Apple versus Google: Whose $100 Million Worked Harder?

June 3, 2011

I just finished reading “Google’s CEO Steps into Spotlight.” There was one item that jumped off the page in my opinion; to wit:

For the media, “it’s much more interesting — what is the latest crazy thing that Google did,” Page said. “It tends to be like three people in the company, keep that in mind. We are not betting the farm on a lot of those things. That’s not what we are doing.” Still, Page said, now-crucial products like Android and Chrome started off as technological long-shots, and there were few hostile questions from the roughly 250 shareholders who attended the annual meeting. “We don’t want to choke innovation. We want to make sure we have a lot of things going on at the company that are maybe speculative,” Page said, quickly adding, “we spend the vast majority of our resources on our core businesses, which are search and advertising. … That’s our core focus.”

The number of articles about the shareholders’ meeting and the comments of Google founder and CEO cover most of the angles. There is little that I can add other than point out the use of the word “crazy” in the phrase “the latest crazy thing that Google did.” Oh, I want to mention that my reading skills are not so hot. I thought I detected an interesting logic stream in the comment about “technoloigcal long shots”, “choke innovation”, and “our core businesses, which are search and advertising.” I interpreted these phrases as suggessting that Google does need crazy things.

The more pragmatic “thing” today is the news that Apple’s $100 million was different from Google’s alleged $100 million to music companies. Here was Google talking about the core of search and advertising, and at roughly the same time, Apple seemed to cement its grip on music in the cloud. Here’s a comment from “Major Labels, Music Publishers Lining up behind Apple’s iCloud” from the Los Angeles Times with the part I noted in bold face:

Apple, whose iTunes music store is the dominant purveyor of music downloads with between 75% and 85% of the market, has been carefully monitoring moves by rival as well as newcomers to the digital music space, including Google and, in Europe, Spotify.

Google has not been able to marginalize Apple. The notion of having apps in the cloud is a good one. What Apple has achieved is getting money directly from people via its walled garden approach. I don’t think of Apple doing “crazy” stuff. I don’t think of Apple taking long shots in today’s unsettled financial climate. I don’t think of Apple mired in legal hassles worldwide. I don’t think of Apple accusing countries of trying to access user data. In fact, I see Google as a company working hard to explain that online advertising and search are the foundation of Google.

I do not disagree. Google is an extension of and other precursor search systems. Google is an evolution of Yahoo’s Overture ( ad business. The challenge for Google is to find a way to cope with the world beyond search and beyond the online ad models from the traditional world of online.

Android is a start. It is arguably more successful than Apple’s mobile platform. Chrome is a start. It is arguably more successful than other cloud netbook operating systems if there are any.

Shareholders want Apple style revenues and profits. Shareholdeers want excitement too. But shareholders want performance. Me too plays, non magnetic $100 million deals, and long shots that become winners do not seem to be operating at the level of efficiency that an Indianapolis 500’s race car engine requires. Google is in the race. Can it make up lost time and, if it does, can it retain the lead in hot new markets where advertising may be only part of the revenue model and search is vastly different from the method from the mid 1990s.

Apple’s $100 million may have worked harder. Google’s may not have worked yet. What is interesting is that Google’s future may be increasingly shaped by Amazon, Apple, and Facebook, not “crazy” stuff.

Stephen E Arnold, June 3, 2011

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