The Best Rivalries in Business

AnnaLisa is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

There are famous sports and business rivalries, some going on over 100 years, like Coca-Cola and Pepsi. Washington Redskins versus Dallas Cowboys, Mets versus Yankees, and Apple (NASDAQ: AAPL) versus Microsoft (NASDAQ: MSFT) are some of the rivalries so bitter that people define themselves by team or brand loyalty.  In business, achieving this kind of defining customer fealty is the Holy Grail. The "I'm A MAC" commercial campaign of several years ago was such a winner that before its comparisons of Apple Macintosh computers to Microsoft run PCs there hadn't really been an Apple type personality. I believe the cult of Apple really began with these ads.

Rivalries would at first glance seem to be detrimental, but if history is any indication, it ups the game for both parties. Microsoft most likely would have been content to put out new iterations of Windows, only slightly improved, but Apple forced their hand making both better companies.

Google Vs. Everybody

Silicon Valley is rife with these rivalries with Google (NASDAQ: GOOG) versus Microsoft, Google versus Apple, Google versus Facebook, Google versus Yahoo, and Google versus Amazon and all the rest versus each other. Google may have too many rivalries to address. Google battles Microsoft on search with Microsoft Bing search engine. Microsoft has been waging a heated campaign against their sponsored search results and just lately running a test of blind search results from both a la the blind taste testings of Coca-Cola and Pepsi of yore. Of course, Google also battles Yahoo! on search and Amazon on tablets.

The premier rivalry now is Google versus Apple on the tablet and phone battle. This is the "winner takes all" battle of 2013, but it's really been going on since 2010 when Google and Apple went head to head on mobile ads and Android and went from allies to frenemies to now just bitter rivals. At one time Google's Eric Schmidt and Steve Jobs were good friends and Schmidt was on the Apple board. Just in 2011, Eric Schmidt spoke very admiringly of Apple, calling Jobs the best CEO in a century  in an Adweek interview pressing the point against Microsoft that Apple had outdone them by building products seamlessly for the consumer and adding that Google had taken to heart Apple's consumer centric design.

Sometimes I suspect this rivalry is all made up as Apple and the Google Maps fiasco fuels my feverish conspiracy theory. Apple and Google still have common cause against Amazon and Microsoft and did team up in earlier years against Microsoft.

In an article for Time, Harry McCracken argued that the Google "worm strategy" with its apps for the iPhone as detailed by Nicholas Carlson for Business Insider was actually good for both Google and Apple. Now the question is who will win and how?

I still think Apple is winning and that's mainly because of the multitude of their apps (close to half a million) and that brand loyalty that they have so assiduously courted. You never hear of a Ford or GM ecosystem, nor a cult of Coke. While it may seem to Apple longs that Apple has just become a day trading vehicle, go long near $500, go short near $600, I think that will change this year and soon.

Another reason I think Apple will soon outperform Google is the aforementioned abundance of rivalries for Google. As large as the behemoth that is Google it's fighting multiple rivals on at least four fronts: tablets, search, Android, and the cloud. That is stretching them thin and I've said the same about Amazon.  Mirroring my own opinion, Danny Sullivan wrote in searchengineland.com," I often look at Google doing its own browser, operating systems, mobile devices and wonder myself if it would be a more successful company without so many powerful enemies if it had stuck more closely to its search roots."

Schmidt once believed that mobile ads could pay for Android phones making them free for consumers and then, battle won. So far, this is still a pipedream. As for tablets the Google Nexus7 is half the price of an iPad and still less than the mini and mainly competes in that price range with the Amazon Fire. The battle still rages over margins and price points for tablets as well as the future of mobile ads.

The Winner and Champion!

As for valuation Apple is the winner with a P/E at 11.94 half the size of Google's 23.13 and offering a 2.00% yield as well. Soon enough both are reporting, Google on January 22 and Apple the next day. Microsoft remains a sore loser in the tech race although it offers a 3.40% yield and a 14.45 P/E. Microsoft is reporting on January 24. Within a matter of days investors will see whether these vaunted rivalries have upped the game for all parties or whether some weren't up to the fight.


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