[radioactive21]

it is not direct profits but it is indirect profits and strategic intentions as the reason google bought it. google wants you to use its services, the more you do the more you depend on them. video, voice, data, etc. they make profit as a whole, so you cant look at one unit and say it doesnt bring in profit. the longer you associate google with your video, voice and data needs they win.

[tom_rath]

Actually, the more you use Google's free services the more you cost them. It's the non-techies who are clicking their ads which are making money for Google so, for all their technical marvels, Google's revenue source(s) are pretty narrowly defined.

I can almost picture Steve Ballmer slapping his cheeks with a mocking "Oh, no! Google's dominating yet another money-sucking cost pit! Whatever shall we do?!?!" before bursting out in laughter.

[moe]

I think Ballmer stopped laughing at google sometime between them crawling out of their garage 10 years ago and them approaching MSFTs market cap today.

[tom_rath]

Until GOOG approaches MSFT's revenues, I don't think Microsoft will worry. If there's a 'war' between those two companies, Microsoft is probably handling it as one of attrition.

Google has one strong source of revenue (search advertising) and has been thrashing about for years in an attempt to build at least a second source without notable success.

Microsoft has many different sources of revenue and continues to build on each. To take out Google, all they have to do is have Bing, Yahoo and the rest patiently chip away at GOOG's search advertising dominance by a few percentage points each year and that revenue will dry up. Then, without that revenue, all of Google's vanity projects will collapse in a heap.

Google's many projects remind me of the Flying Lawnmower: http://www.youtube.com/watch?v=kNWfqVWC2KI

You can make anything fly if you have a strong enough engine shoving it and Google's engine is its search advertising revenue. Once that revenue decreases enough, their lawnmower will fall to earth, and Microsoft is surely happy to see them tack on new expensive doodads like YouTube and Chrome O/S to hurry that day forward.

[philwelch]

Somehow the anecdotes of Ballmer throwing chairs and threatening to "fucking kill" Google run counter to your speculation. Either Microsoft is getting worked up over a non-threat or Google is more dangerous than you think.

[req2]

Have you seen youtube comments? They probably are coming from the non-techies.

[tom_rath]

...and yet, populated with hordes of non-techies, Google still hasn't been able to move YouTube from substantial loss to minimal profit (even when the world was in the middle of a "Web 2.0" tech boom!).

Now that we're in a bust, what does that tell you about their future prospects?

[vijayr]

exactly. how many of MS products are profitable? every successful company has a handful of ultra profitable/successful products, and a bunch of average ones, some that take years to start making profit (as will probably be the case in youtube) and many products that may never make any profit. google is just making sure they get into as many online/mobile biz as possible.