Wednesday, October 21, 2009

Apple > Google = Absurd

While conducting my nightly scan of the news, I was drawn to the unbelievable fact that, at this point in time, Apple is considered to be more valuable than Google. This is based on the current share prices of each company and is thus likely to quickly change.

I find this quite unreasonable for two important reasons:
  • Apple's revenue is based on a portfolio of products that become obsolete after two years (at most). Because of this, Apple is dependent on constantly rolling out new products - and thus on the hit-or-miss nature of consumer tastes. Google serves as the gatekeeper to the Internet. Although their market share can be chipped away, Google could never lose 10 to 20% of its revenue over a few months - something that could easily happen to Apple if the next iPhone is a flop.
  • Google's revenue comes from a more diversified source of business customers. Google still earns the majority of its income from the advertising-network associated with its main search engine. The customers that pay to display these ads come from nearly all corners of the economy - thus likely mimic the overall economy. Apple targets a fickle, high-end customer-base that is rarely predictable.

Google is the cruise ship while Apple is the speed boat. Google is strong and large. Apple is fast and unstable.

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