Shotguns vs. Sniper Rifle

A few weeks ago, Apple (NASDAQ: AAPL) reached a historic threshold. It is the first company to hit a market capitalization over $700 billion, making it the most valuable American company in history. Apple’s market cap is now more than Google’s (NASDAQ: GOOG) and Microsoft’s (NASDAQ: MSFT) combined.  

Hold on… I thought this was a modern-day tech race — a head-to-head rivalry. You know…

• Coke vs. Pepsi
• Star Trek vs. Star Wars
• Potter vs. Voldemort
• Apple vs. Google

A good rivalry is a tit-for-tat, constantly dynamic duel.

So it’s a little disheartening for rivalry-mongers like myself to see Apple just leaps and bounds ahead of Google in the marketplace — to see it reach unmatched success.

Two institutions I thought of as equal technology titans are now billions of dollars apart…

Or are they?

Well, that depends on how you perceive value.

First, let’s do a quick run-down of the Apple vs. Google business model.

For those of you who just left your cave this morning after a decade-long hibernation, Google has evolved beyond the search engine game.

Aside from Google proper, the company has more than a handful of other departments. Google X is a semi-secret (and super sci-fi) division.

Larry Page encourages researchers and developers at Google X to “address a problem that affects millions or billions of people, utilize a radical solution… use technologies that are obtainable within the near future.” He calls these ideas “moonshots.”

With the tagline, “We like epic shit,” Google’s Advanced Technology and Projects Group just revealed Project Jacquard, which merges technology and textiles. Google ATAP is working on customizable smartphones, data security, and other groundbreaking “moonshots.”

Google employees call themselves dreamers, believers, and pirates. Ultimately, they work to improve the world.

Here is a list of just some of the projects and products Google has up its sleeve (in no particular order):

• AdWords
• AdSense
• Google Chrome
• Gmail
• Google Maps
• Google Books
• Google Drive
• Android, Android M
• Google+
• GoogleWallet
• ChromeCast
• Google Now
• Google.org, philanthropy project addressing energy and the environment
• Android Wear
• Nest
• Jump
• Project Wing (drone delivery services)
• Project ARA
• Project Tango
• Project Loon
• Project Vault
• Project Abacus
• Project Soli
• Project Jacquard
• Google Glass
• Driverless Vehicles
• Acquisition of Makani Power
• Smart Contact Lenses (able to measure glucose in diabetes patients)
• Lift Labs
• Baseline Study (genomics and health data tracking)
• Nanoparticles, Synthetic Skin, Disease Detection
• Acquisition of Boston Dynamics
• Acquisition of Gecko Design
• Investments in SpaceX
• Magic Leap
• DNAnexus
• Rani Therapeutics
• SynapDx
• Transcriptic
• One Medical Group
• Calico (to combat aging and outsmart death)

With Google keeping more than a handful of projects fairly close to the cuff, this cannot possibly be a comprehensive list. The point I’m trying to make is regarding the extent of innovation this company is supporting.

Google has its hand in pretty much every sector of technology: devices, wearables, textiles, cloud computing, energy, the environment, biotechnology, big data, space exploration, transportation, cyber security, music, photography, operating systems, and others.

Shotguns vs. Sniper Rifles

The entire Apple business model, meanwhile, focuses around a small collection of products and projects.

Steve Jobs and his successor Tim Cook both align with a very focused mantra. Jobs once said, “People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully.” And that is exactly what Apple has done.

Below is a list of the company’s intended (and speculative) 2015 product line:

• Apple Watch
• Apple TV
• Apple Television Set
• iPad Pro
• iPad Air
• iPad Mini
• iPhone 7
• 12” Macbook
• iMac
• iOS 9
• OS X
• Beats
• iTunes Radio

And that’s all she wrote.

Apple generates the majority of its revenue through devices: iPads, iPhones, Macbooks, etc. The company is facing dropping iPad sales, as well as tough competition from Android devices and Chinese manufacturers.

Today, more people use Android than Apple’s iOS. Google Android devices account for 78% of mobile devices, while Apple’s iOS supports only 18.3%.

Apple’s dependence on retail makes the source of revenue much more volatile. The instability comes from market trends, prices, tastes, and all the other sources of change in consumer demand. Google, on the other hand, generates revenue through advertising sales (about 90%).

Even on Apple devices, Google generates revenue. “A recent analysis by Goldman Sachs estimated that Google collected about $11.8 billion on mobile search ads in 2014, with about 75% coming from ads on iPhones and iPads.”

Security vs. Innovation

Based on this quarter’s numbers, Apple has found the perfect formula for how many eggs it needs and which baskets to put them in. It’s a small line of great products, but people are starting to question the company’s ability to innovate.

Even Woz isn’t raving about the new Apple Watch. He says it won’t change his life. It probably won’t change mine, either.

Flashy tech toys are fun and nice to look at. Making my phone smaller and strapping it to my wrist is a fashionable novelty, but it doesn’t disrupt the way I see the world. It’s not groundbreaking.

Google is developing utensils with built-in accelerators and stabilizers, with the goal of counteracting tremors and the effects of Parkinson’s disease. If successful, they could genuinely impact millions of lives.

Google’s Project Loon uses balloons in the stratosphere to bring the Internet to entire parts of the world that still don’t have access. Two-thirds of the world population will feel the result of this project’s success.

With the acquisition of Makani Power, Google is working to create airborne wind turbines, creating an entirely new strategy of energy production.

Google also invests in Tesla’s SpaceX. That means it is exploring the universe.

Google is reaching new markets (aliens, perhaps?), solving global problems, and developing technologies that have the potential to improve the standard of living for countless earthlings.

Apple, on the other hand, has found a successful niche, and it’s staying there — comfortable in Cupertino.

Apple has manufactured its way to rapid success. But we have to question the sustainability of its business model. Apple hasn’t entered a new product category since the release of the iPad in 2010. Dependence on devices can only sustain a company for a finite amount of time.

The world as we know it is becoming dependent on the Internet of Things. Online services are today’s status quo, and Google dominates that sector. The biggest opportunity for Apple will be to find a way to create more of an online services presence or risk losing its status as innovative leaders. (I would argue that it already has.)

Apple has begun encroaching on Google’s Internet services kingdom through iWorks and iCloud, but it’s a two-way trend as Google evolves further into the devices market.

We clearly have some very different business ideas on our hands. Apple products are phenomenal but few. Google projects are phenomenal, many, and growing.

Apple soared quickly to reach its $700 billion market cap status. Google’s market cap increase hasn’t been quite as explosive, but it’s been on a steady, stable incline.

If Apple doesn’t expand horizons and get back to its world-changing roots, then it’s very possible that the tortoise may win the race after all.