As Google Rapidly Embraces the "Internet of Things" Should Apple Investors Worry?

Google (NASDAQ: GOOGL  ) won't stop at smartphones and tablets. The tech giant wants to be everywhere. And now its effort to bring Android to wearables is official. As Google rapidly invades all sorts of Internet-connected devices, will Apple's (NASDAQ: AAPL  ) ecosystem become less significant?

Google's next stop: Your wrist and much more
The online search giant announced the formation of the Open Automotive Alliance at the 2014 Consumer Electronics Show with the goal of making cars connected Android devices. The Wall Street Journal said in February that Google's "vision for robotics" includes building an operating system for robotic manufacturing like the Android operating system for mobile computing devices. Then there's Google's recent acquisition of Nest, maker of Internet-connected thermostats and fire detectors (and who knows what else is in Nest's pipeline?). Now Google will be introducing an Android software development kit, or SDK, for wearable devices in two weeks, according to Google executive Sundar Pichai (via The Wall Street Journal). The "Internet of things" is undoubtedly upon us -- and Google wants to lead the way.

Pichai, who oversees Google's Android, Chrome, Gmail, the Nexus smartphone and tablet line, Chromebooks, and the Chromecast, says that Android for wearables will be free for manufacturers, as it was for smartphones and tablets.

"The software kit might give Google an opportunity to attract developers and bring users deeper into an ecosystem powered by its software," said the Journal's Rolfe Winkler. Further, Winkler says Google will be releasing its own smart watch in June, which will be manufactured by LG Electronics. "[T]he company wants to help lay out a 'vision' for other developers to power their own wearable devices," Winkler explained.

CarPlay. Image source: Volvo's official announcement of future integration with CarPlay.

Apple's less rapid move to other devices
Of course, Apple has plans for other devices, too. The company recently unveiled its CarPlay. And to be fair, Apple appears to be moving into cars with its CarPlay faster than Google. Further, though Apple's iWatch is still just a rumor, its recent hiring spree of professionals with skills related to wearables suggests Apple's iWatch is likely inevitable. Then, of course, there's Apple CEO Tim Cook's promise that the company will introduce new categories this year.

But for the most part, Google seems to view the advent of the Internet of things with greater urgency than Apple. A June launch of Google's smart watch, for instance, would precede the rumored fall launch of Apple's iWatch. And launched alongside with a free Android operating system that is ready for other manufacturers to adopt in wearable devices, Google's rapid move to the category easily trumps its entry to smartphones and tablets that significantly lagged Apple.

With Google bringing Android to wearables so soon, could Apple's lack of a significant early advantage as it had in smartphones and tablets handicap the growth of its ecosystem compared to Google's?

Or is Apple up to more than we realize?
If history is any indication of how revolutionary Apple's move to a new category could be, Google's seemingly meaningful advantages in wearables may not be as much as a threat to Apple as they seem. Unlike Google, Apple likes to keep product plans as secret as possible -- so it's difficult to ever really know exactly what is in Apple's product pipeline.

Whether or not Google's ecosystem of connected devices helps the company make gains on Apple is still to be determined, but Apple investors can take refuge in the fact that the stock is largely already priced for greater competition ahead. At just 13 times earnings, a lucrative share repurchase program alone could help Apple reward investors even with flat revenue in the coming years. Google's transition to the Internet of things is a development Apple investors should keep an eye on. But Apple's impressive history of successfully entering new categories, combined with a conservative valuation, more than make up for Google's potential early lead in wearables and other categories.

How to invest in the "Internet of things"
Let's face it, every investor wants to get in on revolutionary ideas before they hit it big. Like buying PC-maker Dell in the late 1980s, before the consumer computing boom. Or purchasing stock in e-commerce pioneer in the late 1990s, when it was nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hyper-growth markets. The real trick is to find a small-cap "pure-play" and then watch as it grows in EXPLOSIVE lockstep with its industry. Our expert team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 TRILLION industry. Click here to get the full story in this eye-opening report.

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Comments from our Foolish Readers

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 March 10, 2014, at 10:39 PM, yogaman101a wrote:

    Well, Chaim, since the Board of Directors loves him, if you want to let go of your hate, you might need to follow his advice, and sell.

    But it was considerate of you to seek out this relatively uninformative and wishy-washy click-bait to vent your emotions where there is not likely to be useful commentary.

    I hope you find peace.

  • Report this Comment On March 10, 2014, at 11:00 PM, djtetsu wrote:

    I was bullish on Apple but unless they unveil something spectacular this year, we would all have to agree that the company has been neutered by Tim Cook.

    I cringe at the idea that bigger phone sizes will be the only big leap for the company this year. Basically copying Samsung and leaving everyone wondering and feeling a bit jipped, "what took them so long"

  • Report this Comment On March 11, 2014, at 7:37 AM, jdmeck wrote:

    ""But for the most part, Google seems to view the advent of the Internet of things with greater urgency than Apple""

    Maybe because Google is nothing but an internet search and advertising company while Apple actually makes products. I don't think Apple has to worry about all the junk that will be out there, they just need to stay the quality course.

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Daniel Sparks

Daniel is a senior technology specialist at The Motley Fool. To get the inside scoop on his coverage of technology companies, follow him on Twitter.

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