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Why Microsoft Corporation (MSFT) Cannot Compete With Google Inc (GOOG) on Price

Server and Tools has seen some good growth numbers. From 2010 to 2011, the division saw 17% growth, and from 2011 to 2012, an 18% increase. But, one has to question whether that could continue as companies focus more on the cloud, where the concept of servers is completely foreign. And while Microsoft Corporation (NASDAQ:MSFT)’s Business Division, which sells software licensing to companies, saw a great 24% increase in revenue two years ago, the growth slowed to 7% last year to a total of $15 billion in profit on $23 billion in revenue.

Conclusion

Google Inc (NASDAQ:GOOG) is not going to back away from the enterprise soon. In fact, on its most recent earnings call, it specified that investment in the company’s enterprise products was going to increase. Analysts believe that Google is now making $200 million in revenue per quarter on Google Apps and the Google Cloud Platform, which allows companies to build custom solutions on Google’s Platform. This is a 195% jump year over year.

While Apple Inc. (NASDAQ:AAPL) sells hardware to companies, those devices in turn help Google Inc (NASDAQ:GOOG) because as a replacement for BlackBerry Ltd (NASDAQ:BBRY), an iPhone can connect right into Google Apps’ email and other productivity apps in a snap.

Over 50% of the Fortune 500 is now using some sort of Google Inc (NASDAQ:GOOG) enterprise product. Microsoft Corporation (NASDAQ:MSFT) needs to make a move in this space to stay relevant and to maintain its $42 billion in revenue from the Servers and Tools and Business Division revenue. That makes up 57% of its total annual take. The question is: how is it going to do that?

Daniel Cawrey has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft.

The article Why Microsoft Cannot Compete With Google on Price originally appeared on Fool.com.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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