[adventured]

As funny as that is, their core business has extremely high margins.

If all Google did is run their search engine and ad business, they'd have a 50%+ net income margin.

For fiscal 2010, they printed $8.5b in net income on $29.5b in sales (28.8%). That's with all the other things they do that don't have good margins (or lose money) eating up their core margin.

Very few things have better margins than software (Microsoft once hit a 41% net margin, for fiscal 2000; nothing better than software monopoly margins).

[aaronblohowiak]

>Very few things have better margins than software

Ad business and search engine are not selling software.

[adventured]

I didn't say selling software.

I said very few things have higher margins than software. Google's search engine and ad platforms are software systems, and Google is a software company first and foremost; they always have been, and always will be.

The extrapolated principle is obvious here. Google writes it once, and scales it toward infinity. The same principle worked for Microsoft with Windows; the same principle is at work for Salesforce.com or Facebook or Oracle, regardless of what we call it ("cloud"). This principle is what makes most software so profitable, per user there's usually nothing to uniquely manufacture or create. With scale margins properly skyrocket.

So whether we're talking about software search, or software retail, or an ad business built on software (eg Google's hyper automated ad system) or software services, the difference doesn't matter much.