Did you notice that today Apple became more valuable to the stock market than Google? The iPhone maker now has a market capitalization of $183 billion vs. $174.5 billion for Google. What does that mean to me? For starters, people believe that Apple can continue to […]

googleapple Did you notice that today Apple became more valuable to the stock market than Google? The iPhone maker now has a market capitalization of $183 billion vs. $174.5 billion for Google. What does that mean to me?

For starters, people believe that Apple can continue to defy gravity. Secondly, when it comes to growth, people believe focus is the right approach. What do you guys think?

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By Om Malik

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    1. For sure, but I think this time we might be seeing a divergence in the two companies. The more clueless announcements I see from Google, the more I feel that they are totally losing it as a company. The Google Music is a perfect example of that.

      1. Question is:
        How many Engineers inside Apple know what they have to get done say the next 12 month. How many at Google?

  1. Apple is more valuable than Google, but people around the world know Google better and use Google more than Apple, especially for the search engine and blogger.com.

    1. How do you reach this conclusion? There are possibly millions of people who use Apple products who may not necessarily use Google ;)

    2. What an inane comparison. In the first place it’s silly to compare the number of users of a search engine to that of any device. Those are two totally different categories. You might as well compare airline seat miles and nun’s habits. Second, Google’s products are mostly free to use. Apple’s aren’t. Big surprise more people use Google than Apple, eh? What do you think would be the case if Google charged for their services?

      1. I think we’d see more people using Google Products, that’s what. Apple has a much smaller range as far as “touching the customer” goes. The name of “Google” would be far more prevalent than Apple, and thus, we’d see the common consumers catering to Google’s products. The common consumer isn’t super-wealthy either, which puts Apple’s expansive @$$ products at another disadvantage.

  2. To me it makes sense… and is kind of reassuring. Google is a search company that stumbled into being an Advertising Company. It has built growth by locking up a massive 2 sided market, (adsense/adwords) but at its heart it doesn’t have much ‘mojo’ working for it, and is still locked into the circa-1998 client-server paradigm, from which it began… Apple on the other hand has buckets of mojo, and from its still relatively low market-share in its traditional core-business (PCs) it has a lot of growth potential.

    In 2005 the experiment that Apple was beginning to apply was its ‘halo-effect’ strategy (iPod halo -> converts -> Windows users -> to Mac users) Now, 4 years later, that strategy has clearly been working and the company has transformed itself into a consumer electronics comany, like Sony, but importantly it hasn’t had to ‘sell the farm’ to do so, its still got everything it had, and had lost ( i.e. dominance in the PC market) Hense, (I would say) the bullish valuation.

  3. Speaking of stock I don’t get how Sprint is $3.30 a share being the third largest cellphone carrier in the US. =/ I stopped trying to analyze market value, it seems so dependent on investor hype rather than real company health.

    1. Sprint is far from a healthy company. As I recall, they are hemorrhaging customers at an alarming rate, the new customers they are getting are the less valuable prepay subs, and they are still reeling from the ill-conceived Nextel acquisition. In fact, of the four majors, Sprint is by far the most vulnerable. Hence, the $3.30/ share price.

      1. Incorrect…all of it.

      2. @Brian
        Really? Care to share any sort of data? Here is Sprints Q2 2009 results:
        To sum it up:
        Net loss $384 million
        Net loss of 257,000 customers (Lost 998,000 post-paid, which was partially offset by pre-paid)

        Which part is not true? Granted, the losses were less than Q1, but still not what most would call healthy. Now, it will be interesting to see what Q3 results hold, but even if the numbers are good, Sprint is still by far the weakest and most vulnerable of the 4 major U.S. wireless carriers.

  4. Google has 75% plus marketshare in US search, growth is going to be hard. Apple has less than 10% PC marketshare and maybe 20% smartphone and less than 1% total phone marketshare.

    Apple’s room for growth is so vast still. Plus they have greater control over pricing and the actual product than Google does.

