Google Phone Could Drive Apple Into Allegiance With Microsoft

rsmiller510 writes "A BusinessWeek report suggests that the Nexus One release marks the latest volley in an escalating war between Google and Apple, one that could force Apple into working more closely with Microsoft. 'When companies start to imitate one another, it's usually either an extreme case of flattery—or war. In the case of Google and Apple, it's both. Separated by a mere 10 miles in Silicon Valley, the two have been on famously good terms for almost a decade. ... Now the companies have entered a new, more adversarial phase. With Nexus One, Google, which had been content to power multiple phonemakers' devices with Android, enters the hardware game, becoming a direct threat to the iPhone. With its Quattro purchase, Apple aims to create completely new kinds of mobile ads, say three sources familiar with Apple's thinking. The goal isn't so much to compete with Google in search as to make search on mobile phones obsolete. ... Some analysts believe the Apple-Google battle is likely to get much rougher in the months ahead. Ovum's Yarmis thinks Apple may soon decide to dump Google as the default search engine on its devices, primarily to cut Google off from mobile data that could be used to improve its advertising and Android technology. Jobs might cut a deal with—gasp!—Microsoft to make Bing Apple's engine of choice, or even launch its own search engine, Yarmis says."

Comments

This makes perfect sense

[Foredecker]

Apple is a great company, but they are not large enough to build their own search engine, advertising platform, and back end services to run them. Microsoft's search (bing), advertising platform, and back end services are all designed for partnering - its the core business model.

of course, Microsoft will compete with Apple in the phone space at some point in the future (we are clearly uncompetitive now...), but if Apple is going to be in bed with a competitor, its much better that it be Microsoft rather than google - better for both companies. I mentioed this to Symbolset in a post here.

Re:This makes perfect sense

[nine-times]

I don't think it makes sense, and I say this for a variety of types of reasons. First, Jobs seems like the sort of guy who holds a grudge, and he seems to not like Microsoft. That's just my read on the situation, but I wouldn't guess that he'd be eager to jump into bed with Microsoft without a strong reason.

Second, it doesn't make sense to jump to Bing just because Google releases a phone. It only makes sense if Bing is better than Google. If you think about it, as long as the iPhone and Google phones are using the same maps, searches, etc., then it can't be counted as an advantage for Google. People can't say, "Well I want to buy an Android phone because they use Google for their search engine. The iPhone uses [whatever], and I don't like it as much." So if Apple were to switch to something else, it really needs to be better. Not just arguably better or "some people think it's a little better," but decisively better in a way that Apple can count it as an advantage. I know Microsoft is offering payoffs for anyone who switches to Bing (not criticizing here, Google also pays for placement), but Apple tends to focus on customer experience as the most important thing, and I can't see Jobs opting for a substandard solution even if it came with a big cash bonus. Apple doesn't need the cash. And so far, I haven't seen anything that leads me to believe that Bing is decisively superior to Google.

Third, Apple makes a lot of hay from making Microsoft the butt of jokes. Whenever Microsoft screws up or fails at anything, it helps reinforce their image as bumbling idiots, which in turn helps reinforce Apple's image as slick/cool geniuses. Every partnership they have with Microsoft serves to undercut that, and announcing that Apple is actively switching to a Microsoft product because of its superiority would be dangerous to Apple's image.

I'm sure that Apple's relationship is uneasy, but I doubt it has turned to decisively to outright war that Apple would shoot itself in the foot to hurt Google. If I had to make a prediction, it would be that you'd see the introduction of Apple-branded alternatives without cutting out Google's products. Look at how they've dealt with Microsoft Office as an example (introducing iWork and supporting Exchange with Mail/iCal/Address book while still relying on MSOffice). I wouldn't doubt Apple's ability to create a search engine. I would sooner question whether they wanted to send people all over the country developing the maps for a Google Maps competitor, and whether they're actually interested in being as involved in advertising as Google is.

Re:This makes perfect sense

[nine-times]

Grudge? Microsoft essentially saved Apple by loaning it much needed $$$.

Not exactly a loan. Microsoft bought a bunch of Apple stock. Common wisdom at the time was that Microsoft needed to prop up some kind of paper tiger competitor to avoid further anti-trust restrictions.

