Tech Roundup: Microsoft Soars, Google Disappoints

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Last week, Microsoft (MSFT) signed an important agreement with Oracle (ORCL) related to cloud computing technologies, Facebook (FB) announced its news reader, while the FTC initiated a review of Google’s (GOOG) Waze acquisition.

Cloud Wars: The Age of Collaboration

In a total about-face, the technology sector’s long-standing rivals Microsoft and Oracle decided to join forces. Oracle, in fact, is on something of a spree, also collaborating with leading CRM provider Salesforce (CRM) and others. The idea behind these partnerships is to create hybrid clouds that enable seamless operation of solutions from these players, effectively increasing the stickiness of users to their platforms and stemming share losses to upstarts such as Workday, as well as better entrenched players such as Amazon (AMZN) and EMC Corp’s (EMC) VMware.

IDC estimates that in 2012, Oracle led the database segment with a 45% share of the market and Microsoft was a strong second with 20%, followed by IBM (IBM) at 18%. Microsoft’s cloud platform Azure, which offers infrastructure for building and running applications and storing information in its servers, is up against some very tough competition from Amazon’s AWS.

Amazon has been undercutting Microsoft on price in the fastest-growing IaaS segment of the cloud market, a situation that Microsoft has vowed to change. With the current arrangement in place, Microsoft’s Azure gets better positioned against AWS and its Hyper-V virtualization software gets better positioned versus market leader VMware’s.      

Facebook's Changing Face

Facebook, which was founded by Mark Zuckerberg as a place for friends to find each other, hang out and share pictures, is looking for more. It’s evident that the joy of connecting with a long-lost friend ends once the connection is made, or admiring a friend’s pictures gets boring after a while. This increases the chances of a user moving to other apps. So Facebook intends to do a few things that could keep users on Facebook, giving it a chance to serve them ads and make some money in the process.

For some time now, the company has been trying to draw users’ attention to news, events and hot topics of conversation. Last week, it announced its own news reading service (currently called Reader), which will display both user and publisher-generated news in a mobile-friendly visual format.

Zuckerberg has promised “the best personalized newspaper in the world” at a time when Google has decided to bow out of the segment and LinkedIn (LNKD) as well as several smaller players have stepped in. Seems like a good time and a good domain for Facebook.

Google’s Waze Under Scrutiny

The FTC is reviewing Google’s acquisition of Israeli mapping company Waze two weeks after it closed. Google has taken advantage of a rule that allows the acquisition of foreign companies to go through without prior antitrust review or filing under the Hart-Scott-Rodino Act in certain cases.

Accordingly, foreign companies with less than $70.9 million in revenue or assets in the U.S. can be taken over without such formalities. Therefore, Google’s action indicates that it believes that Waze had neither the revenues (a known fact) nor assets (yet to be proved) in the U.S. that could be worth more than $70.9 million. And yet it agreed to spend $1.3 billion. So Google’s intention becomes suspect and the subject of anti-trust review.

If it is proved that Waze’s intellectual property is worth more, Google could see the deal getting unwound pretty quick since the acquisition would have been improperly executed in the first place. If Google crosses this hurdle, it will be easier to prove that it didn’t have bad intentions.

After all, it has already stated that Waze would operate separately with parts of the technology being incorporated into Google Maps. It will not be blocking others the way Apple (AAPL) or Facebook might have done. It merely wanted to ensure that it was not cut out.

Moreover, the billion dollar+ price tag could be Facebook’s doing in the first place, since Apple had offered $500 million, which Facebook drove up to $1.1 billion. Google is likely to get little more than a rap on the knuckles.

Microsoft and Facebook shares were the clear winners this past week, easily beating the market. Google, Intel (INTC), Yahoo (YHOO), Cisco (CSCO) and Apple didn’t do as well.

 

Ticker

Last Week’s Performance

6 month performance

AAPL

-2.18%

-27.78%

MSFT

+5.11%

+25.05%

FB

+5.33%

-11.14%

GOOG

+0.98%

+21.72%

INTC

+0.44%

+13.33%

YHOO

+1.70%

+25.15%

CSCO

+0.29%

+19.67%

 

The week ahead –

There have been rumblings in the media about Microsoft internally discussing restructuring actions, including the possible expansion of certain roles and the consolidation of some business units into others. Microsoft officials did not confirm any such measures and AllThingsD was not able to specify when a public announcement was likely to be made.

Google will be withdrawing its Reader despite its solid fan following. The decision was announced in March, so is not likely to come as much of a surprise. The decision has already prompted a large number of other readers to enter the market (NewsBlur, Digg, AOL, Feedbin, Feedly and Reeder to name a few).

Yahoo will be enforcing new provisions of the Children's Online Privacy Protection Act, so children under 13 will not be able to use its services unless their parents sign a waiver. There will also be other restrictions on sites collecting information on these young users. Google and Facebook require their users to be at least 13.

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