Daniel Eran Dilger in fine form after Apple became the world’s largest technology company by market capitalization.
These days, Apple’s primary competitors have all fallen down on their knees while clutching their gutted bellies…
Who is left? Google, the paid search giant that backers hope will beat Apple in hardware and software platforms… despite Google being neither a hardware vendor (nor marketer nor retailer nor support provider) nor having any real experience in managing a software platform for consumers. Fans of Google suggest that the company will take on Apple by acquiring a competing version of everything Apple has built over the last decade: iTunes, a mobile platform, hardware expertise, user interface design savvy, development tools, and a user base.
The problem is, they don’t also foresee that Apple could compete against Google in its own home territory of ads.
The key assumption in the “Google can buy anything Apple already has” is that of the three things that make up a company (resources, processes and priorities) the only thing cash can buy is resources, and, in the tech world, even those are fragile things with legs that can walk out the front door.
Google’s “copy-paste” competitive approach vis-a-vis Apple falls down when you realize that Apple has been successful mostly because of its processes and priorities. It’s well known that all of its vanquished competitors could (and did) recruit legions of Apple employees, elevating them to positions of responsibility, with naught to show for it. Grafting engineers and IP onto Google (or Nokia or Microsoft) cannot make it into an Apple.
Conversely, through a risky, long and arduous path, Apple could become a Google. Success with ad-based search requires resources (mostly CapEx), algorithms and distribution. With the $42 billion (soon to be $100 billion) in the bank and eye-watering free cash flow, there are few no resources that Apple cannot buy.
With iAd the world will witness an Apple that can make loads of money in Google’s home turf, while Google burns cash and bridges with Android trying to defend its soft platform underbelly. The irony is that Apple can knee-cap Google without even trying to do search. After all, Jobs said plainly enough: On a mobile device Search hasn’t happened.
Judging by the stock prices of the two companies, I suspect investors know this already.