But anyway that was after Jobs left and before he returned. When Apple started becoming successful again, Microsoft dropped Exchange support from their MacOS office suite and stopped developing IE. It doesn't seem like a friendly relationship. Apple still wants Microsoft Office for OSX for marketing purposes, and they want ActiveSync licenses for their iPhones. I don't see the relationship getting much closer than that.

Re:This makes perfect sense

[TheRaven64]

I take it you don't remember AltaVista? It existed for the sole purpose of advertising Alphas. Most people didn't care, or even know, that it ran on Alphas, but whenever the DEC sales people went to corporate customers to explain how well their kit scaled they had an example that they could easily point to. No one cares about Google's custom Linux because Google isn't selling it. People would care about a search engine running on XServes with OS X because it would be a large-scale server deployment that Apple sales reps could point to.

Re:This makes perfect sense

[CastrTroy]

Sorry, but any search engine that requires me to download a browser extension gets an automatic fail in my opinion.

Re:This makes perfect sense

[fuzzyfuzzyfungus]

On the other hand, while Apple and MS are direct competitors on the PC side, they've settled into a fairly comfortable(for Apple) stalemate.

MS sells licences to the Wintel box-pushers who move product by the megapallet every year; but have shitty margins. Apple sells relatively modest volumes to people willing to pay for their substantial margins. Both parties lack the ability and/or interest to push into the other's camp. MS is largely incapable of capturing the "premium" market that Apple has(both because of its own software, and because of the PC OEMs' somewhat chintzy engineering). Apple has absoutely no way of substantially expanding its market share without ghastly violence against its margins, and Steve's attitude toward backwards compatibility would not be a hit in the corporate world.

Google, on the other hand, is basically interested in scorched-earthing the margins on hardware, software, and connectivity in order to make it cheaper for consumers to look at Adwords.

I'm not saying that an MS alliance is in Apple's future. There are plenty of wannabe search engines that don't completely suck, and could be made to work well enough for phone purposes that Apple could chose from. However, I would say that MS is less counter-intuitive than it looks. The Apple/MS rivalry is dramatic; but largely stable. It is basically just a dispute over how to divide up the PC market. Google, on the other hand, would be happy to nuke that entire market if it made access to their internet advertising incrementally cheaper.

Let me play Linux fanboi

[Anonymous Coward]

That's it! Apple is done now too! Another nail in their coffin!

I haven't used M$ or Apple since 1935 except for at work, when i play games or when I want to do anything except browse the web.

OpenMoko! OpenMoko!

i may not be able to run apps but I can mod my phones OS... if only I knew how to code.

Not the MS-Apple deal I would expect

[LoudMusic]

I see very little chance of Apple using Bing as the default search provider on the iPhone. More likely they'd want MS to provide ultra compatible Office apps for the iPhone to help them get into the business smartphone market, competing directly with RIM / Blackberry.

I have a very hard time buying this

[phillymjs]

Jobs thinks everything Microsoft does is second-rate. He won't team up with them for that reason alone, never mind the fact that Apple has been burned by trusting Microsoft in the past, and I can't see that mistake being made again.

~Philly

Why on earth is everyone so hung up on Nexus One?

[jabbathewocket]

granted its 'new to google' to be you know selling phones directly .. but this is not a "war" with carriers or handset makers, its more of a war on.. noone?
Its really not that much different from going to the HTC website and clicking buy now and being directed to a web seller of any given phone as well as the carriers who sell them.. all google is REALLY doing here is creating a platform they can use to advertise android.. by that I mean.. when Verizon is done spamming millions of Droid Does! ads.. Android is left with being just another handset in the carriers collection of handsets.. by creating a direct way of buying , they have more importantly created a direct "sales conduit" that showcases Android and only android devices..
For all intents and purposes this is no different than the ADP1 and ADP2 only now rather than buying unlocked, you buy them with tmobile service, which was the only place the unlocked dev phones worked in 3g anyhow.
If Google was trying to be a gamechanger, they would have become an MVNO buying bandwidth from t-mobile, and reselling it (at reduced rates) in exchange for advertising/collecting demographic data from all the buyers, possibly even going with a pure GoogleVoice device that was IP only and no actual telephone service..
Now if they would just fix the fragmented Android mess of a landscape, do away with the half-assed java applets and move to entirely native apps.. as well as license SenseUI from HTC OR convince HTC to offer its app stack over the marketplace.. they could almost become a decent size player in the mobile space.. until then.. MS/Nokia and Apple will contine to eat their lunch.. Pity that Google didn't buy Palm and kill the Pre before it shipped as it too is hurting Android's long term viability as a platform.

