They earn huge profits by creating classy products that work well, and work very well together in a delightfully Disneyesque walled garden way. Along the way to hundreds of millions of satisfied customers and billions in profits, Apple has learned how to make competitors waste their money. Here are a few high profile examples.
Buy Or Build?
First up is the iPhone. There’s little doubt that once former Apple board member Eric Schmidt found out about the iPhone and took the secrets back to corporate headquarters to build a competitor that the race was on.
Apple launched the iPhone, kicked the traitor Schmidt off his board of directors spy perch, and sold hundreds of millions of phones that beget billions in profits.
Google quickly copied the iPhone’s user interface, and unlike Microsoft which did the same to the Mac and made billions, Google has only spent billions to compete against Apple. Many billions.
Many? Google bought Motorola for the boatload of patents the company needed to defend against the sure-to-come legal onslaught from Apple.
Google spent billions more to purchase additional patents to defend itself from Apple, Microsoft, and others. How have those purchases worked out so far? Some estimate that Google has dumped $15-billion into the Android effort and has little to show for it as still two-thirds of the company’s mobile revenue comes from iOS devices.
Don’t expect to see apps from Apple on Android devices any time soon, but Apple doesn’t mind Google apps on the App Store? Why? Google needs the revenue because iOS is a huge platform, though the company cannot extract as much private data from users as it does from Android devices.
That walled garden looks pretty private and comfortable now, doesn’t it?
Here’s another way Google has been enticed to spend huge amounts of money. Waze. It’s one of my favorite iPhone apps. Waze provides iPhone users with near real time community based mapping, traffic, and navigation. It’s free and a great app to have if you live near other Waze users.
Google just spent about $1-billion to buy Waze, supposedly in a bidding war with Apple, which supposedly Apple lost. I don’t think so. Apple has hundreds of millions of iPhone users. Waze has only about 50-million users, and most are in larger metropolitan areas. Could Apple build a Waze-like app for less than $1-billion and make it available for free to hundreds of millions of iPhone users?
There’s evidence that Apple is doing just that. An Apple designed Waze app would reach more iPhone users, cost less to build and distribute, while Google spent another billion dollars trying to outflank the company that’s not easily outflanked these days.
Google spends billions to be competitive with Apple in non-search engine, advertising segments, while Apple actually makes billions of dollars in profit doing what it does best– great products that customers love to use.