Conventional wisdom says Google — armed with open source, software as a service (SaaS) and Web 2.0-centric tools — will trounce legacy players like Microsoft. If that’s really the case, then why has Microsoft’s revenue grown more than Google’s since 2002? Skeptical, take a look at this chart and some data culled by The VAR Guy.
Sure, in terms of pure percentages, Google is growing much faster than Microsoft. Revenue at the search giant surged from roughly $439 million in 2002 to a lofty $16.59 billion in 2007. Absolutely amazing.
But Microsoft actually has Google beat. Thanks to some dominant brands (Office, Windows, Exchange, etc.), Microsoft’s revenue has surged from $28.37 billion in 2002 to $51.12 billion in 2007.
Here’s a chart showing both company’s annual revenue (in billions) since 2002:
Translation: Microsoft’s top-line has grown roughly $23 billion since 2002, compared to Google’s top-line growth of about $16 billion.
So, a few takeaways:
- Yes, Google is growing faster than Microsoft in terms of pure percentages
- Yes, Google’s annual revenue growth (in terms of actual dollars) may beat Microsoft’s revenue growth this year
- Yes, the world is infatuated by open source, SaaS and Web 2.0
- But sorry, Microsoft bashers: The software giant isn’t collapsing.
Much like IBM’s transformation from mainframe monopolist to a successful company on multiple fronts in the 1990s, Microsoft increasingly resembles a solidly successful company that continues to grow in numerous areas.
The VAR Guy is no fan of Windows Vista. But there’s no denying Microsoft’s fiscal power.
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Note that 50% of the revenue is from Office, and 30% from Windows
All the rest account for very little… That’s why their position may get difficult: BackOffice, SQLServer, Xbox, .Net, MSN, Live search etc… they don’t bring any money.
Philippe: You missed one key point — BackOffice (SQL Server, Exchange, SharePoint on Windows Server) — bring in BOATLOADS of Money. Even if it’s only 10 percent of MSFT’s annual revenue, that’s $5 billion. The MSN, search and other stuff, admittedly, aren’t as hot. But don’t underestimate MSFT’s server business.
VAR Guy: You missed the second key point – Windows\Vista and Office markets are seriously threated by successful Giants (IBM, Sun, Google, Canonical, etc).
Even it’s only 5 percent of MS revenue, that’s boatloads of money. Don’t overestimate MSFT’s desktop business.
Agreed: Every percentage point lost on the desktop represents big bucks to MSFT. But don’t forget. The company’s DAILY profit is more than Red Hat’s entire QUARTERLY profit.
Good argument. Phenomenal financials though – both Google and Microsoft.
Please update this analysis with 2008 and 2009 data
Google has grown in popularity but needs training to capture more users of Enterprise products.
MS Office 2007 is surprisingly a lousy product, but what are people buying MS – Office 2003?
It’s time for The VAR Guy to update the chart above. Here are the surprising results.
-TVG
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