On Jan. 5, news broke that Apple (Nasdaq: AAPL ) would acquire Quattro Wireless, a mobile advertising company. A few weeks earlier, Apple was rumored to be a bidder for AdMob, a competing mobile advertising company that Google announced it would acquire for $750M. What gives?
It's no surprise to see Google (Nasdaq: GOOG ) snapping up mobile advertising assets. For Google, this is a natural extension of its core advertising business, from desktop to mobile. But what is Apple doing? Its core business is PC and mobile hardware and software, not advertising.
I believe the motivation behind Apple's acquisition of Quattro Wireless is a desire to maintain as much control over the iPhone and App Store as it can. Apple, after all, has a history of maintaining tight control. Unlike PC market rivals Microsoft (Nasdaq: MSFT ) , Dell (Nasdaq: DELL ) , and Hewlett-Packard (NYSE: HPQ ) , Apple makes both the hardware and operating system for its Macs. Similarly, in the mobile market, it produces the iPhone hardware and software and has maintained tight control over its App Store. Unlike Google's approach to the Android market, Apple reviews every app before it's approved for inclusion. This tight control has created a seamless user experience that has bred ferocious consumer loyalty to Apple's products. Growth of in-app mobile advertising will make it increasingly difficult for Apple to maintain that degree of control, but it will certainly try.
By acquiring Quattro Wireless, Apple will have a horse in the mobile advertising race, and will exert influence over the advertising that will be an inevitable part of any iPhone (or tablet) user experience. It might even unleash its famous creativity on an industry heretofore known more for its annoyance. If the mobile ad market lives up to industry expectations, Quattro Wireless should provide Apple yet another growing revenue stream, but even if the acquisition is a veritable home run, Apple will never be an advertising company. Down to its core, it will continue to be all about consumer hardware and software experiences -- experiences that it controls.
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