Re:Bing on an Apple product?

[FlyingBishop]

Yeah, a company whose entire business is predicated on cool can't partner with uncool. Uncool is contagious. Cool isn't.

Buy, not build

[TubeSteak]

Google bought a mobile ad company called AdMob.
Apple bought a mobile ad company called Quattro.

Whatever happened to doing things in-house?

Another solution for Apple

[RoscBottle]

To avoid Microsoft Apple could buy whatever is left of AltaVista. And then we'll have Apple Vista. No, wait...

Re:Bing on an Apple product?

[janek78]

It does do that. For example googling for "Slashdot" returns a link that on mouse over show as "http://en.wikipedia.org/wiki/Slashdot" in the status bar, but in fact is http://www.google.com/url?sa=t&source=web&ct=res&cd=3&ved=0CBkQFjAC&url=http%3A%2F%2Fen.wikipedia.org%2Fwiki%2FSlashdot&rct=j&q=slashdot&ei=-FJTS6eACaKmnQOhmKCTCg&usg=AFQjCNEZ2izp-RcQ2rEPNchi1qS-mPpnRA

It does this both logged in and logged out.

What nonsense

[BearRanger]

Why is it always "war"? You know, it's just possible that the market for mobile phones is large enough to support many different vendors. Apple has consistently shown that they're happy with just a portion of the markets they play in--provided it's the most lucrative end of that market. The iPod is more an anomaly than the norm in terms of how Apple approaches its various markets. Google and Apple stand to gain more here if they continue to cooperate than if they become all out adversaries.

Re:Bing on an Apple product?

[linumax]

Seems like it is browser dependent. On Firefox I get a modified URL in clipboard, but in Chrome, Safari and Opera the actual URL.

Doubtful.

[MaWeiTao]

This story sounds like fluff intended to stir the pot. I'm sure people at Apple are keeping their eye on Google and certainly they must realize that your average consumer can only remain loyal so long before they start craving something new and different. However, to suggest that they'll somehow be driven to work with Microsoft simply because of a threat from Google seems ridiculous at best.

Apple is a hardware maker, first and foremost, while both Google and Microsoft are software companies. And Apple has the advantage over the other two that they do also very good resources on the software side. This ensures that in this market Apple will always have the advantage because of far superior integration. Software and hardware is developed concurrently under a unified visions. The other guys basically develop the software then find a vendor to provide a phone that meets certain requirements. And because both Microsoft and Google provide their OSs for a variety of phones it inherently means their systems are compromised. It's far more difficult to provide a unified, closely maintained platform and an integrated app store. And Apple has managed to keep very tight control over their phone despite offering it on AT&T. Most other smartphones are crippled by the garbage service providers dump on there, and I'm not sure the hardware makers have the luxury of making demands.

For Microsoft, and presumably Google once their OS becomes more widespread we are going to see the same kinds of issues with PCs. Apple again wins with integration. The others have to make do with whatever the hardware makers decide to include with the OS.

As for the search engines, those are pretty much irrelevant. Google and Bing are pretty much the only top tier search engines out there. From my experience they produce results of comparable quality. What matters, however is advertising and web apps especially for businesses. One of the big reasons we use Google at my company is because the analytics and extensive marketing resources, and obviously, because it's currently got the biggest market share. I think Microsoft is at a disadvantage here mainly because they're still a more traditional software developer although they obviously have the resources and the experience. In this market Apple is really a non-entity. They've got great OSs and perhaps an app or two that stand out and that's it. I routinely use their iWork suite and am not impressed by it at all. It's no more intuitive than Office and is generally less powerful. Office is still the better suite.

I think ultimately the question is, is Apple looking to compete directly with Google and MS. I realize that the pundits are always clamoring for this sort of direct competition with anything that's even remotely similar but at this point I don't yet see it. It would be a very different focus for Apple. I do think if they were going to take this route it would make sense that they acquired a smaller search engine company and then work on it internally. Partnerships don't always turn out well for Apple and they don't really sync well with the company's focus on integration.

Committed

[symbolset]

They're also committed to Plays4Sure, MS Java and COM.