When Stars and Cash Cows collide...

As a student of the stock market, I am always interested in the evolution of companies and the succession of the world's largest.  When it comes to trying to invest for the long term, greater than five years, its common for investors to go after the big name companies that exist like Wal-Mart, GE, Microsoft, Exxon Mobil, etc.   These companies are often revered as cash cows with a distinct competitive advantage in a specific area that has helped them to grow very large.  Unfortunately, cash cows often don't last very long in the grand scheme of things.  The up and coming rising stars tend to introduce new products and services that eventually eclipse the business models that cash cows set up successfully.

One area that has intrigued my interest lately is the Microsoft vs. Google battle.  In this example, Microsoft would be the cash cow and Google the star.  Ten years ago, Microsoft was the dominating company in the software business and Google was being formed by two Stanford Grad students in a garage.  Fast forward to 2008, and Microsoft is trying to purchase all or part of Yahoo - the jury is still out - in order to compete against the up and coming Google behemoth.  Google is essentially competing against Microsoft in everything from style to software to paid advertising on their search site to inventing new products out of thin air.  Furthermore, Google consistently reigns as the top employer for recent MBA graduates and I don't think its entirely because of their free meals in their cafeteria.  

In an arena like the technology industry where consumer tastes and preferences change on a daily basis, it will be interesting to see how Microsoft takes on the challenges they are currently facing.  If the Yahoo merger does not go through, will they be able to maintain their cash cow status as Google simultaneously replaces all that Microsoft sells and provides it on the web for free?  In the upcoming posts, I hope to dissect this battle between the two Tech-titans as well as determine the future of online media as we know it today.