Google Search to Elbow Windows As Revenue Generator

By spring 2009, according to Silicon Alley Insider, "Google's search business will be larger and more profitable than the most profitable and legendary monopoly in history—Microsoft Windows."

This past quarter, Windows produced about $4 billion in revenue for Microsoft, down from $5 billion-plus a year earlier (when the Vista operating system was released). Google's search business in first quarter of this year approached $3.5 billion in revenue, nearly $1 billion more than a year earlier.

Microsoft Windows and Google Search are natural monopolies and are "wildly, fantastically profitable," the Insider article says. "Google is also growing faster than Microsoft's two monopolies combined—Windows and Office. Google has yet to develop a second huge, fantastically profitable monopoly—the Office equivalent—but (Google's ad serving service) AdSense is getting there."

Now that Microsoft won't be buying Yahoo, Google dominance as an online revenue generator will soar. "By next year, half of the world's online advertising—set to reach $55 billion in total—is expected to flow through Google's systems," the Financial Times reports. Of that, slightly more than two-thirds will come from advertisements that run on Google's own Web sites. The rest represents advertising that the Internet company, acting as a broker, places on other companies' sites in return for a small cut of the action."

Revenue from Google search represents about 70 percent of the estimated $16 billion of advertising placed on search engines last year, a share that continues to rise, according to the Financial Times. MIT management professor Michael Cusumano told the paper: "They're sitting on a goldmine."

Posted by Eric Chabrow on May 14, 2008 9:54 AM