    1. And Google, with its monopoly in the online advertising space, will be under more anti-trust scrutiny than Apple, both here and abroad. Apple, at its size, is in a safer position within the market.

  5. Google and Apple are both doing well. Apple have come off a strong quarter, have some great deals, and even more next year.

    Google have also had a strong quarter, and some products are really picking up (Android, Google apps).

    I don’t see Apple diverging much from google.

    Microsoft are going to suffer. They have nothing much to offer, nobody really wants 7 apart from a few crackpots. It offers nothing over XP. You can already get all the UI improvements for XP for free if you really want them. They are failing in search (although Bing has proved ok, but not enough?), mobile, servers, development. Don’t get me wrong, they are a big dog here to stay, but they have lost there way. The Xbox division is yet to turn a profit overall.

  6. The difference in market valuation of the two companies can of course not be traced back directly to one difference, for example the difference in focus as you propose.

    Besides that, I feel Apple has a large diversified product range as well (while Google doesn’t even do hardware). Secondly, I feel your example of Google Music (which is a search engine) is not an unfocused product for a search company (that also holds the largest video search engine..) and it is quite funny you mention music as an example of unfocused business as Apple is even a music retailer!

    Maybe Google has many more (small) services than Apple has hardware products (even including side or hobby projects as the Apple TV), but I’m sure these software based products are a lot cheaper to develop and maintain than hardware products.

  7. Please!!

    Looking for a direct correlation between stock price and anything of meaning (in the short term) is just plain silly.

    The stock market is a gambler’s paradise not a place to learn about valuing companies.

    Apple is the EXACT same company with the same successes, failures and prospects today as it was when its’ shares were around $80 (down from $200).

    I have owned AAPL and followed it closely for years (1st purchase at an split-adjusted $13). The insane gyrations of the share price make NO sense, none.

    I have to laugh when I listen to analysts / talking heads on TV discuss AAPL.

    The vast majority of trades involving AAPL are by traders not investors. The underlying principles of the company are not important – whether the stock goes in the right direction in the short term, is.

    1. That is total nonsense because the company may have been the same but the mentality of the market was completely different… because Apple is in a high-end product group it was expected to be impacted the most, and that’s what the stock price represents- future earnings. Fortunately as a shareholder I double downed at 80.

      1. “That is total nonsense because the company may have been the same but the mentality of the market was completely different”

        My point exactly – no one has any idea of what’s coming or they wouldn’t have sold AAPL. The mentality of the market is a collective stupidity.

  8. My question for Google is where is the second act? So far their only real hit market-wise is search. Every product seems to feed their advertising, but they don’t have a second big hit. Gmail, while great, is a distant third in email. Android is stuck is first gear at the moment, docs and the like are nice, but still have no real presence. Pair there eclectic collection of products of moderate success with the inevitable backlash against the silo of personal data they have (i.e. the voicemail incident) and I think Google is set up for a fall, at least in mindshare.

    Apple on the other hand has homeruns in at least four different markets (computers, music retail, pmp, phones). They also are able to sell their products at a premium at a time when there is a shift away from expensive options to cheaper ones (netbooks).

    I am not saying that Google is not a great company. They are going to make a ton, and their stranglehold on search will exist for a long time, but I think it is clear that Apple has much more upside and opportunity to grow.

    1. the second act is google apps. it is a very good product that is likely to take the place of microsoft exchange/office suite. just recently has google thrown some marketing weight behind their second act. also, watch out for youtube.

  9. This is a direct result of the iPhone sales. If you are riding a one-trick pony, you should be careful not to ride it too hard lest you kill goose that lays the golden eggs. Howz that for mixed metaphors?

    1. Yeah, tell that to google search

      1. Which is exactly why Google is working on diversifying search AND make other products, which is what Om calls ‘lack of focus’. But hey, I call it diversification. Now, we all know the benefits of a diversified portfolio, don’t we?

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