The stock market has yet to figure this out, and with all the market manipulation going on, I somehow doubt that knowledge of how poorly Google fares against Apple will have much impact on GOOGL or AAPL.
Google and Apple could not be more different despite some glaring similarities. Both are Silicon Valley companies but only one is highly diversified (multiple highly profitable product lines). Google, despite all the press about high tech, is an advertising company. Apple sells hardware. Both are money making machines.
House Of Cards
The stock market, manipulated though it appears to be, seems to worry about Apple far more than it worries about Google, yet it’s Google that is a true one trick pony operation, despite the new name (Alphabet, implying a company of many colors and business units; only advertising makes appreciable revenue and profits).
Google needs Apple more than Apple needs Google.
This was born out last week when tech giant Oracle spilled the beans on how much money Google has made from its Android venture (Google is being sued by Oracle for stealing intellectual property; a marketing and R&D ploy Google uses often). A total of just over $30-billion in revenue since 2007 when Apple launched the iPhone. By comparison, Apple made over $30-billion in revenue selling iPhones in the past quarter. Profits are different and far less over the same period, of course, but both companies make billions on their respective product lines. Google makes a huge chunk of its advertising revenue on Apple devices.
Google pays Apple about $1-billion a year to make Google the default search engine on Safari, the browser of choice among Apple’s customers. That billion dollar price tag is cheap, though, because searches generate far more revenue for Google.
Not only has Alphabet failed to diversify itself beyond Google, even the company’s famed advertising business has undergone dramatic pressure. Website visitors are treated to a plethora of advertising pablum and have begun to revolt in ever increasing numbers. Google’s revenue (and profits) per thousand ads delivered continues to drop, while viewers to those ads employ ad blocking techniques to avoid the deluge of unwanted messages which seldom get viewed.
News last week also revealed that Google blocked almost 800-million bad advertisements in its network last year, and has a staff of over 1,000 people fighting the problem. Compare that to news that Apple has over 800 people working on the iPhone’s camera and it’s easy to see why people hate online advertising but love the iPhone’s camera. Alphabet’s most important business segment, Google, has a huge problem that is not reflected in the company’s inflated stock price because, you know, self-driving car.
Google gets good press and media buzz for products which never see the light of day, never become a money-making project and the self-driving car, and Google Glass are but a few of the examples. Meanwhile, Google’s bread and butter is a division behaving badly, obscured by massive profits reminiscent of Microsoft executives fiddle playing while the company burns through Windows and Office profits.
Alphabet, the new name for Google, is a house of cards, a one-trick pony company that is little more than a gateway for advertising disguised as a technology company. Hey, Wall Street. Move along. There’s nothing to see here.