Tech giants Microsoft (MSFT, $27) and Google (GOOG, $705) are locked in a multi-front struggle whose outcome will have enormous implications for the shareholders of both companies as well as technology customers around the world. In many ways both companies find themselves at a vital crossroads: what to do when the cash cow upon which the organization is built comes under mortal threat? The answer that both have settled upon, leveraging areas of strength to force their way into adjacent markets, is both uninspired and fraught with risk.
Understanding the fundamental differences between Microsoft and Google comes down to the different paths each company took to dominance. Microsoft is a company that determined where best to place the mousetrap, and improved its products over time after securing advantageous placement. Google is a company that built a better mousetrap, and over time learned how to make placement irrelevant. Microsoft utilized Moore’s Law to sell software with ever more bells and whistles, Google utilized Moore’s Law to sell advertising and give away software as a loss-leader.by