Google’s market capitalization surpassed that of Microsoft this week, marking the second time in two years that one of the software giant’s competitors has outperformed it in this strange measurement of value. Apple, of course, surpassed Microsoft’s market capitalization in 2010, triggering talk of a post-PC era.
Google’s market capitalization—a measurement of a firm’s share price multiplied by the number of shares outstanding (which, I think we can all agree, is absolutely the best way to measure the size of a company ... cough)—hit $249 billion on Monday, surpassing Microsoft’s $247 billion market cap. Post-PC era?
I think what we’re really seeing is simply a normal diversification of the technology market, which used to be almost purely PC-based from a growth and momentum perspective. Today, PCs are a mature market, with slow growth relative to mobile devices, cloud services, and other technology products and services. Microsoft calls this the “PC plus” era, which is certainly as accurate a term as “post-PC.”
But Google’s claim on the post-PC world is tenuous. The firm’s revenues come almost solely from advertising, not cloud services, mobile devices, or other technology products. And despite a claim by The New York Times that there is “evidence” that Google isn’t a “one-trick pony,” it is. This story says that Google is branching out from search ads to new markets. Those new markets? Display ads and mobile ads. Right. Google is an advertising company, not a technology company.
Put in that light, Google’s rise above Microsoft is about as upsetting as Exxon Mobil’s. Which is to say: not that much at all. And since market cap is a pretty bogus measurement of size anyway, I’d also remind worrywarts that Microsoft’s revenues continue to outpace Google’s by a wide margin. In the most recently reported quarter, Microsoft posted revenues of $18 billion compared with Google’s $12 billion. Will the companies eventually switch spots? We’ll see how those ad revenues go, I guess.
The top two companies in the world by market cap are Apple and then Exxon Mobil. But if you measure companies by their revenue, Exxon Mobil is number one and Apple is … number 44. Microsoft and Google aren’t even in the top 50. But looking at just market cap, there are only four tech companies in the top 10: Apple, Google, Microsoft, and IBM. And that latter company isn’t so much “post-PC” today as it is “pre-PC,” so it’s unclear what trends, if any, this list exposes.