Today is March 13th 2006 and it was exactly 20 years ago today the most successful technology company of all time came to market.
The year was 1986 Chernobyl was being covered up by the Russian government, the Iran Contra Affair was in full swing and in the NBA The Boston Celtics took the Houston Rockets in 6 games. The most popular song was “That’s What Friends Are For” … Dionne Warwick and Friends
There was also a rather small company changing the way the world was computing, and about to make many early investors and employees (who took stock options) very happy.
The performace of microsoft’s stock has been absolutley stunning as everyone knows, just to give you a few examples if had invested only $3000 at there ipo price of $21 a share it would be worth in excess of 1.1 million, another intresting fact is that Microsoft’s stock has split 9 times, so that same $3000 you would have 40,000+ shares (now that doesnt hurt). We all know Microsoft is one of those rare companies that people wish they had invested in, but now a days all the talk seems to be surrounding Google. Which is very understandable since the stock has put in a great preformance so far, only recently falling on hard times.
The Comparision
Microsoft - The company that popularized the “windows” style (not the inventor, that goes to Xerox Parc, probley the biggest screw up company in the history of the world) and basically owns the Operating System business still to this day, was in the “sweet spot” they were in the right place at the right period in time, when computers were not really able to talk to each other, so the progress was limited. They dominated that spot for now 20 years, but the harder times are now coming, even the chief Bill has declared that the OS’s days are running out, people are now migrating to a simper style of computing. A style which is much more dependant on web services, i would boldly predict that within the next 10 years
you may not even have an opoerating system, your computer would just boot up instantly to your personal “homepage” it’s basically your homebase on what you want to do.
So what are shareholders left to think?
Well as with all other things Bill does he is thinking ahead many many years into the future and he has realized that web services are the future, so as a shareholder (as i am full disclosure people) i think you are in a good spot as Microsoft is gearing up to take over the living room and many other things you never thought of, i.e. the mobile phone with the switching of Palm Treo to the Microsoft mobile OS can it be only a matter of time till the Redmond boys own the phone market too?
I don’t know what the future hold all i know is that the past is a great indication of the future, but remeber just a when you drive you can’t only look in the rear view mirror, that’s how accidents are caused =)
Google
Google ipo’d in August 19th 2004 at $100 a share, since then it has gone on a meteoric rise to the high of $475 and more recently come down to the $350’s.
With Google we have a completely different story a company who’s mantra is “do no evil” and trying to please everyone from users to shareholders, but there seems to be some issues as of late, people have realized that Google is 99.9% dependent on advertising revenue which for right now is ok, and even looking into the future as newspaper sales continue to weaken, with more and more people turning to the internet to get there information, Google seems to be in the “sweet spot” also…… but for how long?
One of the key points i made about Microsoft earlier was that computers were not connected and that is crucial, for once they are connected information, files, and the most important thing ideas, can be transfered instantaneously. We are seeing that today as the internet and websites that are in vogue seem to be changing faster than who’s hot in Hollywood. Which is a very bad thing for Google (which i am a shareholder of…like i said before full disclosure).
Not to worry though Google has a plan, or at least i think they do…..
With the recent purchase of Writley and the leaked information on the G-Drive? (Google storage). Google seems to be building a way to escape the operating system, and pushing users to do everything online. With the engineering geniuses that Google hires they should be able to come up with a way to do that….. but can they monatize it? (meaning can they make money from there inventions). Only time will tell but as you can see from below the pro’s and con’s of both companies are rather apparent.
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Microsoft
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Google
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| 20 years of experience (stock unsplit price is about $7780 | 1.5 years of experience current price $360 |
| History of success beating estimates | Has some of the most talented engineers |
| Expanding into new catagories including mobile phones, living rooms | own 40%+ of search engine share |
| Has Bill Gates (that alone is worth at least $15/share) | Online leader in advertising |
| MSN Messenger is seen as a very key target for future advertising growth and intergration of products | Has a squeaky clean image |
Con’s
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Microsoft
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Google
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| Giant company seen as stodgy | Not able to monatize on creations |
| OS life is running out over the next 10 years | Horrible Design |
| Losing key employees | Click fraud |
| Justice department monopoly | SEO optimization wrecking search results |
| Only 15% of search engine use | Recent failure’s of google talk, google video, google desktop |