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Worry Less About Google, More About Microsoft

Stocks in this article: GOOG AMZN MSFT AAPL

Microsoft's main rival is not Amazon, but Apple (CLNE), and there it's being beaten badly, as Wired explains . The historical roles have fully reversed, with Microsoft offering the niche product in the Surface tablet, while Apple controls the mass market through the iPad. This is even reflected in the PC niche, where sales are not just declining but where the iMac is gaining share steadily.

So, sure, both companies had a disappointing quarter. Google's results are still too tied to advertising. Google had to absorb both the cost of acquiring Motorola and of downsizing it.

But Google will survive. Its cloud leadership is not threatened. Its problems lie entirely in how it can monetize its advantages.

By contrast Microsoft has lost its advantages. It's Azure cloud is more costly than the clouds of Google and Amazon. Its "moat" -- the PC and enterprise server software that keeps competitors at bay -- is losing its edge in the face of competition from IBM (IBM), Oracle (CLNE) and other cloud-based technologies.

Even if Windows 8 turns out to be much better than expected, it's unlikely to gain a double-digit share of either the phone or tablet market.

This time next year, Microsoft will be increasingly threatened by the cloud, its Windows 8 will have peaked, while Google will be fully engaged in monetization. I have shares in both Microsoft and Google, but I'm likely as not to take my lumps on Mister Softee and put that money back into Google, maybe soon.

Time may have passed Microsoft by, but the age of Google is just beginning.

At the time of publication, the author was long MSFT, AAPL, and GOOG

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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