2011, p. 54) This demonstrates that Microsoft would be a great company to invest in because they offer many different products that makes a lot of money. This also demonstrates that Microsoft has seen an increase in revenue due to the fact that they invested in Bing and MSN.

Therefore one should also consider the return on current ratio and the dividend payout ratio before making a decision on investing in the company. On the other hand one should also look at the investment valuation before making an investment decision. Investors need to be aware that before they invest in a company such as Microsoft that the likelihood of the problems when it comes to investing occur with large corporations where there is a higher degree of the separation of ownership and management, and thus perhaps an occurrence of a conflict of the goals of the managers and the goals of the shareholders.

Aside from doing research on the company itself, doing an evaluation of stock can also prove to be useful. Knowing if stock is overpriced can tip you off, in that you then need to find out why it is overpriced. For example, is the stock overpriced because investors sincerely believe that the stock is good and has potential, or is the stock price high because of current economic conditions. Knowing the answer to such questions will help individuals as investors make better and more informed decisions. According to Google’s annual report: Strategic, financial and execution isks and exposures associated with our business strategy, product innovation and sales road map policy matters, significant litigation and regulatory exposures, and other current matters that may present material risk to our financial performance, operations, infrastructure, plans, prospects or reputation, acquisition and divestitures. (2011, p. 16) This explains that investing in large corporations can be risky and, this also explains that you should look, at a company’s investment valuation before investing.

The reason why this is so important is because people can lose their money and if they did their homework by using the investment valuation they would see where their money is going and if they are making a wise decision when they invest into a company. In conclusion, Google and Microsoft’s are the world’s most powerful technology organizations that have proven it is possible to excel in the corporate world. The software and programming that Microsoft’s sells is the same product that has proven to be a useful tool for the company.

Allocating costs and investing in new technology and recognizing competition including recognizing revenues gain and loss has also proven to be an asset for Microsoft. Google and Microsoft recognize and realize the potential of technology in the ever changing world of business. Google and Microsoft have met the challenges and changes of today’s society. As for Microsoft achieving its goals, the belief is that it has surpassed those goals and is constantly revising technology and products to meet them and new ones in a timely manner.

Therefore, making it a company that investors want to invest in. Microsoft, financial aspects has allowed me to decide that it is one of the best companies, to invest in today. While Google on the other hand, must find better innovative techniques so it can gain more capital so that investors want to invest in the company. At the same time Google must keep up with other competitors such as Microsoft so that the company does not be left behind in the future from other competitors stealing their clients.


Datamonitor: (2011 a). Microsoft Corporation. Retrieved from Business Source Complete. Datamonitor: (2011 b). Google Inc. Retrieved from Business Source Complete. Google Annual Report (2011). Retrieved from Microsoft Annual Report (2011). Retrieved from Appendix

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Google vs Microsoft. (2017, Jun 01). Retrieved from

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