Both Microsoft (News - Alert) and Amazon reported earnings last night that showed marked improvement over last year. However Microsoft's earnings came in above the estimates by 5 cents a share while Amazon's fell 9 cents a share short of the expectations.

As the twist of fate would have it the two companies that have divergent core businesses are also competitors on some levels. Amazon, a pioneer in cloud computing, is seeing competition from Microsoft in the form of Azure platform. As the adoption of the cloud seems to have leveled off a bit, more competition means smaller margins and more expenditures to attract users.

Next up is the rumored Windows Tablet. If that comes to pass, it will be yet another area that Microsoft will be competing with Amazon. Amazon's book reader, Kindle, is already under pressure from other book readers as well as the popular iPad by Apple (News - Alert).

The market reaction to Amazon's disappointing earnings has been broadly negative sending the stock down sharply on Friday, while Microsoft has received a cool reception, with the stock trading relatively flat, unlike the surge Apple experienced on Wednesday after announcing impressive earnings.

The broad market seems to be more pre-occupied with macroeconomics events, such as jobless rates, housing numbers, deficit, and consumer sentiments in the U.S. and abroad.