It's no secret Google (NASDAQ: GOOGL ) and Apple (NASDAQ: AAPL ) aren't the best of friends. Nor will it come as a shock that Google's Android OS dominates the world of mobile computing. So it shouldn't be surprising that Google plans to better compete with Apple in the high-end part of the market: top-of-the-line smartphones, and cutting-edge technologies.
Google's decision to spend $12.5 billion for Motorola Mobility this past spring was about two things:
- Patents. Lots and lots of them.
- Expanding beyond mobile computing operating systems and go head-to-head with Apple on the hardware side of the industry.
Google's Nexus line of phones and tablets, as it's turned out, were only partially intended to unseat Apple. Nexus tablets and smartphone alternatives are fine for the entry to mid-market customers, but have made little impact in Apple's world of top-of-the-line, high-margin mobile units.
Can't we all just get along?
Google CEO Larry Page would like nothing better than to make Apple sweat. But past patent litigation, or less-than-flattering statements, doesn't mean the two behemoths can't combine forces. In spite of past animosity, the Google and Apple recently joined forces -- along with some other tech notables -- to secure a $525 million piece of Kodak's patent portfolio.
Google making its updated Maps application available to Apple's iPhone users again was another example of the two deciding to play nicely; when both benefit of course . The Maps app took just hours to become the No. 1 download at Apple's online store.
Plans for the new year
But partnerships of convenience aren't likely to change the fact that Google and Apple would like nothing more than to be the catalyst for the other's fall from grace. Toward that end, word has it Google has a couple plans for the upcoming year designed to more directly compete in Apple's world.
You don't have to search long to find rumors about Apple TV. Apple CEO Tim Cook never comes right out and says it, but he doesn't deny the rumors that an Apple TV will come; it's just a matter of when. As you may know, Google introduced its version of TV software a couple of years ago along with partners Sony and Logitech with little or no success.
Korean electronics manufacturer LG, Google's partner in the manufacture of its Nexus products, will introduce Google's new and improved Android OS for television next month in Las Vegas. The latest Google TV will boast voice recognition capabilities, a better remote control, and enhanced functionality for its online search and YouTube services.
For Google, really making a dent in the iWorld means competing in the mobile computing arena, specifically high-end smartphones, if rumors of its X Phone prove to be true. Unlike Google's existing Nexus line of products with partner LG, the X phone will be designed by Google and its Motorola Mobility team. Google is making its pitch to be all things to all mobile people in 2013.
Don't expect Apple to sit idly by. Most believe we'll see an Apple TV in 2013, though later than Google's January 2013 launch. As for Apple's bread-and-butter, brushing aside smartphone competition from Google won't be quite as easy as pooh-poohing early-stage Nokia alternatives, or offerings from phone sales leader Samsung.
Google's $46 billion in cash seems paltry in comparison to Apple's reserves. But for investors, Google offers something Apple doesn't: multiple continuously expanding revenue streams. Apple? Two-thirds (give or take) of its profits are derived from smartphone sales. That's a lot of mobile eggs in one basket.
No matter which side of the fence you fall on, 2013 promises to be an interesting year in technology. How will Apple fare against growing competition, coming from multiple directions, in its most critical business line? With Google's plans for the coming year, we're about to find out.
2013 and beyond
As one of the most dominant Internet companies ever, Google has made a habit of driving strong returns for its shareholders. Despite gaining an enviable lead with its Android operating system, the market isn't entirely sold on Google. That's why it's more important than ever to understand each piece of Google's sprawling empire. In The Motley Fool's new premium research report, we break down the risks and potential rewards for Google investors. Simply click here now to unlock your copy of this invaluable resource, and you'll receive a bonus year's worth of key updates and expert guidance as news continues to develop.