Apple's Making Friends and Enemies

One of the underrated and genius features of Apple's (Nasdaq: AAPL  ) surge in popularity has been the company's openness when it comes to software development. Apple has always been known as a closed platform with less available software than PCs, but slowly that changed when the iPhone was introduced and the app floodgates were opened. Now, slowly, the company is moving to steal the thunder of some of the most popular apps on iPhones and iPads.

Yesterday's new iOS and OS X announcements highlighted the company's openness and partnerships with some developers while shutting out other suppliers. To me, this divergence shows how Apple is viewing partners and threats to its current ecosystem.

Best friends forever
The integration Apple now has with Twitter and Facebook (Nasdaq: FB  ) , expanded under the new iOS, brings the two social networks front and center on all of Apple's iProducts. Now you can tweet or post to Facebook from Safari or your photos app, and developers will be able to integrate them into their apps. These two companies are closer than ever to Apple; it's increasingly integral to their success.

The Passbook app will make some friends, making it easier for airlines, movie theaters, and even merchants to remain front and center on a user's devices. It may cause the iPhone itself to become your wallet in the future. Starbucks, Fandango, and United got the publicity yesterday, showing off Passbook's capabilities to use location and updated data to make apps easy to use and access. I'm sure retailers are going to love being so readily available on the iPhone whenever you're out shopping or looking for a cup of coffee.

Maybe the biggest winner was Yelp (NYSE: YELP  ) , a network of reviews that will be integrated closely with Apple's devices, bringing vital information to consumers and probably replacing data Apple hoped would come from its failed social network, Ping. The market has barely flinched at the integration, but this is one company that I think came out a big winner from Apple's announcements yesterday.

Apple kicking old partners to the curb
The biggest loser of yesterday's event was anyone involved in mapping not named TomTom. Garmin (Nasdaq: GRMN  ) and Google (Nasdaq: GOOG  ) were kicked to the curb when Apple announced its own mapping app, which includes turn-by-turn navigation. The app will be driven by data from TomTom, although the exact impact on TomTom is unknown at this point.

Google used to hold the perch of the default app on the iPhone and iPad, but the two companies have been dueling over operating systems and patents, souring their relationship. The Google Map app will more than likely still be available on the iPhone, but it won't be in the coveted default position it once was.

Garmin was also a huge loser, with the new Apple app rendering the $49.99 Garmin U.S.A. app and $59.99 Garmin StreetPilot virtually useless with one fell swoop.

Apple also took a major swipe at an up and coming venture-backed app named Pocket as well. The app that saved Web pages and made them available offline won't have much utility for Apple users now that Safari has the same ability to store Web pages offline.

This isn't the first time Apple has picked fights with some of its most popular apps. iBooks is a direct competitor to Amazon.com's Kindle app and is now integrated on all iOS devices. Netflix also has to battle with the Movies app and Apple's integration across devices, making renting and watching movies a breeze at a time when Netflix has stopped growing like a weed.

Watch the expanding empire
It's too early to say whether the Apple Maps app is any better than Google's app, but I am concerned to see Apple building so many of its own apps and encroaching on the territory once owned by competitors. It's only natural given the size of the iEmpire, but it draws away from the creativity of app developers who can be overtaken by Apple with the next iOS update.

With that said, you can see Apple tightening ties with developers it has no interest competing with. Facebook, Twitter, and Yelp have built social networks that aren't Apple's bread and butter, and it's positive for each of them to be more integrated with Apple.

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Fool contributor Travis Hoium manages an account that owns shares of Apple. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw. The Motley Fool owns shares of Netflix, Google, Apple, Starbucks, Facebook, and Amazon.com. Motley Fool newsletter services have recommended buying shares of Starbucks, Netflix, Amazon.com, Google, and Apple, creating a bull call spread position in Apple, and writing covered calls on Starbucks. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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  • Report this Comment On June 13, 2012, at 12:27 PM, DaroldB1940 wrote:

    Friends & enemies, No it just proves that Apple is the Walmart of the tech world. When they no longer need you, then you're gone. Mom and Pop app providers had best beware of totally jumping into the Apple bed.

  • Report this Comment On June 13, 2012, at 2:15 PM, Archaeologist77 wrote:

    APPLE (AAPL) is widely recommended, but large quantities of APPLE shares are beyond the reach of novice investors building our portfolios. My question:

    Is it better to buy a few shares of AAPL or more than a few shares of an ETF that holds AAPL?

    For example, QQQ (17.9% AAPL) or VGT (18% AAPL).

    Seasoned investors are requested to share their wisdom.

  • Report this Comment On June 13, 2012, at 3:36 PM, TMFFlushDraw wrote:

    @Archaeologist77

    The number of shares you own means absolutely nothing. If you own 1,000 shares of a $1 stock or 1 share of a $1,000 stock the only thing that matters is the percentage of the company you own. If you like AAPL, buy AAPL for exposure, not an ETF that owns AAPL.

    To put this into context: If you owned 1 share of Apple stock and Apple did a 1:100 split would you own more of the company with 100 shares than you did with 1 share? No.

    Travis Hoium

  • Report this Comment On June 13, 2012, at 4:11 PM, CluckChicken wrote:

    This sounds a lot like when MS made IE free, wonder if the DOJ and EU will Apple or just continue to let them do whatever they want.

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