One OS to Rule Them All…

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

One Ring to rule them all,

One Ring to find them,

One Ring to bring them all

and in the darkness bind them.

-J. R. R. Tolkien

If you replaced the word ‘Ring’ with “Google App” you would have a good sense of what it seems Google’s latest business strategy is in regards to Apple.

Just take a look: Time Magazine’s Harry McCracken recently published a list from Business Insider’s, Nicholas Carlson on Google’s recent apps for iOS (or  ‘Rings’ as I call them) he notes:

“Over the past six months, Google has begun to systematically replace core, Apple-made iOS apps with Google-made iOS apps.

In July, Google launched Chrome for iPhone — a Safari replacement.

Then in October came Google Search — which included a voice search feature to compete with Siri.

In December, Google launched Google Maps to replace Apple Maps, and a much improved Gmail to replace Apple’s core Mail app.

It also put out a new YouTube app to replace the one that Apple removed during its last iOS upgrade.”

This is quite telling when you consider that Google could have “hogged” all of its apps for its own Android devices in an attempt to starve Apple (down over 13% in the last six months) out of market share. But it did not. This suggests that Google could be up to something larger than tech altruism.

Possibilities abound

Google (up over 23% in the last six months) is most likely trying to sweeten up its offering on the iOS platform to secure a larger slice of the “Apple Pie” [Ad Revenue] as I mentioned last year: “each time an Apple (NASDAQ: AAPL) customer uses Google to search, Google gets paid. Each time an Apple customer checks out the latest viral sensation on YouTube, Google gets paid...”

But could there be more to it? Perhaps Google is trying to increase Apple users’ comfort level with an immersive “Android like” experience on the iPhone so that at their next upgrade session when they look over at the Android device they say “hmmm… maybe.” instead of “hmmm...nope.” If that is there gambit it would be quite the subversive trick to increase device sales. Yet when you consider the Apple faithful I’m sure it will take quite a bit more than accurate mapping software to lure them away.  

And what of ol’ man Microsoft?

Microsoft claims that Google (NASDAQ: GOOG) hasn’t approached them with the same fervor in producing shiny new apps for their Windows Phone as it has for the iPhone and Android devices.

What could be the problem?

Could it be that Google simply doesn’t want to play with Microsoft (down over 12% in the last six months) due to the fact that they have been one of the strongest supporters of Google’s anti-trust situation?   If that were true, it would be a childish reason for Google to suspend possible [Ad Revenue] profit from Windows Mobile users.

What if it was something else, or nothing at all?

Microsoft’s Deputy General Counselor Dave Heiner has made statements which suggest that the reason Microsoft has not received apps it deems as equitable [when compared to iOS and Android] is due to the fact that Microsoft is in direct search competition with Google. CNN’s David Goldman noted Heiner’s remarks: “You might think that Google would be on its best behavior given it's under the bright lights of regulatory scrutiny on two continents,”… "However, as we enter 2013, that is not the case."  Heiner said Google is playing favorites with Apple, "which doesn't offer a competing search service." 

 Yet in Goldman’s account Google states that Microsoft is mistaken:

"Contrary to Microsoft's claims, it's easy for consumers to view YouTube videos on Windows phones," said Google spokeswoman Niki Fenwick. "Windows phone users can access all the features of YouTube through our HTML5-based mobile website, including viewing high-quality video streams, finding favorite videos, seeing video ratings, and searching for video categories. In fact, we've worked with Microsoft for several years to help build a great YouTube experience on Windows phones."

No matter which side you are on in this mobile debate one thing is clear: Microsoft is not a leading seller of mobile devices. John Callaham of neowin.com points out:

“… according to new stats from ComScore, which reported this week that Microsoft's share of the mobile phone market was just 3.0 percent in the three month period ending in November. That's down from the 3.6 percent market share it held at the end of August, and down from 4.0 percent that it had at the end of May.”

An unnamed source [who Goldman states is familiar Google’s decision making process] says “it doesn't make sense for Google to write apps for every mobile operating system, and Windows Phone isn't popular enough to compel Google to develop and support a separate app for Microsoft phones.”

If this is true the neglect Microsoft (NASDAQ: MSFT) is claiming could be the result of Google preserving resources, but remember Google is not citing any neglect on their part.

Does the bickering improve tech product selection, company profits, or investor portfolios?

 No.

Usually competition between top performers in an industry brings about great innovation and profits. It helped make tech titans top market performers and helped to bring us from the “Brick” phones of the past to the efficient, sleek and multi-functional “smart-phones” of today. Microsoft is mistaken if it thinks it will rocket back to stardom by simply throwing stones at Google. Perhaps it can get offensive and take a page from Google’s notebook by developing the next “must-have” application that Google & Apple users will want to use on their phones.

Investor’s Bottom Line

Without regard to how these companies feel about each other, investors who agree that Apple and Microsoft have better days ahead should consider taking an opportunity during this time to invoke strategies to invest while the storm clouds are still gray in their direction (both have been down well over 10% in the last 6 months). For those investors who are feeling bearish in terms of Google’s continued anti-trust inquiries in Europe, now would be a good time to establish strategies that support your hypothesis. 


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