Steve Jobs was always notorious for being able to get his way -- everything from making sure those who worked for him met his perfectionist product requirements by deadline to talking wireless partner AT&T into launching a handset the company was never even permitted to lay eyes on. Well, he got his way in another important deal years ago -- or rather, in the lack of a deal.
May I ask who's calling?
SFGate recently ran a profile of Yelp
With the review site's growing popularity catching the eye of the titans, Google
Jobs was still fairly raw about Android as what he viewed as technology stolen from Apple
So far, Yelp's decision to go it alone is working out, with its market cap now standing at $1.3 billion, more than twice what Google had offered. That's just about where it started when it went public in March of this year, more than two years after the phone call from Jobs and turning down Big G.
In the meantime, Google decided to pick up restaurant ratings and review site Zagat to satisfy its craving, and Yelp now views Google as a major competitive threat since it relies on the search giant for most of its traffic. Google was responsible for more than half of traffic from Internet searches in the first quarter, and Google has removed links to Yelp from some of its search products in favor of its own local offerings.
The site is free for users, a key advantage over rival reviewer Angie's List
At the Worldwide Developers Conference last month when Apple detailed iOS 6, the iPhone maker also incorporated direct integration with Yelp's services, allowing for check-ins directly in the new maps app. That's a big boost for Yelp as exposure to Apple's large and rapidly growing installed base of iOS users, and it most assuredly wouldn't have been possible if Yelp had been corralled into Google's stable.
It's also a big vote of confidence from Apple, putting Yelp in the same category with other dominant third-party social services getting iLove, most notably also including Facebook in iOS 6. Twitter was directly integrated last year in iOS 5.
The next major version of Apple's desktop OS X, Mountain Lion, is also integrating social features directly. Mountain Lion is due out this month and will launch with Twitter while Facebook will be added this fall. One can't help wondering whether Yelp might eventually get this treatment as well, which would be yet another major score with Apple.
For now, heavy spending in sales and marketing continues to hold back Yelp's bottom line, despite a booming top line. It's been able to fetch a loftier valuation by staying independent, and the deals with Apple definitely help, but for now I'd review it as 1.5 out of five stars as an investment, because I'm not confident in Yelp's ad-based business turning a sustainable profit.
Interestingly, my rating is just half of the three stars that the company fetches as a service on its own website.
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Fool contributor Evan Niu owns shares of Apple and AT&T, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Google, Facebook, and Apple. Motley Fool newsletter services have recommended buying shares of Apple and Google and creating a bull call spread position in Apple. 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. The Motley Fool has a disclosure policy.