Will Google destroy Microsoft?

It's likely that Google and Microsoft will compete even more in the future. Both companies are expanding their core businesses. Microsoft is trying to gain ground online while Google creates services that fulfill the same functions as traditional desktop software. Both companies are on the lookout for potential acquisitions and partnerships to bolster their position in the market.

Neither company is in a bad position. Both have suffered losses from the global economic decline. Both had to make sacrifices and cut jobs for the first time in their respective histories. But both are still worth several billion dollars, have recovered well from their financial setbacks and continue to develop new products and services.

Google seems to have a great deal of momentum. The company has a reputation for innovation. It's famous for giving employees 20 percent of their work week to pursue special projects. Many of these special projects end up in Google Labs, a special section on Google that allows users to experiment with new services. Eventually, these services may graduate into fully-realized products from Google.

On the other hand, many Google services seem to be stuck in beta. Beta is the industry term for products that are in a testing phase -- they aren't yet in a finalized format and users may encounter bugs or other problems while testing the product. As an example, Google introduced Gmail in 2004. It wasn't until five years later that the service finally lost its beta tag [source: Coleman]. And despite multiple attempts at diversification, Google's search engine is its only breakout financial success. According to the U.S. Securities and Exchange Commission, 97 percent of Google's revenue comes from online ads [source: SEC].

The public and corporate reaction to Windows Vista was a blow to Microsoft, though the positive response to Windows 7 has helped turn the tide. The Windows operating system is a core Microsoft product. As more people learn about cloud computing and question the value of powerful personal computers, the company must adapt to the new market environment. Products like Office Live Workspaces are a start, and Microsoft has other initiatives designed to capitalize on cloud computing, too. Microsoft is regrouping for the big comeback, and it has the resources to make it happen.

Competition continues to heat up on some fronts, but both sides are still strong, and it looks like Google won't be dealing the death blow to Microsoft any time soon.

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