Tim Beyers sits down with Rick Engdahl to talk comics, TV, movies, tech, and related geekery. Tim is a member of the Motley Fool Rule Breakers stock-picking team, as well as the real-money Motley Fool Supernova Odyssey I growth portfolio.
Apple's (AAPL +2.59%) model entices users into a "walled garden" of an ecosystem, where intertwined devices and switching costs encourage users to stay. By contrast, Google's (GOOG +1.71%) aim is to get more software on more devices -- including Apple products.
A full transcript follows the video.
Richard Engdahl: I know that I have Google Apps on my iPhone, but somehow when I'm on my Chrome browser I don't see them as apps. I see them as Web pages or something like that. I don't know; there's something strange about that.
Is Google benefiting as much from the iPhone and the Apple user as they are from their Android users? They're fairly agnostic, I would assume.
Tim Beyers: Yeah. There is a reason that the Google experience on Android is more pervasive and productive than it is on iOS. Having said that, though, Google does very well with its iOS apps.
Like you, I'm an Apple user that tends to live in a Google universe. My Mac is loaded with all kinds of Google software. On my iPhone I use Google Maps; I use Chrome as my default browser on the iPhone. There [are] lots of things I use that are Google Apps on those Mac devices.
But definitely when Google is the owner of the pipe -- this, by the way, is the business case for Google Fiber -- when Google not only is delivering you the software, but also the owner of the distribution mechanism, then that's just more data and more insight.
When Apple is the one who gives you that handset, and is tracking the apps that you're using inside the iTunes App Store, then really it's Apple that has that data. Google is one step removed from it. So the iOS user, while very useful, is just not as useful to them as the Android user.
Rick: I've always felt that Apple has this advantage because of their "walled garden," or whatever. Once you enter the Apple universe, it's Hotel California. You can check in, but you can never leave.
Tim: But you can never check out.
Rick: Because everything's so related. For me to switch phones, from an iPhone to an Android phone, there's a huge switching cost because I have a lot invested in my apps, and with the iPad as well. Not just your phone and office-y things and stuff like that, but I have a bunch of music apps that I create with; I have photography apps.
If I add it -- it's $0.99 apiece, or sometimes more -- but you add it up and it's a lot of investment that you have in that universe.
Tim: Absolutely.
Rich: Whereas I've always felt like Samsung, with their latest phone, maybe they're top dog today, maybe it's LG tomorrow. There's no switching cost going from one Android phone to another, I don't think.
Tim: That's true.
Rick: I've never been real comfortable with that argument that, "Oh, Apple's doomed, and Samsung's the new kid on the block," or whatever. To me, it's a totally different apples-and-oranges comparison.
Google, on the other hand, they don't care if you're on LG or Samsung.
Tim: Right. Right. Google wants more software more places, so that you will generate more data and get more used to using the cloud, and particularly their brand of the cloud. The more you do that, the more data you generate for them, which makes their search engine smarter, their ads more relevant. They profit more than Apple, or really more than anybody, from habit changes.
The only one that might profit about as much would be Netflix, because that shift to watching television on a device -- or completely off of a regular big-screen TV -- when that shift accelerates, the first one to profit from that is Netflix. The next one to profit from that is probably Google and Apple.
But, yeah. You're not wrong. Google is betting on this eventual shift in the way that we interact with the digital world, whereas Apple is a hardware company that wants to sell you an ecosystem of products, and the more that you buy, the more you're going to want Apple. That has worked extremely well for them, and I think it's going to work well for them for a while.
