Microsoft left searching for answers as Google maps out market gains

FOR Microsoft, it was bad enough when Apple's sharemarket value surpassed its own in 2010. Now Google, a company that didn't even exist 15 years ago, just did the same thing.

FOR Microsoft, it was bad enough when Apple's sharemarket value surpassed its own in 2010. Now Google, a company that didn't even exist 15 years ago, just did the same thing.

Earlier this week a slight bump in Google's share price and a drop in Microsoft's gave Google a market capitalisation of $US249.19 billion ($241.8 billion), just ahead of Microsoft's $US247.44 billion. Google's market value also edged past that of Wal-Mart Stores, making it the third most valuable US company behind Apple and Exxon Mobil. Market value is determined by multiplying a company's stock price by the number of shares it has outstanding.

It was one more sign that the technology industry has entered what some call a post-PC era. Investors are becoming more bullish on the growth opportunities for Google, a company whose fortunes are predicated on the internet and, increasingly, on mobile devices and services.

Microsoft, meanwhile, has not been able to shake the view that its software business is still largely beholden, in one way or another, to the PC, a technology that is now looking stale next to younger, faster-growing devices like the smartphone and tablet. Microsoft's software business, although still highly profitable, is not growing the way it once was.

Microsoft once had one of the technology industry's highest-flying stocks, but its shares have stagnated over the past decade after many big investments by the company, especially in the consumer market, failed to pay off. Its Bing search engine is a big money-loser and a distant second in the market behind Google. Its mobile software business has been marginalised by Apple and Google with their iPhone and Android products.

Google's attempts to find other sources of revenue, like display and mobile ads, have potential. But many investors have not been convinced because it takes new businesses some time to grow and because a business must be very profitable to be more than a drop in the bucket of Google's earnings from search ads. At the same time, Google's experiments, like self-driving cars or Groupon-style deals, make some worry that it is throwing money at the wrong places.

Google is expected to topple Facebook and Yahoo! this year as the leader in online display advertising, bringing in $US2.31 billion in display ad revenue, according to eMarketer.

Microsoft's revenues are still larger than those of Google and are likely to remain so for a while.

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