Google Overtakes Microsoft to Make Investors Cheer

Google (NASDAQ:GOOG) has had a pretty great year to date. The stock has been hitting record highs. In morning trading on October 1, Bloomberg reported that Google’s market cap had passed that of tech giant and rival Microsoft (NASDAQ:MSFT).

This success builds in part on some failures by its competitors. Microsoft has been largely unsuccessful at entering the mobile market. The company’s Windows Phone 8 platform is trying to find a home in Nokia’s (NYSE:NOK) new flagship phone the Lumia 920, but many investors are unsure that the combination will prosper. Meanwhile Google’s Android platform has been met with resounding success in the marketplace, with 52.2 percent of the platform market as of July 2012. The company’s acquisition of Motorola puts Google front and center in mobile, while Microsoft is still trying to get into the game.

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Google competes with many of Microsoft’s business solutions, as small companies turn to free web services like Google Drive instead of the Office Suite. Martin Pyykkonen, an analyst at Wedge Partners, told Bloomberg, “The PC hardware business is obviously struggling. The transition here is pretty straightforward in terms of where things have moved to and certainly that’s cloud, that’s Web.”

Google may also be benefiting from Apple’s (NASDAQ:AAPL) recent iOS 6 and maps fiasco. Apple remains the most valuable company in the world, but the proven quality of Google’s technology is attracting investor confidence and driving shares higher. A leader in web services, the company is entering the cloud to take on leaders like Amazon (NASDAQ:AMZN). With Europe announcing a massive cloud initiative and the IDC expecting the market to reach $16.9 billion in 2015, Google stands to grow enormously.

Though the company’s heart is in search and advertising, its ability to competently outperform in new and related markets is the core of its success. Google demonstrated this recently when eMarketer reported that the company will beat out Facebook (NASDAQ:FB) and climb to the top slot in display ad revenue in 2012. However, a Facebook that figures out monetization and search could seriously compete with Google.

The end of Microsoft is nowhere in sight, but with many proclaiming the “death of the PC,” companies with innovative, decentralized services like Google could define the future of software giants.

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