Google takes on Mr. Softie
Research for Online Investors

by John Dalt

7/09/09

Google took a shot at Mr. Softie.  Every time I hear that moniker for Microsoft, I think of the giant marshmallow man in Ghostbusters!  Google announced in a blog posting yesterday that they would introduce a new operating system (OS) in the spring of 2010.

Google Chrome Operating system shares the same name as the web browser it introduced in September 2009.  Chrome will initially run on net books (small web laptops).

Leading manufactures are looking at Chrome for incorporation in their products.  Microsoft will defend their home turf.  If Google can make headway in the net book market, they will naturally want to move to laptops and desktop computers.

Google touts anti-virus and malware capabilities.  Like its Gmail and Google Apps, the new operating system will use Cloud computing technology.  This is where the user accesses programs, spreadsheets, documents and attachments on the internet.  This allows easy sharing with others.

Cloud computing also means that if you do not have internet service, you do not have wordprocessing, spreadsheet or other programming.  If you send an email with cloud computing, the attachment is not sent to the recipient, just a link to the file stored on a central computer.

Microsoft’s Windows holds 87.8% percent of the market in May 2009 This is the lowest percentage they have ever held, as Apple is taking market share.  Apple MacOS is up to 9.8% from 8.9% in November 2008  Eric Schmidt, CEO of Google, serves on Apples board.  It will be interesting to watch for his resignation.

Microsoft launched Bing, its new search engine to open a front against Google’s strength.  Chrome will be an “open source” project.  Developers of third party software can access the code for Chrome free.  This should lead to a fast ramp up of peripheral applications.

Microsoft rolls out Windows 7 on October 22, 2010  The stock has drifted lower since the announcement by Google.  It would be hard to attribute the lower price to Google’s announcement as the market as a whole has been under pressure.  On the other hand, Google has moved higher.

Microsoft will be under increasing pressure to defend Windows 7.  You can only imagine the pressure Mr. Softie is putting on manufacturers to keep Chrome out of the market.  Should we short MSFT?  Maybe along with the rest of the market, but not because of this development.

Yesterday, I wrote about Wal-Mart and the fallacy of their getting in bed with the government on the mandate for health insurance.  I did not add, short WMT from above $55, if you have a long term horizon.  You will have to pay the $1.02 dividend if you hold into December.  The track they have chosen could lead to their destruction.  Imagine Wal-Mart run by unionized postal workers.

Consumer credit dropped for the fourth month in May.  Consumer borrowing in the U.S. now equals $2.52 trillion according to the Federal Reserve.  This is a 1.54% drop from April.  Savings rates are increasing; borrowing declines are the most significant since 1991.

Apartment vacancies are at their highest levels in 22 years.  Vacancies climbed to 7.5% according to Reis Inc.  Year ago vacancy levels were 6.1%  As unemployment climbs, vacancies increase.  Is this a precursor to more bad news?  In 1987, the last time rates were this bad, the S&P 500 dropped 23%

Thanks to John B. for sending in the health care/tea party cartoons, I could not use them here because of the quality.  Keep them coming.

“It’s human nature to keep doing something as long as it’s pleasurable and you can succeed at it – which is why the world population continues to double every 40 years.”
---Peter Lynch

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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