Has Google Learned How to Slice Apple Pie?
Jason is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
As many investors know, the bond between Google and Apple is strong, even though it is strained. But what some investors may not realize is that Apple’s success does not always mean Google’s failure.
Sure it may be hard over the last three months to pinpoint a good run for Apple (as they have been down over 15% in this time), but sales are still rolling. In September Apple (NASDAQ: AAPL) pulled in a nice $8.5 Billion in iPhone sales alone. While this seems like a telling strike against Google (NASDAQ: GOOG) (who shares the profit from Android powered phone sales with other manufacturers), its investors need not shed many tears. Just as Google receives profit from the sale of its Android software on the many non-Motorola devices sold in tech stores, it receives profit from the millions of iPhones around the world as well (via ads from usage of its search page).
However, since the introduction of the iOS6 software upgrade this profit has received a bonus due to Google’s ability to place ads on YouTube. With all this taken together, and the additional fact that Google is producing a Map application for iPhone, you’ve got your self a nice slice of Apple pie.
Can Apple strike back?
Is there a way to stop the bleeding? Let’s look at the facts: each time an Apple customer uses Google to search, Google gets paid. Each time an Apple customer checks out the latest viral sensation on YouTube, Google gets paid. Each time an Apple customer sets an App-link to their home page for Google maps because they’ve grown tired of Apple’s version, Google gets paid. Does Apple get paid for anything Google’s customers do?
What the next sensational Apple product should be:
To separate himself from Steve Jobs, Tim Cook is going to have to pull off something drastic (and I don’t mean ridiculous drastic that ruins the company). One way he could do this would be to make Apple universal. Not the universal it is now, now it is still a brand, still exclusive. But what if Apple’s next big product was something that Android users could link to their phones, tablets, or PC’s? Imagine the rumored “Apple TV” coming with the capability to stream desired content on Android devices for a small fee or for free, with commercials. It would be an opportunity for Apple to slice into Google’s cake.
Thoughts to Consider
It would only benefit Apple to cross the barrier and make money from all consumers, not just Apple consumers. Apple has to see that without a web of income beyond its own hardware it will become a greater struggle to keep profits up if its consumers do not re-purchase its products each time it has an upgrade. Other companies have tried to play Google’s game (with not as much success mind you), but have been able to seize some profit none the less. In order to keep from living and dying by the success of iPhone sales (51% of their profit), Apple will need to get creative, innovative even.
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