Google vs. Microsoft: Revenue Reality Check
When Google announced big Q2 revenues yesterday, it reminded The VAR Guy of an old blog he wrote. Back in May 2008, The VAR Guy openly wondered if Google’s annual revenues would ever surpass Microsoft’s revenues. Fast forward to the present and it’s time to raise that question again: Are Google revenues catching up to Microsoft revenues? The VAR Guy has an answer and some analysis that will surprise most readers.
First, let’s look at conventional wisdom: Some critics think the Microsoft empire is collapsing, especially as Microsoft struggles to compete against Google in search, Apple in tablets, and both Apple and Google in smart phone software. But most critics overlook the fact that the Window and Office businesses remain massive, and Microsoft does have a pipeline of multi-billion-dollar business applications — like Lync, SharePoint and Dynamics CRM.
So what’s the result? Let’s look at annual results for Microsoft and Google since 2001, in billions of dollars — with some rounding here and there from The VAR Guy.
GOOG vs. MSFT: Annual Revenues ($Billions)
[table]Year Google Microsoft Microsoft Lead
2001 $0.1 $25.3 $25.2
2002 $0.4 $28.3 $27.9
2003 $1.4 $32.1 $30.7
2004 $3.1 $36.8 $33.7
2005 $6.1 $39.7 $33.6
2006 $10.6 $44.2 $33.6
2007 $16.5 $51.1 $34.6
2008 $21.7 $60.4 $38.7
2009 $23.6 $58.4 $34.8
2010 $29.3 $62.4 $33.1
What the Data Shows
The Google column reveals Google’s remarkable growth from a tiny company in 2001 to a $29.3 billion Internet powerhouse in 2010. The growth curve is rather amazing. But hey… what’s going on over at Microsoft? During the same 2001 to 2010 time period, Microsoft has more than doubled its revenues from $25.3 billion to $62.4 billion. For a “dead” company, that’s quite a strong heartbeat.
Now, look at that final column on the far right. It measures the difference or gap between Microsoft and Google annual revenues — in billions of dollars. From 2004 through 2010, the figure is quite consistent: Despite Google’s rapid growth, Microsoft’s annual revenues have exceeded Google’s annual revenues by at least $30 billion each year.
In the past three years (2008 through 2010), Google certainly gained ground on Microsoft’s revenues, closing the gap from $38.7 billion down to $33.1 billion. But The VAR Guy thinks most folks continue to greatly underestimate Microsoft’s staying power. And for at least the next few years, it’s safe to say Microsoft’s annual revenues will exceed those of Google…