NEW YORK (TheStreet) -- Two of the three computing giants reported earnings last night, andthe market reacted well to both reports, as both companies traded upin the after-market.However, these two companies are by no meansdoing equally well. Let me explain how Google ( GOOG) is sucking thelifeblood out of Microsoft, and it's going to get a lot worse in thecoming quarters and years. Microsoft grew revenue year-over-year by 7% and adjusted EPS by 6%.This compares to Google, which grew revenue (exclusive of Motorola) by21% and adjusted EPS by 20%. In other words, Google is growing threetimes as fast as Microsoft. Microsoft is in the midst of the biggest worldwide computing boom inhistory, with billions of people around the world starting to affordcomputers -- whether residing in their hands, laps or on their desks-- for the first time. So why is Microsoft growing so slowly, hardlykeeping up with more commoditized old-world businesses? Google, that's why. Ask yourself this question: How many people do you know who haveswitched from a Google product to a Microsoft product in the lastyear? Two years? Ever? Exactly, me neither. Let's mention four major product areas where Google is beating Microsoft: 1. Productivity software Microsoft Office is Microsoft's biggest profit center because -- youguessed it -- it typically costs a lot of money to use it. Someversions of the Office suite has cost as much as $450, although manypeople, including students, of course pay less. Google sells laptopsfor $450, and the software is provided for free for individuals andsmall businesses. 2. Email Everyone knows Gmail beats Hotmail. That's why almost all of yourfriends -- at least those under the age of 50 -- have switched. 3. Smartphones Depending on whose market estimates you use, Android has around 50%market share, whereas Microsoft struggles to achieve 5%. This is thebiggest market in the world, and Google is beating Microsoft 10 to 1. 4. Social media In one year, Google has reached 250 million users, or one third ofFacebook's. Yes, user engagement isn't quite there yet, but whothought one year ago that Google would even be close to 100 million bynow? What does Microsoft have? A stake in Facebook. Better thannothing, but a relative embarrassment compared to Google.
Back to the switching argument again: Ask yourself how many people orbusinesses you have seen that switched from Microsoft to Google in thelast year. Then ask the opposite: How many have switched fromMicrosoft to Google? If your observation is similar to mine, you will conclude that this isa one-way street: Google is winning everything, and losing nothing --at least to Microsoft. This is why Microsoft is growing revenue andearnings at one third Google's pace. And it's not just companies switching from Microsoft to Google. Whatabout new startups? I have been meeting with startups almost everyother day for over a decade, and in the last few years I have not seena single one building its IT on Microsoft. It's 100% Google -- appsand Gmail. Of course, Apple ( AAPL) has a strong device presence, from PCs tosmartphones and tablets. Google is opening up additional fronts against Microsoft. The700,000-plus core Compute Engine is one such front. Sooner or later,Google is also likely to get into the gaming console market, one wouldthink. Most visibly, and relatively near term, however, should be Google'sincreasing emphasis on the PC business. So far, Google has marketedChrome OS PCs mostly to some schools, where it has had some success inplaces such as the South Carolina and Florida school systems. Google's timid approach to marketing a well-received product will soonchange. In only a few short months from now, we should expect more PCmarkers -- the likes of Dell, HP, Lenovo, Acer, Asus, Sony andequivalent -- to introduce and market Google laptops and desktops. When Google goes after the PC market with more effort, more people arelikely going to see the threat to Microsoft. Judging from how goodGoogle's current PCs (made by Samsung) are, this will likely causematerial harm to Microsoft. Of course Google's product portfolio continues to lack in someimportant areas. I already mentioned the gaming console. Somethingto compete with Microsoft Outlook is another. Google Calendar isalmost there, but not quite. Google's most glaring weakness in theentire company's portfolio is the address book, which is far behindOutlook in important functionality. Conversely, Microsoft has remaining advantages with the Xbox 360 andOutlook. One embarrassing shortfall for Microsoft is that its newWindows 8 RT operating system will not get Outlook. This is theequivalent of BlackBerry launching a new product without email and aphysical keyboard. People will soon wake up to this embarrassment.
What about the smartphone? I actually think Windows Phone is anexcellent product, with the OS performance easily holding its ownagainst the iPhone and Android. The problem is that being equallygood -- or even slightly ahead -- is not likely good enough. Microsoft is late to market, and many of its cloud service tie-ins arearriving late to market, or aren't there at all. That said, Microsoftshould be a player here -- far, far behind Google and Apple. This brings us to Windows 8 for the PC. Do your friends salivate atthe idea of upgrading to Windows 8? No and neither do mine. Some arecurious to try it, as they have some hope that it might turn out to besomething interesting. Sadly for Microsoft, the people who have trieda Beta version have almost uniformly sworn to never get it, runninginto the arms of Apple and Google instead. I like some of Microsoft's products. Windows 7 was a success.Windows Phone is a solid product. Skype is dominant. The Xbox 360 isbest in class. Outlook has no decent competitor from Google or Apple.However, these positives are not stemming the overall tide. The tide carries a market share shift in only one direction: Outfrom Microsoft, and into Google and Apple. Apple has been the stockmarket's darling for a few years now, and for good reason. Google,however, is coming on strong, taking market share from MicrosoftOffice and other cloud services. When Windows 8 largely fails in the coming months, as I expect it will-- lack of interest in an upgrade cycle -- and Google makes its pushfor the Chrome OS PCs (Chromebooks and Chromeboxes), people will seemuch more clearer how Google's growth rate will continue to be vastlysuperior to Microsoft's. For Google, Apple is the toughest competitor-- not Microsoft. At the time of publication, the author was long GOOG, AAPLand FB, and short MSFT. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.