Fin - Breakout - US

Cloud Clash: Microsoft vs Google


Ladies and Gentlemen... it is time for our main event of the evening... the heavy weight brawl you've been waiting for... Cloud Clash 1.0!

How cool would that be? The Redmond Rainmaker vs The Mountain View Kid.

If only Microsoft (MSFT) and Google (GOOG) were truly going to square up in the ring rather than just partaking in the traditional sniping, elbowing, and customer poaching that accompanies most product launches.

But alas, today's global debut of Office 365 is boldly being touted as "A Game Changer for Businesses of All Sizes."

Further raising the hype bar, Microsoft CEO Steve Ballmer said in today's press release, "With a few clicks, Office 365 levels the playing field, giving small and midsize businesses powerful collaboration tools that have given big businesses an edge for years." Sounds like Microsoft just re-invented the wheel.

But Michael Yoshikami, CEO & Founder YCMNet Advisors, says the move to the cloud is not only one that Microsoft had to do, but one that carries risks too. "One thing investors should keep in mind is as soon as you change how people work... it is disruptive behavior.. and that gives other entrants an opportunity to gain market share," he warns.

While Yoshikami says Microsoft "deserves some credit" for embracing cloud computing early, Office 365 "is not a slam dunk as they are trying to promote it." One area of concern he highlights about Microsoft's answer to Google Docs is its complex strategy of multiple price tiers versus a simple $5 per month charge from the competition.

In fact, he says Google's simple, cheap strategy for what he calls its "Office substitution product" is gaining acceptance worldwide, especially in emerging markets where actually paying for software is, shall we say, often overlooked.

Stock-wise however, most everyone agrees that this is a battle between two tech titans that are both still as dominant in their core/original businesses as they are needy to find the next big thing to carry them forward.

Yoshikami says he got out of Microsoft about 6 months ago but is currently "stalking" Google which has slumped 17% so far this year. But given Google's recent anti-trust issues and Android's losing battle against Apple's (AAPL) iPhone, he's happy to watch it for a bit and "if it drops a little more it could be an opportunity."

In the meantime, he says you have "two titans that are really trying to remake themselves." Both have massive revenues to support their efforts, but he says both also need to be like venture capitalists and use their cash flow to find the next big thing.

What do you think? Is the Google-Microsoft Cloud Clash the path to the next big thing?

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