GOOGLE VS APPLE: THE BATTLE FOR MOBILE
Kyle Khasigian Let’s Get Ready to Rumble!
Jobs: “Folks who want to buy porn can buy an Android phone.”
2 More than jjpust competition
Once close friends, the feud between Apple and Google has become highly emotional “The biggest eg o battle in history .(pg 38) ”
Based on Google’s violation of an understood alliance between the companies Built phones by stealing the ideas behind the iPhone
Results speak for themselves Schmidt resigns from Apple board due to competition Apple sues HTC over p atent infring ement Google apps blocked/Apple enters new domains
3 Less than 2% of overall web ads
Total Internet Advertising = $60 Billion
$2 Billion
Other Web-Based Advertising Mobile Advertising
$58 Billion
Why fight over such a small piece of the pie? 4 Source: Gartner Potential for mobile is substantial
iPhone + iTouch vs Netscape vs NTT docomo imode vs AOL : First 20 months after Launch 100 Mobile Internet iPhone + iTouch 80 Launched 6/07 DkDesktop Internet Netscape Launched 12/94 60
Mobile Internet 40 NTT docomo i-mode Launched 12/94 20 Desktop Internet AOL v2.0 Launched 9/94 0 Q1 Q3 Q5 Q7 Q9 Q11 Q13 Q15 Q17 Q19 iPhone + iTouch Netscape NTT docomo i-mode AOL 5 Source: Mary Meeker, Internet Trends, Morgan Stanley, April 12, 2010. Mobile bigger than Desktop in 5 y rs
Global Mobile vs. Desktop Internet User Projection, 2007 – 2015E 2,000
1,600
1,200 rs (MM) ee
800 Mobile Internet Users
Internet Us DktDesktop IItnterne t Users 400
0 2007E 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E
6 Source: Mary Meeker, Internet Trends, Morgan Stanley, April 12, 2010. Market turned into an arms race
Acqqpquisitions have heated up, both to acquire technology and to keep tech out of the rival’s hands Apple Google Quattro Wireless, Inc. AdMob, Inc. (Mobile Advertising) (Mobile Ad Network) Siri, Inc. Corduro, Inc. (Personal Assistant – Search) (Mobile Payments) Intrinsity, Inc. Agnilux, Inc. (Semiconductors) (Semiconductors) La La Media, Inc. Bump Technologies, Inc. (Music) (3-D Technology) Imagination Technologies Group Gizmo5 Technologies, Inc. (Graphics – Chips) (Communication) * 9+ acquisition in last 12 months involving mobile 7 Mobile usaggye is the key…
Global Smartphone Share (in %) 60% 54% 51% HTML Mobile Page View Share (Net Applications, 50% 12/09) 44% Mobile Internet + App Usage Share (AdMob, 12/09)
40% Global Unit Shipment Share (Gartner, CQ4:09)
30% 27%
20% 19% 20% 20% 16%
10% 7% 8%8% 8% 5% 4% 3% 2% 2% 1% 1% 0%1% 0% iPhone Symbian Android RIM Windows Palm Other
8 Source: Mary Meeker, Internet Trends, Morgan Stanley, April 12, 2010. …Apple and Goog le have won
US Mobile Internet Usage by Smartphone Operating System 100% 3% 7% 12% 20% 80% 8% 14% 6% 42%
32% 23% 4% 17% 13% 60% 31% 19% 12% 2% 7% 27% 40% 60% 59% 55% 46% 51% 31% 44% 20% 29%
6% 8% 0% 4/08 6/08 8/08 10/08 12/08 2/09 4/09 6/09 8/09 10/09 12/09 2/10 Symbian iPhone RIM Windows Palm Hiptop Android 9 Source: Mary Meeker, Internet Trends, Morgan Stanley, April 12, 2010. Business models contrast pppyhilosophy
Apple Profit = Development of integrated products sold to the public Sale of pp,,roduct bundle: software, hardware, and service iPhone, OS, and App Store
Google profits from indirect content and usage, i.e. the sale of information and opportunity Advertising – Adwords Sales data gathered from search engine
10 Founded on different ppprinciples
CLOSED vs. OPEN Others: Sony-Ericsson Dell Huawei Lenovo Archos Acer
Apple HTC Motorola Samsung LG 11 Monetization of apps #1 concern
Android has struggled monetizing apps and showing developers the money
Google ’s typica l ad- %%p of users that purchase at least 1 paid app per month based advertising not 60% 50% as effective on mobile 50% platform 40% 35% 30% 24% 21% Higher Apple paid 20%
downloads and higher 10% user base delivering 0% iPhone iPod Android webOS Touc h value over Android. Source: AdMob
12 Apple: “mobile advertising sucks”
CtCurrent MbilMobile Adverti si ng Platf orm Browser-Based Application-Based GlGoogle Adword s bdbased Banner adsor itinterrup tion a ds Redirect necessary (problematic Low effectiveness of search results w/o multitasking)
Consumer wants more focused Poor content results
Low monetization rate (click Poor user interface throughs) Not sufficient to support free app Low Monetization rate development
13 Apple to save the day
th On April 8 , 2010, Apple launched iAd as a solution for mobile advertising
Mobile Advertising Features Ads fully integrated inside apps No redirect outsid e of app Interactive ad content Improved user experience Revenue split between Apple and developer . 60% developer / 40% Apple Apple both sells and hosts ads
14 And it onlyyg gets worse for Goog le
15 What ViP means for Google
Direct competition for AdMob Competitive advantage for Apple Gathers information valuable to clients Means Google is not acquiring that information and reducing value of Google’s ad product iPhone is largest mark et, wh ich Appl e will control Potential lock out of other analytics platforms and ad networks Ads don’t exist without analytics – what do you bill clients? Better monetization drive developers to Apple More free apps means more customers
16 Apple currently in control, but…
Android quickly catching up
FTC looking into anti-competitive practice of Apple’s “control-freak” policy on app development Banning Flash and other programming languages Funneling advertisers through its own network
iAd risk of failure Super high development cost per ad Questionable value gained even with added click through
Apple has turned into the evil emp ire Charges against Gizmodo for iPhone 4.0 fiasco 17 Googgygle not laying down
AdMob is the largest mobile network in the market Advertiser not yet willing to leave a large network for the unproven technology of iAd
Apple’s purchase of Quattro Wireless has eased concerns over AdMob anti-trust case Proves Google has competition in the market
Massive investment in new mobile technology Mobile still on the “emerging” part of adoption curve New technology continually changing playing field
18 And the winner is: ANDROID!!!
“Open or Perish” Open source platform will continue to draw developers to it Ex. Windows domination
As Android continues to win manufacturer approval, more devices will carry the operating system Android is only realistic competitor to iPhone OS
Gartner predicts that Android will ship more units than the iPhone by 2012 Android: 94.5M units vs. Apple: 71.5M units
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