Hidden within the comparisons between tech giants Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOGL) (NASDAQ:GOOG), lies a rather inconvenient fact -- the two companies have distinct (and mostly differing) business models. For Google, its core business is search, while Apple sells premium hardware integrated with software.
Even where the two do directly compete, their strategies are different. For smartphone operating systems, Google has taken a mostly open source model to accelerate adoption, opting to monetize user data, mobile search, and transactions through its Google Play Store. For Apple, its highly integrated, "walled-garden" operating system pairs with its hardware and software in order to sell more high-margin devices.
However, more recently the rumor mill has decidedly pointed to a new product where Cupertino and Mountain View are aiming to compete: an autonomous car. If the rumors are correct, the battle to reinvent the driving experience may be even more fierce than the smartphone wars.
Apple's further along than many thought
According to correspondence obtained by Britain's The Guardian, Apple is building an autonomous car and is currently in the process of finding locations in San Francisco for testing purposes. There are a few big surprises in this article -- the first of which is the fact Apple's car is self-driving. Earlier this year, a self-driving car rumor was leaked by Reuters, only to be disputed by The Wall Street Journal, which reported the vehicle would be a conventional car.
The second, and perhaps more interesting, is Apple's pacing in regards to bringing a self-driving car to potential market. According to the article, engineers from Apple's "Project Titan" met with officials from GoMentum Station, a secretive defunct naval base that has found a new usage as a testing ground for self-driving vehicles.
It is also interesting to note this seems slightly out of step with Apple's high-margin strategy, as cars are notoriously low-margin, but it seems the company is aiming to compete with one of Google's "moon shots."
Does this put pressure on Google?
Again, true to form, Google and Apple couldn't be more different as it relates to the research and development of an autonomous vehicle. While Apple is extremely secretive in regards to this project, Google is quite open with its efforts. In May, the company announced its vehicles would be on public roads this summer and more recently they have been appearing on the streets of California and Texas.
The question, of course, is how important first-mover advantage would be in this market. Unlike a smartphone or another consumer-electronics gadget, the consequences of releasing a flawed self-driving vehicle are inherently more dangerous and should be tested extensively to mitigate any issues. It is for that reason, why I expect a longer testing period before the technology is available and may require legislative approval before being bought to market.
In the beginning, and if both are able to bring a self-driving car to market, I expect fierce competition between the two companies as they seek to compete for early adopters. However, as this technology becomes more widely accepted, the potential losers are entrenched automotive manufacturers that haven't developed competing technologies and professional drivers whose jobs could be automated.