Apple vs. Google
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When looking back to the heyday of heavyweight boxing in the United States, Muhammad Ali is synonymous with greatness. He was great because he not only fought the best but had opponents who elevated him and themselves through their battles in the ring. One of those opponents that stands out the most was Smokin' Joe Frazier, who maintained a disdain for Ali well beyond their fighting days. The two did battle three times and all of their bouts were epic. Frazier won the first contest with Ali winning the last two. How does this relate to stock investing? Apple (NASDAQ: AAPL) announced that they will no longer include a YouTube app in their upcoming iOS and that they are also going to release their own map service, dropping Google’s (NASDAQ: GOOG) Google maps. Though I am sure there are already several developers with apps ready to sell that will allow Apple users to access YouTube, this signifies an escalation in the battle for supremacy between these two tech giants.
The boxing metaphor applies to the battle that is growing between Apple and Google, as both have entered each other’s respective spaces and will battle it out for dominance across a variety of industries from handsets to Cloud computing in the mobile revolution. What is most applicable to the above metaphor is that when all is said and done and we look back on the decade, I see both companies being very successful and continuing to be dominant players in the tech space. Though they will battle on a number of fronts they will also help each other move into the next generation of tech. Apple missed analysts' estimates in its last quarterly review but its shares have surged past $600 as rumors of the upcoming iPad mini and improvements to their next OS slowly come out. Google has been relatively stagnant from a share price point of view over the last year, but seems to be picking up momentum as it is still off its all time high. It looks poised now to continue its ascent upwards as Google, like Apple, has not stopped trying to innovate new and groundbreaking products and services. Some have been misses, though the vast majority seem to gain traction very quickly. Think of how long it took Apple to dominate the handset market with the release of the iPhone or how long it took the Android OS to be adopted by a large percentage of the handset market. These companies are the equivalent to world champion boxers who in the short term may lose a fight but over their careers will be successful many more times than not.
As Google has left Yahoo (NASDAQ: YHOO) in the dust and struggling through five different CEO’s in the last couple years, Apple has done the same to RIM (NASDAQ: BBRY). Yahoo has been left to compete for Google`s scraps and can no longer even be considered a threat to any of Google's businesses regardless of their partnerships or management change. RIM has lost over 90% of their share value since reaching their historic high, but even with a planned turnaround in the works they will not be a competitor to Apple any time soon. Though Apple and Samsung have been going back and forth in patent courts throughout the world, Samsung does present a realistic threat to Apple's dominance; but, as they have nowhere near the brand loyalty or the eco system Apple has fostered, it will be some time before they can really threaten Apple for tablet and handset dominance.
This leaves both Apple and Google at the top of the heap, and as they grow and innovate into other businesses they are bound to clash a number of times when they meet. These battles will not leave a one man standing type situation, but both companies will be sharpened by the constant competition. A lack of competition can be disastrous in tech; just look at RIM which rested on its laurels with an innovative product only to see the market pass it by quickly. The competition between Apple and Google will help each company improve in areas that will position both of them for long term success. I see both companies being great buys now and as an anchor in any long term portfolio.
mooseelz owns shares of Apple, Google, and RIM. The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services recommend Apple, Google, and Yahoo!. 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.