Will Apple Drop Google Search?

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 (AAPL) mold. One company who doesn’t fit the Apple mold appears to be Google (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

Comments

[inciso:]

Dude, where did you learn to write? Have you heard of good grammar? Did you graduate from high school?

Oct 02 05:32 AM

[Jon T:]

This guy is either a moron or from planet Zog.

They're all just wanting to talk up the great "rift" between Apple Google.

Oct 02 09:12 AM

[GSlusher:]

How can Apple "drop" Google search when it doesn't "have" it to start with? OS X allows the user to choose just about any search engine one wants. It's easy to set a particular engine (or even a sub-set, like Google France) as the default in Safari or any other OS X browser. (I use Camino.) One can add as many search engines as one wants.

Oct 02 09:19 AM

[Doug C:]

Surely Google already planned ahead for this hence the Android OS which has the google search bar embedded in the home screen. Local search will be huge for Google when they integrate mobile vouchers into Adwords and Android search.

The question I guess is: will manufacturers start making Android handsets that look as s3xy as the iPhone?

Oct 02 09:45 AM

[relayer75:]

Fascinating. "Google could be yesterday's news tomorrow". I've always thought that, since their IPO 5 years ago. Where's their moat? I am also afraid to short it or buy puts though. Too much mindshare among institutional investors, the same herd that still buys MSFT 10 years past its prime. Interestingly, AAPL's stock price performance since the day of the Google IPO in August 2004 has beaten GOOG. I tell people this, and they can't believe it until they check for themselves. For those of you hurling insults at Jason, this is the guy who very balls-ily wrote in Feb 2009 that BAC was going to $20 when it was at $3.xx and everyone else thought that the end of the world was nigh. Well, well, it hit $18 in August and September, and I hope Jason made himself and his clients and followers very rich. Me, I bought a chunk of BAC at $3.98, and then stupidly sold some May $6 calls when it hit $5. Boy were those shares taken away from me fast. I would have had a 4-bagger in 5 months if I hadn't sold the covered calls. Oh well, I made money. Jason has also been consistently bullish on AAPL off the $80ish bottom earlier this year, with great confidence. Helped keep me stay in the game with AAPL. Thanks Jason, I'm going to buy your ebook as a thank you.

Oct 02 10:11 AM

[modelportfo...:]

Who to believe? Jason or Warren Buffett, who says that the Google "moat" is indeed very wide and deep? Guess I will choose Warren, despite his lack of "technology knowledge" over Jason's technology knowledge. I know who has the better track record. Guess Jason believes that Google engineers will stand still.

Oct 02 10:29 AM

[TSB:]

Microsoft has even more incentives than Apple to 'drop' Google, but look at the market share Google has in Desktop search; if consumer continue to prefer to use Google search, can Apple stop it?

Oct 02 10:49 AM

[CGP:]

Superficially you could say anybody w/some time and a computer could replicate Google (the infinite monkeys could randomly type out Shakepeare argument)...

....Google started their moat w/their algorithms, expanded it with time and now defend it with scale - sure maybe Twitter or the others could make a dent but it's a long haul to 70%(? - whatever Google's share is). Granted, mismanagement and lack of direction could be their Achilles heel.

Certainly surprising all the competitive moves GOOG made considering Schmidt was on AAPL's board.

Oct 02 11:15 AM

[relayer75:]

Warren Buffett is good and picking companies that make candy, furniture and underwear, but has admitted that he does not understand technology, and he rarely if ever invests in technology companies. Does Berkshire Hathaway own any GOOG? I wasn't aware of it if they do.


On Oct 02 10:29 AM modelportfolio2003 wrote:

> Who to believe? Jason or Warren Buffett, who says that the Google
> "moat" is indeed very wide and deep? Guess I will choose Warren,
> despite his lack of "technology knowledge" over Jason's technology
> knowledge. I know who has the better track record. Guess Jason believes
> that Google engineers will stand still.

Oct 02 11:24 AM

[Highonlife:]

This is the problem with buzzwords. Ok...realistically ask yourself this question....
How often do you search twitter for microblogged real time updates about a specific item?
How often do you search google/yahoo/bing/ask/... for comprehensive information (which may or may not include microblogged real time updates from individuals) about a specific item?

At the end of the day, everyone forgets the bit where if twitter can search through its archives...google can too. Unless of course twitter gets a monopoly on all internet news, and everyone only posts on there...i dont see them overtaking google.
When was the last time you ever heard of a niche product overtaking the entire market share of a more generic service, that also provides the niche product.

Oct 02 11:57 AM

[waf76:]

'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. '

Streaming additional content over itunes like netflix????

Oct 02 02:45 PM

[dual cit:]

And what about your Artificial Life ALIF prediction Jason? Where is the update on this stock pick of yours ?

Oct 02 05:11 PM

[Tom B:]

"Where's their moat?" It's a "virtual" moat. Hypothetically, anybody can launch a new search platform. In practice, the best that even a company with MSFT's billions can do is the latest lame attempt, Bing. Obviously, it's no so easy.

As for Apple-- they won't drop Google. I think they MAY try to add some FOCUSED search modules-- say location-awareness, maps. Didn't they just buy a map company?


On Oct 02 10:11 AM relayer75 wrote:

> Fascinating. "Google could be yesterday's news tomorrow". I've
> always thought that, since their IPO 5 years ago. Where's their
> moat? I am also afraid to short it or buy puts though. Too much
> mindshare among institutional investors, the same herd that still
> buys MSFT 10 years past its prime. Interestingly, AAPL's stock
> price performance since the day of the Google IPO in August 2004
> has beaten GOOG. I tell people this, and they can't believe it until
> they check for themselves. For those of you hurling insults at
> Jason, this is the guy who very balls-ily wrote in Feb 2009 that
> BAC was going to $20 when it was at $3.xx and everyone else thought
> that the end of the world was nigh. Well, well, it hit $18 in August
> and September, and I hope Jason made himself and his clients and
> followers very rich. Me, I bought a chunk of BAC at $3.98, and then
> stupidly sold some May $6 calls when it hit $5. Boy were those shares
> taken away from me fast. I would have had a 4-bagger in 5 months
> if I hadn't sold the covered calls. Oh well, I made money. Jason
> has also been consistently bullish on AAPL off the $80ish bottom
> earlier this year, with great confidence. Helped keep me stay in
> the game with AAPL. Thanks Jason, I'm going to buy your ebook as
> a thank you.

Oct 02 09:42 PM

[Trent Hauck:]

Your perception of how much real time data is actually needed is a bit over stated. Yes its good to find out the latest concert news, but I don't have time every day to check twitter or the last blog post for news that is timely, but irrelevant, I let the news come to me.

Oct 03 03:28 AM

[vpwinner:]

Very insightful article. Thank you.

Oct 03 03:34 AM

[shutterbug70:]

Google doesn't have a "moat" much as Apple and MSFT do, but maybe that's what will keep it consumer friendly and ethical. Apple is doing great and they have made good decisions in the last few years, but we are a bit more at the fancy of their management.

Oct 05 12:31 PM