Microsoft Corporation's Cold War With Google Is Heating Up

CEO Satya Nadella issues a 3,000-word missive that calls for a big investment in productivity and platform software.

Jul 15, 2014 at 10:45AM


Current Microsoft chief Satya Nadella speaking at a 2013 event. Credit: Microsoft.

In laying out his priorities for Microsoft (NASDAQ:MSFT) in a 3,100-word memo published last week, Satya Nadella signaled a coming escalation in Mr. Softy's war with Google. Fool contributor Tim Beyers explains the details in the following video.

Nadella referred to Microsoft as the "productivity and platform" company for a mobile-first and cloud-first world. While that could mean anything, Tim says the context of the memo suggests an even bigger bet on the Office products that have become so important to the company.

"We have a rich heritage and a unique capability around building productivity experiences and platforms. We help people get stuff done. Stuff like term papers, recipes, and budgets. Stuff like chatting with friends and family across the world. Stuff like painting, writing poetry, and expressing ideas. ... This is an incredible foundation from which to grow," Nadella wrote, referring largely to work performed using Office apps.

No one should be surprised by his emphasis. Microsoft has repeatedly said that one in seven people worldwide uses Office in some form. Nadella has to keep as much of that business as possible, but he can't do so without first making the software accessible on any device, anywhere, regardless of the underlying OS. Perhaps that's why Microsoft has never denied reports that the touch version of Office would go to Android before Windows 8?

Either way, it's becoming clear that Microsoft won't tolerate Google's naked attempts at torpedoing Office any longer. Tim says that's good news for investors who watched as the search king has grown its installed base of Google Apps business users from zero to about 50 million at the end of last year.

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Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple and Google (A and C class) at the time of publication. Check out Tim's Web home and portfolio holdings, or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool recommends Apple and Google (A and C shares) and owns shares of Apple, Google (A and C class), and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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