Apple v Google: they’re rivals in many ways but it’s not quite a death match

ROBERT LANE Greene has written a sparkling account in Intelligent Life, Winter 2010, of the growing rivalry between Google and Apple. For years Steve Jobs was an inspiration to Larry Page and Sergey Brin, and Eric Schmidt sat amicably on Apple’s board until 2009.

As Greene puts it: ‘The companies could have been a match made in heaven: Apple’s gorgeous devices running Google’s miraculous services.’

But when Google launched Android and challenged the iPhone in the glittering smartphone market, they became serious rivals and now compete on several fronts: operating systems, browsers, email, photos, app stores, cloud computing, even books and music, although not exactly ferociously.

Greene is particularly good on what he calls the clash of cultures. The key to understanding Steve Jobs, he suggests, is that calligraphy was the most important course he took in his brief time at college. Design is Apple’s supreme value and Jobs has always been a perfectionist.

His colleagues used to moan about his reality distortion field. Now that he’s a god, they simply venerate him. Google on the other hand is a ‘herky-jerky place’, where engineers experiment endlessly, happy to put out beta products that often fail.

According to Eric Schmidt, ‘the Apple view is coherently closed. Ours is the inverse model: the web, openness, all the choices, all the voices.’ Yes, but they’re doing very different things. You don’t produce beautiful objects like the iPad and the iPhone through open source, nor is Google simply a mouthpiece for the wisdom of crowds, any more than YouTube is merely a platform for other people’s videos. Apple and Google are competing only obliquely, and their cultures and values have far more in common than what separates them.

They are the shining exceptions to the general rule that, as companies become large incumbents, they lose the ability to produce really radical innovations.

 HEALTHY COMPETITION

Apple and Google are exceptional – even by the standards of start-ups they are way ahead of the field, and able to attract and inspire the most talented people. They are still driven by the visions that inspired them from the start, much more than by how to keep Wall Street happy.

They also greatly respect each other. Schmidt recently called Jobs ‘the best CEO in the world by any measure’. This is more a contrast of cultures than a clash and it’s a long way from being a ‘death match’; it’s closer to Federer v Nadal than Achilles v Hector.

Whoever wins won’t be dragging the mangled remains of the other through the dirt. Android is on the way to becoming the most popular operating system, but iPhone users are likely to retain a significant market share, like RIM’s BlackBerry. The crucial difference from the PC world of the late 1980s is that Apple will not be cut off from the mainstream as it was when Wintel became dominant.

There could be only one dominant winner in the smartphone market if one player enjoyed enormous network effects or switching costs. That isn’t yet the case and John Gapper in the Financial Times has made a strong case for suspecting that it may never happen.

Greene makes much of the fact that ‘there is no easy way out of Apple’s system . . .

Apple’s offerings hardly ever let you down, but when they do, you are stuffed, left with sunk costs and a reputation as an Appleist that you would publicly have to disavow.’

But this is not lock-in in the way that most businesses are still stuck with Windows and Office, because the cost of switching would be prohibitively high. Appleists have chosen to be different and put up with inconveniences like iPods dying young, as they used to do, because they simply adore them. Some aspects of the cult may be ridiculous, but this is true love. Brands don’t get any better than that.

 UNIQUE COMPANIES Neither of these two have serious rivals in their core domains. Despite disrupting nearly every part of the media industry, the only adversary Google has seriously sought to displace is that master of customer lock-in, Microsoft.

Apple has learned to coexist with the old enemy. For years Microsoft was its most important software developer and even now Office for Mac remains crucial for its credibility as an alternative to the PC. Surpassing Microsoft’s market cap must have brought enormous satisfaction to Steve Jobs, but now he has more important things on his mind.

The recent announcements that Jobs is taking sick leave again and that Google is changing its leadership structure raises intriguing contrasts. One reason Jobs has been such a successful CEO since his return in 1997 is that he has had in Tim Cook a COO who complements his mercurial brilliance perfectly.

Cook may have played as big a part in the company’s transformation as its iconic leader. Until 2002 when the iPod took off, Apple was barely profitable and annual sales were stuck around $6bn.

It has just announced a net profit of that amount for the last quarter alone. Cook revolutionised Apple’s production processes and gave it the world’s most efficient supply chain. He has been all but a partner to Jobs since he joined from Compaq, and if Jobs should not come back he would probably make as good a successor as Apple could find.

The changes at Google are timely. Having three people take all the important decisions worked well during its extraordinary growth period, but has been clogging things up now that it is a large company with many aspirations. Blaming Schmidt for supposed failures such as not beating Facebook, as some have done, is ridiculous.

If anything, Google should be criticised for trying to do too many things at once. What is remarkable is how many have succeeded.

The last thing either of these two needs is a conventional CEO who would try to turn them into machines for maximising shareholder value. Long may they continue to swim against the corporate flow.

Kieran Levis is the author of Winners and Losers, Creators and Casualties of the Age of the Internet (Atlantic Books, 2009). [email protected]

Whoever wins won’t drag the mangled remains of the other through the dirt