Will Google End Up Merging With Apple?

There’s a very long, worthwhile piece by the author John Heilemann on Apple (AAPL) in the latest issue of New York magazine. Among other things, Heilemann looks at the growing competition for Apple in the digital music business, and considers whether or not the iPhone will be a success. He also quotes an unnamed person asserting that - get this - Jobs might want to sell Apple to another very large company with which you are familiar.

“I think Google (GOOG) is going to buy Apple,” the unidentified person says. “It would be a victory for Apple; they’d get major-league partners, money and engineers. And it would be a victory for Steve - a huge win that lets him leave the stage.”

Heileman thinks, though, that in such a combination, Jobs would end up as CEO, or at least chairman.

Heilemann gives few clues as to who the person quoted is, although he identifies him as a Jobs friend, and quotes him as saying he sees Jobs “around the neighborhood,” which if taken literally would mean someone who lives near the Jobs manse on Waverly Street in Palo Alto.

It’s a fun idea to talk about, and as Heileman notes, the companies have ties, with Google CEO Eric Schmidt on the Apple board, and collaborations on a variety of projects, including Google Maps for the iPhone and YouTube videos on the AppleTV box. But it seems a little hard to swallow - literally.

Apple has a market cap of $107 billion; Google’s value stands at $160 billion and change. Assume Apple holders would get a hefty premium for their shares - let’s call if 40% - and you end up with something close to a merger of equals. And it would almost certainly be a merger; I don’t think even Google has $150 billion in cash lying around. Would Google holders want to transform their business that way? It seems hard to imagine.

Anyway, you should read the story.

Comments

[roger.canada:]

Just wrote a related article, that strongly disagrees with your position Eric... Would be great if you can take a look

techwinter.com/2007/06.../

2007 Jun 19 05:35 AM

[Tom B:]

Read your piece:

"Lets be honest Apple and Google are one trick ponies,"

Apple? A one trick pony:
1) first commercial GUI
2) first WYSIWYG printing (with help from Adobe Postscript)
3) First practical digital movies (Quicktime)
4) First consumer-oriented wireless (Airport)
5) Firewire
6) First useful scripting languages (Applescript and HyperCard)
7) iPods
8) First company to make the power of UNIX accessible to the home consumer (It'll take MSFT at least another decade to copy that, if they are around that long).

Also, drove adoption of ethernet and USB.

Best in class on consumer databases (Filemaker).
Best in class in music and video content creation (iMovie, Final Cut pro, Shake, Logic, Garageband).

This is a short list. Having said that, I think GOOG and AAPL have natural synergies and reasons to work together. But they don't need to be the same company at this time. Apple buying ADBE makes more sense, because then they have greater creative control over PDF technologies and Photoshop.

2007 Jun 19 11:45 AM

[Tom B:]

""Lets be honest Apple and Google are one trick ponies,""

GOOG has only MONETIZED search/advertising. I think ways to emerge other GOOG monopolies (e.g. Google maps) will emerge.

2007 Jun 19 11:47 AM

[karpodiem:]

I...don't think Google will be merging with Apple anytime soon. Two completely different organizations, with different strategies and goals, albeit with one common competitor in Redmond, WA.

2007 Jun 19 06:31 PM

[John Scott:]

I guess Heilemann is a friend of yours, Eric. I am disappointed you did not use your critical skills in evaluating his piece. Perhaps it is fun to speculate on stuff like this, but some of us read your work to be informed, rather than entertained. Heilemann' article is second rate and stale.

2007 Jun 20 02:31 AM

[charles656oio:]

With iPhone, making a call is as simple as touching a name or number. In addition, you can easily construct a favorites list for your most frequently made calls

www.pspconverter.com/i.../

2007 Jun 25 01:10 AM