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Jan 05

Google and Apple: The Rivalry Builds

Posted by meggebrecht in Steve JobsQuattro WirelessNexus OneiPhoneGoogleEric SchmidtAppleAdMob


As Google shows off Nexus One, its much hyped new smartphone, in a heavily covered press conference today, one thing is clear: Apple and Google are no longer best friends forever.

While the debate has raged about whether Nexus One will be a game-changer, or perhaps more of a game-tweaker, there's no question that the device is a direct challenge to Apple's iPhone. We're not talking about Google offering up a free OS to cellphone manufacturers, but rather a phone designed by Google and poised to make a big splash in Apple's pool.

Apple, which is gearing up for its own huge product announcement concerning a certain tablet, might just have noticed what's happening at Google's Mountain View HQ today. This morning, Apple announced that 3 billion applications have now been downloaded from its iPhone App Store, which launched in July 2008. It hit the 2 billion mark two months ago.

Apple honcho Steve Jobs said that "the revolutionary App Store offers iPhone and iPod touch users an experience unlike anything else available on other mobile devices, and we see no signs of the competition catching up anytime soon."  I kind of doubt he's talking about Palm or BlackBerry maker RIM.

That isn't the only news on the smartphone front, though, and it isn't the only sign that Apple and Google are on a mobile collision course. All Things Digital reported late Monday that Apple has acquired Quattro Wireless, a mobile advertising company, for $275 million. Less than two months ago Google inked a deal for its own mobile advertising network, AdMob, agreeing to pay a massive $750 million to extend its online advertising business into the smartphone world.

Apple and Google, head to head in the mobile ad business. Anyone else think the kid gloves are off?

And the stakes are high. In November, Mike Wehrs, CEO of the Mobile Marketing Association, told Reuters that he expects to the mobile ad market to increase as much as 33 percent next year, to $2.4 billion. "The first thing a company asks for when they go to an ad agency is, ‘How fast can you get me on an iPhone app?" said Wehrs.

Lest anyone forget just how important a battlefield the smartphone sector is shaping up to be, research firm Forrester released some impressive survey results on Monday. Smartphones, according to Forrester, have continued to grow at their 2008 rate. "Nearly one in every three U.S. adult mobile phone subscribers now has either a smartphone or a [quick messaging device], up from one in five less than a year earlier," blogged Forrester analyst Charles Golvin, who stressed that 2010 will be the year of the smartphone.

And Apple and Google will certainly be slugging it out. While the two companies have increasingly been competing in areas from operating systems and browsers to phones, it wasn't so long ago that the two companies were accused of having a "special" relationship. After all, it's only been half a year since Google CEO Eric Schmidt stepped down from Apple's board, as the government pursued an antitrust investigation into the overlapping directorships.

In announcing Schmidt's departure, Jobs noted that "as Google enters more of Apple's core businesses, with Android and now Chrome OS, Eric's effectiveness as an Apple board member will be significantly diminished."

The distance between the two companies is only growing.

As an aside of sorts, I should point out that RIM should hardly be overlooked in the smartphone conversation, although many analysts and observers have tended to do that recently. "Despite Apple getting all the attention, even in a market segment that grew by more than half, RIM maintained its two-to-one advantage over the iPhone," wrote Forrester's Golvin. "Certainly broad availability across all operators and a range of form factors and prices helps, but also some people just want a keyboard, full stop."
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