Tuesday, August 21, 2012

Apple and google relationship

Posted by K.NAVNEETHA RAO at 9:35 PM

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The tussle is far from over. The direction that both tech companies are headed—toward greater reliance on mobile computing for their revenue—is setting them up for a long-term fight over the same technological turf.
Apple and Google have been fated to collide since at least the summer of 2005. By then it was clear to the leaders at both that mobile computing would become central to everyday life, and more important than conventional computers. Apple was working on the first iPhone, and Google had just bought a startup called Android along with the technology that would underpin its own mobile operating system.
For the first few years, though, the companies saw their missions as complementary, and they collaborated. Apple licensed Google's Maps technology to make the iPhone more appealing, and Google's then-CEO Eric Schmidt joined Apple's board.
"Apple and Google both saw Microsoft as a common enemy, and they had a highly cooperative relationship," says Hemant Bhargava, a professor of management and computer science at the University of California, Davis. "That honeymoon is now over."
Within a few years, everything changed. With phones and tablets ascendant, and Microsoft seemingly irrelevant, Apple and Google became focused on grabbing a healthy slice of whatever future moneymaking opportunities that allows—a realignment that has turned them from collegial frenemies into full-on foes.
Apple dumped Google Maps, says Bhargava, because it needs full control of its devices' most important features (see "Apple Charts a New Course on Mobile Maps"). But Apple will also begin expanding into new areas, says David Yoffie, a professor at Harvard Business School. He believes the company's focus will be the most likely source of mobile revenue beyond just selling devices—advertising. And this leads Apple directly onto technological ground that is firmly Google's, since ads provide almost all the search company's revenue, mostly via search.
Advertising represents both an opportunity for Apple to hit Google where it hurts, and potentially a new income stream alongside its high-margin gadget sales, which may dwindle in markets where smartphones are reaching the saturation point.
Could Apple go after Google's search and ads business directly? With over $100 billion of cash in its coffers, Apple could easily buy the expertise, infrastructure, and technology needed to build a rival search engine. But experience suggests that would not be enough to succeed. "Microsoft has cash, and you can see how much difficulty it's had in making its search engine [Bing] successful," points out Yoffie.
Indeed, Apple appears to be taking a different tack. Siri, the voice assistant that comes with the latest iPhone, has the potential to divert queries that would otherwise have gone to Google. Siri may now be relatively rudimentary (it is still labeled a "beta" product) but it has strong potential, and Apple appears committed to it (see "Social Intelligence").

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