Google Races Past Microsoft to Number Two Tech Company

on Oct 2, 2012
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The decade-long race for dominance between the leaders of the PC and internet eras of computing, took a turn on Monday (1 October 2012). On early trading on Nasdaq, shares of Google (NASDAQ:GOOG) reached an all-time high, hitting another symbolic milestone in the process — the search engine operator became the world’s second-largest technology company as its stock market value surpassed that of long-time rival Microsoft (NASDAQ:MSFT).

Google’s shares rose 0.96 per cent to end at $761.78, boosting the internet giant’s market capitalisation to $249.1 billion. Meanwhile, the world’s biggest software maker, Microsoft, fell 0.91 per cent to $29.49, which put its market value at $247.2 billion. Both companies remained well behind Apple (NASDAQ:AAPL), the number one tech company by market capitalisation. The iPhone maker shed 1.16 per cent to $659.39, meaning its market cap is just above $618 billion, which is more than double the worth of Google.

!m[](/uploads/story/502/thumbs/pic1_inline.png)Comparing the three tech leaders, Trip Chowdhry at Global Equities Research said that both Google and Apple have “strong momentum” in the mobile internet sector, while “developer interest in Windows Phone is almost non-existent”. Chowdhry added that Google’s “innovation velocity far exceeds any other company.”

In 2007, investors nearly drove Google’ value beyond that of Microsoft but the stock later retreated as Wall Street grew worried that the company was pouring money into loss-making ventures such as the YouTube video site and Android mobile operating system. But this year Google’s stock price has climbed steadily as the California-based company bolstered its dominant position in the search engine area. Currently, Google captures around 60 per cent of global online search traffic. By comparison, Microsoft’s website Bing, the number two search engine, controls just 16 per cent of the market. And while Google is enjoying clear dominance in the search engine world, the company is also growing its YouTube and Android businesses. According to The Financial Times, citing Mark Mahaney, internet analyst at Citigroup, Google is also set to top Facebook (NASDAQ:FB) this year to become the biggest online display advertising company, with global revenues likely to hit $6 billion.

Meanwhile, Microsoft is trying to reverse its fortunes as the world shifts away from its software-centric model to an online-centric one. Its new mobile strategy includes its new Windows 8 software. The next version of Windows, due October 26, is designed for touch screen technology in tablets and will power handheld devices. But despite the upcoming launch of the new operating system and the recent push into the tablet and phone markets, enthusiasm for Microsoft has been lukewarm. According to analysts, a positive effect on the company’s market capitalisation is not expected in the short term as most corporate buyers wait a year or more before upgrading. Investors are also cautious about Microsoft’s chances of winning back consumers whose heads have been turned by Apple devices.

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