Will Apple Drop Google Search?

 |  Includes: AAPL, GOOG, MSFT
by: Jason Schwarz

Steve Jobs loves small innovative companies. That’s why he bought P.A. Semi to produce low power chips and it’s why he bought Placebase to replace Google Maps. Both of these young companies do things a little bit differently and fit the Apple (NASDAQ:AAPL) mold. One company who doesn’t fit the Apple mold appears to be Google (NASDAQ:GOOG); Steve Jobs continues to distance himself from Google after Eric Schmidt left the board, Google voice was rejected for the app store, and now this maps replacement.

Could Google search be the next shoe to drop from Apple’s offerings on the Mac and iPhone? You don’t want to get on Steve’s bad side and it looks like that is exactly what Eric Schmidt has done. He should have known better. While on Apple’s board of directors he took advantage of a non-competitive and synergistic relationship with one of his top customers. Steve will never forget it. Google’s release of the Chrome web browser to compete with Apple’s Safari and their release of the Android mobile phone platform to compete with the iPhone was certainly not what Jobs had in mind when Schmidt originally came on board on August 29, 2006. Unfortunately for Google, we’re finding out that Google needs Apple a lot more than Apple needs Google.

In an article titled ‘How the Real-Time Web is Leaving Google Behind’ Clive Thompson of Wired adds to the idea that Apple doesn't need Google.

For more than 10 years, Google has organized the Web by figuring out who has authority...but the real-time Web behaves in the opposite fashion. It’s all about ‘trending topics’ which by their very nature generate a massive number of links and postings within minutes. And a search engine can’t spend days deciding what is the most crucial site or posting; people want to know immediately.

Because of the rift with Google, I wouldn’t be surprised if Jobs looks to one of the new generations of search engines like Twitter, OneRiot, Topsy, Scoopler, or Collecta as a potential Apple acquisition.

Twitter is the new pulse of global news. Yes, there will always be room for an old search engine like Google when you want to research historical information, but to be in the know in the now you need a platform like Twitter to get you immediately up to speed. Collecta imports blogs and tweets to appear in search results less than a second after they go live rather than waiting hours for traditional search engines. Google met consumer demands in 2006, but they’re looking a little out dated as we enter 2010. Apple devices like the iPhone and the coming Tablet are all about being in the know in the now. It does not seem that Google is the right fit for these products.

If Apple were to buy one of these young search engines and call it Zapple it would be interesting to see what happens to Google’s market share. Jobs would never consider such a move unless he was confident that Apple could build a better search engine than the competition; it appears Google has left the door open for innovation more suited to today's lifestyle that includes social networking, blogging, personal media, and so on. Apple still hasn’t told us what they plan to do with their $1 billion server farm in North Carolina. Zapple search might be something they have in mind.

Google’s business model is highly vulnerable to competition. Whereas Microsoft and Apple operate business models with gigantic moats that insulate them from short term competition, Google could be yesterdays news tomorrow. As Google veers away from their core business of search they need to be careful not to step on the toes of their top partners like Apple. Steve Jobs' competitiveness is legendary and it might be too late for Google to get back on his good side.

This is not good news for Google investors. The war between Apple and Google is only one of the many projections regarding the future of technology in my new ebook, Apple Revolution, on sale starting today at www.applerevolution.com. Thanks for reading.

Disclosure: Long AAPL