Now Playing: Apple & Google Heat it Up 3D
David is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Steve Jobs lead the charge against Android years ago declaring it a stolen product and vowing to go thermonuclear to destroy Android. These opinions marked a drastic drop in relations from when Google (NASDAQ: GOOG) and Apple (NASDAQ: AAPL) shared a board member and were largely in a state of coopetition, not direct competition. Since Mr. Jobs passed away in 2011 there have been rumors that Apple may be willing to license some of its intellectual property to Google in a cross licensing deal similar to what Microsoft has with 70% of all Android handsets (Microsoft could make close to half a billion dollars from this licensing in 2012 according to Goldman Sachs). Additionally rhetoric like “I'm going to destroy Android, because it's a stolen product. I'm willing to go to thermonuclear war on this.” And “I don't want your money. If you offer me $5 billion, I won't want it. I've got plenty of money. I want you to stop using our ideas in Android, that's all I want” has not been heard since Jobs passed. Though, that does not mean the rivalry between the two tech titans has been turned down as the latest arena for their clash is mapping and location based services.
Apple has plans to drop Google maps on their iOS devices later this year, according to reports in the Wall Street Journal, after using Google maps since 2007. Earlier this year Apple released a new iPhoto App for iOS which lacked the Google Maps geo-tagging feature that had previously been in iPhoto. OpenStreetMaps, an open source alternative to Google Maps is now used for geo-tagging in this iPhoto app, though iPhoto does not have any water mark or map maker identification. According to the Wall Street Journal, Apple has been working on its new mapping products for years so that they can replace Google Maps.
Indeed Apple bought mapping companies Poly9 and C3 in 2009 and 2010. Apple has also been collecting location information to provide better location data for iPhone users which could be a competitor to Google Navigations turn by turn service on Android. Apple is expected to launch its own competing service to Google Maps using its own technology in their upcoming iOS 6 mobile operating system and we should get a preview of it at WWDC the Apple developer conference. This move will have a larger impact on Google than it will on Apple. Apple is not making this move to make money, they are making it so they don’t have to rely on Google for their maps, navigation and local services.
The Google maps experience has never been as good on iOS as it is on Android where Google Maps, Google Street View, Google Navigation, Google latitude and other Google services integrate to produce an excellent suite of location services. According to Strategic Analytics by 2016 the location based services market will reach $10 billion with roughly half of that coming from mobile search advertising. Google recently purchased AdMob for $750 million to ensure that it is the dominant player in mobile search ads.
However maps, navigation, reviews and social local services will make up the other half of that $10 billion and with Google Maps, Google Navigation, Latitude, Google Plus, Zagat, Street View and other services Google offers a full suite of location based services. These services will get less traction on the iOS platform with Apple’s shift to their own in house mapping service and location information. At the moment Apple has complete control over their map app in iOS, but the back end belongs to Google. According to Opus Research, mobile ads associated with a location accounted for roughly 25% of total mobile ads in 2011 up from just 10% in 2010.
For Apple this is not about making money in the location based services market. Apple makes its money mainly from hardware and can offer greater location integration and control of their ecosystem by offering their own mapping and location services to compete with the Android navigation experience and Google maps. For Google, whose location based services are the default on both Android and iOS giving them over 80 percent of the smartphone market and the vast majority of the tablet market, this is a larger deal.
Especially because 90% of iPhone users used Google maps on their iPhones; Google will lose revenue and they will also lose some of their very valuable location data aggregated from users of their location services they use to pitch companies to buy ads on their local products. Additionally Google recently started charging for services that use Google Maps at scale, more than 25,000 API calls per month, which could have been the straw that broke the camel’s back and prompted Apple to launch their competing service that they had been working on for years.
One of the rumored features of the new Apple mapping service is a set of 3D maps that go above and beyond the images provided through Google’s mapping services. Google has not remained silent on this front as they invited journalists to an event where they announced an offline mode to Google maps for Android and eventually iOS. Google also announced an upcoming 3D addition to Google Earth. Google has airplanes contracted to fly in grid patterns over highly populated areas taking high quality pictures that they then stitch together for a crisp 3D viewing experience. Google is also working on brining high quality maps to locations not reachable by car such as national parks, snow mobile trails and shopping malls. Google executives declined to comment on the rumor that Apple will drop Google maps as their default back end in an upcoming release of iOS.
Microsoft (NASDAQ: MSFT) also offers a competing service to Google Maps and some of the Google location based services through Bing Maps. Bing Maps offers traffic information, directions, local businesses, a street view competitor and more. Microsoft and Nokia (NYSE: NOK) have also teamed up on Windows Phone and Bing Maps now integrates Nokia’s live traffic data for 24 countries and geocoding algorithms, which helps translate longitude and latitude into real world locations. Microsoft used to have a 3D viewing option that was available in 68 cities at its peak but in 2010 they decided to drop this option to focus on Bing Maps.
A new 3D mapping service that expands Apple’s control over its iOS ecosystem combined with Apple’s recent purchase of the mobile advertising company Quattro Wireless for 300 million dollars indicates that Google services will be ever more marginalized on the Apple platform. This combined with Microsoft and Nokia teaming up to make Bing Maps a credible competitor further isolates Google to Android. However Google’s Location based services are still the best overall which the cimpany should leverage into future opportunities.
ded004 has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
