Technology companies Microsoft and Google have both missed earnings targets as poor sales of tablet hardware and online advertising reduced both companies’ net income. The two companies are some of the largest in the tech sector, dominating the home software and online search advertising markets respectively.
Google has increased its profits by more than 16 percent in the last year, which is certainly not disappointing news for most technology companies. Despite this, the earnings fell below expectations as analysts had expected the company to see far greater growth as mobile advertising – Google’s newest service – gained ground.
Advertising, which drives over 95 percent of Google’s total revenue, resulted in a large increase in revenue, with the company earning 15 percent more than in the last twelve months. Most of the growth has come from mobile advertising, but low rates reduced Google’s earnings to below-estimate levels.
Google CEO Larry Page has called mobile advertising a ‘challenge’ and claims that the company needs to embrace the new technology. Google and Facebook, two of the largest online advertising firms by user reach, are both increasingly focusing on mobile advertising products.
Microsoft, on the other hand, has experienced poor sales of its Surface tablet – a web tablet designed to compete with Apple’s iPad. The company has a mixed record with hardware investments, as the ill-fated Zune MP3 player also failed to catch on with a mass audience in the face of competition from Apple.
The Redmond-based company made $4.5 billion in the second quarter, with sales of its operating system driving most of its profit. Microsoft has also successfully made its way into the competitive gaming hardware business over the last decade with its Xbox 360 gaming console and the upcoming Xbox One hardware.
Despite profits falling below expectations, both firms remain optimistic about long-term growth. Google’s large array of advertisers is increasingly investing in mobile advertisements, while Microsoft’s enterprise solutions continue to drive most of its revenue.
