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YouTube Dodged Apple's Bullet, Matrix-Style

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The iPhone 5 launch on Wednesday is sure to be the most important event for tech investors this year. The Motley Fool will host a live chat where our top tech analysts will answer your questions and break down what the announcement means for Apple and investors everywhere. Swing by at 12:45 p.m. EDT this Wednesday for all of your coverage of Apple's next big announcement.

Apple (Nasdaq: AAPL  ) raised a lot of hackles last month when the company decided to drop the native YouTube app from future iPhones, iPads, and iPods. These devices are nothing if not brilliant media consumption devices, and YouTube remains the largest video destination online. Isn't it insane to ship media tablets without the content app?

Well, some iPhone users comforted themselves with the fact that the YouTube app was getting crusty anyway. The mobile browser version includes a ton of features that the app never delivered, such as "like" and "dislike" buttons or suggested search results. So it's not like Apple fans would be deprived of their viral videos.

Today, YouTube parent Google (Nasdaq: GOOG  ) took the next logical step. YouTube's engineers have cooked up a brand-new app for iPhone and iPod users, with an iPad version to follow soon enough.

Unlike the old app, which was developed by Apple and hardly updated since it was first released, the new app does everything the browser-based experience can offer -- and more. Among many other upgrades, this release supports video ads which in turn enables oodles of videos that are licensed to play only after the pre-roll video ads. If nothing else, this expands the library of available music videos something fierce.

This may very well have been Google's master plan all along, given that the old app's license expired over the summer. Users are certainly not left out in the cold (as some critics first thought).

The next big question is, will Apple include the new YouTube app by default or will users have to find it in the app store? Slapping a YouTube icon on your home screen from the get-go would put a lot more eyeballs on the app, but then again, Netflix (Nasdaq: NFLX  ) isn't complaining about the lack of prime iPhone real estate for its streaming service.

Mobile traffic remains a massive growth driver for the paid subscription service, and YouTube has the additional advantage of being free. So this app should quickly become the de facto standard for watching YouTube videos on your Apple gadgets.

If Apple ever fired a bullet, YouTube dodged it with ease. But it's more likely that the pair planned this all along, with a wink and a friendly nudge.

It's impossible to judge Google in a vacuum. Given the intricate entanglement of mobile hardware and software, you really need to understand Apple before tackling Big G. If you'd like to find out more about Apple -- all of its opportunities and potential pitfalls -- check out our new premium report on the company. Getting a copy will also give you access to real-time updates on latest company developments.

Fool contributor Anders Bylund owns shares of Google and Netflix, and has created a bull call spread on top of his Netflix shares. He holds no other position in any of the companies mentioned. Check out Anders' holdings and bio, or follow him on Twitter and Google+. The Motley Fool owns shares of Netflix and Apple. Motley Fool newsletter services have recommended buying shares of Apple, Netflix, and Google. Motley Fool newsletter services have also recommended creating a bear put ladder position in Netflix and a bull call spread position in Apple. The Motley Fool has a disclosure policy.

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Read/Post Comments (1) | Recommend This Article (3)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 11, 2012, at 4:56 PM, melegross wrote:

    As has been pointed out elsewhere, it may very well be Google that prevented Apple from continuing to offer their YouTube app.

    As we see, Google already offers their own—with the advertising Apple shunned in their own app. As we all know, Google is an advertising company. Everything they offer serves one purpose; to put advertising in our faces.

    Indeed, Google's filings show that 97% of their gross and net profits are from advertising.

    It seems as though it's easy, and a good headline to blame Apple for everything that happens. In this case, Google's name should have been used instead.

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