The truth is that Google has many different profitable product lines, and all are ad supported. Exactly how many, and how profitable, can't be told from the way they report earnings.
In any case, you don't really need to convince me. I'm just trying to interpret what the market is saying. And the market is saying that they think Microsoft is walking off of a cliff. That's why they are worth a P/E of about 13, while Google is worth one of 22 and Apple is worth one of 21.
The market projection only gets more stark when you subtract current book value to find how much the market values future revenue. Microsoft's market cap is 221 B, their book value is 46 B, and therefore 175 B of their market cap is projected future earnings. Their current profit is 46.28 B/year, and that works out to the market valuing them at their current earnings stream projected over a bit under 4 years.
For Google the equivalent exercise says a market cap of 154 B, and book value of 38 B so 116 B of market cap is projected future earnings. Their current profit is 14.81 B/year, which translates into the market valuing them at their current earnings stream projected over a bit over a decade. (10.4 years.)
For Apple the equivalent exercise says a market cap of 225 B, a book value of 39.4 B for 185.6 B of market cap due to projected future earnings. Their current profit is 17.22 B/year, which translates into their current earnings stream projected over a decade. (10.8 years.)
So the projection that Microsoft is walking over a cliff in a few years while both Google and Apple have a decent future isn't just claimed by some random haters on the Internet. This is the consensus of the stock market, which is based on people putting their money where their mouths are.
(I took all figures for this from http://finance.yahoo.com/q/ks?s=msft, http://finance.yahoo.com/q/ks?s=goog and http://finance.yahoo.com/q/ks?s=aapl. I got book value by multiplying book value / share times shares outstanding.)
For the market in general the median "life" expectation is lower between 8 and 10 years (and negative for banks). Thus maybe we should conclude that in 10 years time the average U.S. company is going to be death...
Isn't low P/E a good thing? I don't see how this supports your point, unless I'm misunderstanding something.
I want to know what the customers are saying, because they make or break a company, not some suits playing with stocks.
Regarding Google, they're a company with one income source, no matter how many products use that income source. If they lose the search engine they lose everything.