Filed under: Google (GOOG), Microsoft (MSFT)

The New York Times quotes Harvard Business School (HBS) professor David Yoffie as saying “the right way to think about” Google Inc. (NASDAQ: GOOG) is as “the next Microsoft Corp. (NASDAQ: MSFT).” Setting aside for the moment, the arrogance that we need Yoffie to tell us how to think is the simple notion that he’s wrong.

Here are three reasons why:

• Google is an innovator, Microsoft never has been. Microsoft got started by licensing an operating system for the PC. And it prospered by making it the dominant operating system and tying it to office software — each component of which it copied or bought from an innovator. Google has won because it has developed an improved a search ad technology that gives advertisers a higher return on their investment;
• Google has succeeded because its product works better, Microsoft’s not so much. Microsoft has lost market share in search advertising since it started to focus on it — watching its share fall from 11% in 2005 to 5% today. The reason Microsoft has lost share is that its product simply does not work as well as Google’s; and

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This entry was posted on Wednesday, May 7th, 2008 at 9:14 am and is filed under Stocks Money News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.