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Yes, Microsoft Corporation (MSFT) Can Defeat Alphabet Inc (GOOG) in Search

There’s no arguing that the Microsoft Corporation (NASDAQ:MSFT) we have these days is different from the one we had in the first decade of the millennium. The fact that comparisons are being drawn between Apple Inc. (NASDAQ:AAPL) and Microsoft stock these days — with MSFT actually coming out ahead — is testament to this assertion.

Yes, Microsoft Corporation (MSFT) Can Defeat Alphabet Inc (GOOG) in Search

For most people, the fact that Microsoft is switching from being just a software company to designing its own computer hardware as well is the reason Microsoft stock is winning.

The company has reworked its business to become more vertically integrated, building a one-stop shop for the needs of enterprises and consumers. A recent move in that direction is the addition of customer relationship management functionalities that can be assessed through Outlook to the Office 365 SMB plan at no extra cost.

Microsoft execs noted that the Outlook Customer Manager — the name given to the CRM functionality — will be introduced to Office 365 E3 and E5 plans imminently. This makes Microsoft a stronger competitor to salesforce.com, inc. (NYSE:CRM), to some extent, as it improves the value proposition of Office 365, which was already essential to the operation of several businesses.

In short, Microsoft is working on getting even more ingrained into consumers’ lives. The only missing piece of the puzzle is a scalable mobile platform that works almost seamlessly with the Microsoft desktop platform. And there are rumors that the company is working on a Surface Phone due for release sometime in 2017. Microsoft stock holders likely aren’t too enthused with MSFT’s mobile prospects, as it hasn’t had the best luck with mobile in the past, but its Surface brand could be strong enough to pull mobile out of the swamp.

The Battle Between Microsoft and Google

If the missing puzzle that is a coherent mobile platform comes around, and it creates an integrated MSFT ecosystem, Microsoft stock investors should expect a serious battle between Bing and Alphabet Inc’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google Search.

Microsoft execs hinted at this (albeit without mentioning Google) during the recent Bing Ads Next event. Rik van der Kooi, corporate vice president of Microsoft Search Advertising, referred to Bing as an “intelligence fabric” that has been embedded into Windows 10, Cortana, Xbox and other products, including Hololens. He went on to say the future Bing will be personal, pervasive and offer a personal experience so much that it “might not be obvious users are even interacting with the search engine.”

An example of interacting with search engine without knowing it would be doing a product search on Hololens in which the user tests how a couch looks in their living room. Another example would be asking Cortana questions and getting what you need without actually launching the Bing search box. According to Kooi, Microsoft is working on these aspects.

Why Microsoft Stock Will Win the Search Battle

This is a bold call considering that Google owned 89.38% of the global desktop search engine market, while Microsoft owned 4.2% as of July 2016, according to data provided by Statista.

With MSFT’s endeavors to create an integrated ecosystem, however, the long-term scale is tipping in the favor of Microsoft stock. That’s because Microsoft’s traditional business is entrenched into many people’s lives as well as business operations. For instance, the majority of desktop devices run on Windows.

Yes, Google has a wide moat in the mobile space, but that’s likely to shrink if Microsoft eventually pushes through a mobile platform that appeals to consumers while seamlessly integrating with desktop. Unlike MSFT, Alphabet doesn’t have a desktop platform that it can use to battle Microsoft in this regard.

In essence, if Microsoft Corp. gets it right with mobile/desktop integration, Google is in for a rough ride in the search engine business over the long term.

Interestingly, Microsoft is also thinking outside the box with Bing. Bing is the search engine for Amazon.com, Inc.’s (NASDAQ:AMZN) assistant gadgets, as well as Apple’s Siri. And investors shouldn’t forget that once the acquisition of LinkedIn Corp (NYSE:LNKD) is completed next year, further Bing integration will come.

Long story short, investors who have invested in Google because of its search business should as well start considering investing in Microsoft.

As of this writing, Craig Adeyanju did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/11/microsoft-stock-msft-bing-google/.

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