Google Versus the World
Salvatore "Sam" is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
With shares of Google (NASDAQ: GOOG) trading above $800, and the company attracting a level of interest reminiscent of Apple (NASDAQ: AAPL) at its peak, investors may be wondering how to judge Google’s business.
Google is unique in the tech world in that it is a company literally attempting to do virtually everything. Fortunately, Google does many of these things quite well. But unfortunately, the company has conflicts of interest with just about every other major tech company. Is Google’s massive scope a benefit, or will its squabbles with rivals be its undoing?
Google challenges Apple mostly in mobile
When it comes to its rivalry with Apple, the two companies’ major clash remains in the mobile computing space. Android is the biggest competitor to Apple’s iOS; phones and tablets running Android have been the biggest threat to Apple’s iPhone and iPad.
Even on Apple’s iDevices, Google retains somewhat of a foothold -- its gmail and Google Maps remain staple apps for many of Apple’s customers.
On a global basis, Google’s Android has a larger market share than Apple’s iOS (about 70% to 20%), but in the U.S., Apple remains king. And critics of Android have pointed out that market share numbers are inflated by a plethora of cheap, low-quality phones whose owners barely utilize their devices.
In Google’s perfect world, the variety of Android phones and tablets eventually overwhelms Apple’s iDevices, giving Google a solid hegemony in the mobile space. But if things go awry, Google’s Android could end up fragmented and fail.
Microsoft might be Google’s biggest rival
Most consumers might see Apple as Google’s largest rival, but really, Microsoft (NASDAQ: MSFT) is a bigger threat to Google (and vice versa).
Microsoft is Google’s only real competition in its primary business: search. Bing remains a distant second to Google, but it’s largely a two-horse race.
And while Microsoft has challenged Google on search, Google has begun to target Microsoft’s Office business. Google Docs, although stripped down, is a fairly robust alternative to Microsoft Office for the typical user.
Google has even begun to challenge Microsoft in the desktop arena. Chrome OS, which started off as cute side project, has morphed into a legitimate desktop operating system. Admittedly, it still fails to satisfy the needs of power users, but Google has gone so far as to incorporate touch-input (Microsoft’s big Windows 8 innovation) into the latest version.
Google+ is a distant second to Facebook, but animosity is there
Like Bing to Google search, Google+ is hardly a threat to Facebook (NASDAQ: FB) -- at least for now.
But Google seems intent on being a competitor in social. If its advances with Chrome OS are any indication, Google+ might one day pose a serious threat to Facebook.
Consequently, Facebook has turned somewhat of a cold shoulder to Google.
When Facebook unveiled Graph Search back in January, it partnered with Bing -- not Google -- for its external search capabilities. If someone using Graph Search can’t find what they want, it runs the search on Bing’s engine.
The cold shoulder goes both ways, however. Business Insider points out that Google executives are careful never to identify Facebook by name when speaking in public.
Even Google’s Ally Samsung could soon become a competitor
While Google’s feuds with Apple, Facebook and Microsoft might be seen as normal battles within an industry, there is growing speculation that Google could soon find itself fighting against one of its biggest partners: Samsung.
Samsung has used Google’s Android operating system to become a dominant player in the smartphone industry. Along with Apple, it’s the only company that’s actually profitable making phones.
But its success may have gone to its head. The Wall Street Journal reported Monday that Google executives are concerned Samsung might “flex its muscle to renegotiate...arrangements and eat into Google’s lucrative mobile-ad business.”
Ultimately, as I previously wrote, I don’t believe the companies will split up. But if they do, Google could find itself fighting a civil war within its Android ecosystem.
Positives and negatives to Google’s strategy
Investors might look at these issues and come to the conclusion that Google is an ambitious and aggressive company. It remains dominant in search, and though its other projects may take time to develop, they have shown rapid progress.
On the other hand, fighting a war on so many fronts might be Google’s undoing. Apple is attempting to create a better version of Google Maps and has sued Google’s Android allies in court; Microsoft is currently running an extensive ad campaign against both Google search and gmail; Facebook’s Graph Search could undermine Google’s core business; and Samsung, the dominant Android maker, could abandon or go against Google.
Having tentacles in so many sectors makes Google resistant to failure. If Google+ goes down it flames, it will hardly affect the company. Compare that to Facebook, which would plunge into irrelevancy if its website went the way of MySpace.
In the end, investors in Google must ask themselves one question: is the company stretched too thin?
joekurtz has no position in any stocks mentioned. The Motley Fool recommends Apple, Facebook, and Google. The Motley Fool owns shares of Apple, Facebook, Google, and Microsoft. 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. Is this post wrong? Click here. Think you can do better? Join us and write your own!