Did you notice that today Apple (s AAPL) became more valuable to the stock market than Google (s GOOG)? 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?
This isn’t the first time, either: http://digitaldaily.allthingsd.com/20080813/boom-apple-worth-more-than-google/
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.
Question is:
How many Engineers inside Apple know what they have to get done say the next 12 month. How many at Google?
They’ve been neck and neck for the past two years: http://www.wolframalpha.com/input/?i=aapl+market+capitalization+versus+goog
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.
How do you reach this conclusion? There are possibly millions of people who use Apple products who may not necessarily use Google 😉
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?
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.
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.
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.
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.
Incorrect…all of it.
@Brian
Really? Care to share any sort of data? Here is Sprints Q2 2009 results:
http://phx.corporate-ir.net/phoenix.zhtml?c=127149&p=RssLanding&cat=news&id=1313470
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.
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.
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.
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.
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.
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.
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.
“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.
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.
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.
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?
Yeah, tell that to google search
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?
Google’s stated goal is to organize all of world’s information. The organize web pages, videos, books, so why would organizing music be uncharacteristic of them?
I’m not sure why AAPL’s market cap overtaking GOOG’s is such a big deal. MSFT’s market cap is still higher than both? Does that mean that MS is making all the right moves?
The next big market is the mobile web. There’s enough in it for a lot of players to co-exist. I think Google’s strategy (and MS’s) of owning the platform instead of making money upfront will help it in the long run. Apple’s revenue stream from iPhone sales will dry up eventually. Google will still make money from ads long after everyone on the planet has a smartphone.
iPhone is but one arm of Apple’s revenue… But show me a better platform than Apple’s? (which now seamlessly bridges PC’s and the Mobile space ) and show me a more solid and diversified store-front facility than iTunes? (songs, movies, iPhone and iPod apps, podcasts etc) – Google’s cash-cow is Advertising, but there are many would-be challengers out there baying for Google’s blood in that realm. (Omnicom, WPP, Denstu etc… Google has been eating their lunch and they are not too happy about that) Madison Ave will always be stalking Google from here on in, to take back what they feel is rightfully theirs, so Google has a lot more to worry about in defending that prize. While Apple, (as was pointed out earlier) still has a lot of market-share to snatch back from Microsoft.
Specifically on my way to tell it, all stock market business its swerving around the investors who get the goals to recover an investment that could producing more money than expected. Even sales of each company are incresing the stock market and his overall earnings focus on the controversial and decision about investors to buy stocks, during the day the market vary and according the movements performed along, the stocks close at one price. The investements do the work of get value and make a company more profitable because the behavior of the stock transactions.
Google and apple are powerful companies and privileged so its utterly worthed investors decide to purchase stocks of these succesful companies.
Basically both companies being seek by investors on stock market to look for their earnings and companies take the growth. Plural.
From a consumer perspective I can say: Me and my wife own 4 iPhones, 3 Macbooks, 1 Time Capsule and 2 iPods. I am using Google on my iPhone and Macbook Pro every day. I like both companies but I spend a lot more money for Apple products than for Google products.
From a business perspective I can say that Apple and Google are becoming competitors in more and more markets. While Google is a software company, Apple makes software and hardware. The hardware control enables them to impress customers with super design and usability. Both make the difference. If you don’t believe, just compare the iPhone hardware with Android hardware.
Moreover, Apple gets most of their money directly from customers while Google lives off advertiser budgets. The customer and emotional relationship is more intensive between Apple and their customers as compared to Google.
I think it is fair that Apple is more valuable than Google as of today. How both will evolve in the future I cannot foresee as I don’t know their roadmaps. But I think I will continue to be overspending for Apple products rather than for Google products.
..and you summer in Long Island, loft in South Beach, your and hers Bimmers- life is goooodddd. bling, bling, bling- hey it’s your dog walker on the iPhone: your poodle took a dump on the sidewalk…ccuuuuteeee
Son, are you drugs?
They are both great companies. Who else compares in the tech space? I’d say Amazon. Beyond that, it’s the startups. Speaks to the centrality of the consumer, I think.
Mark
I’m pretty sure Google will be back on top in a matter of months. I’d say at the latest, the end of January will see Google significantly higher than Apple because of Android phone sales which, while not directly making Google money still bode well for their entrance into mobile advertising. Also, if ChromeOS is out any time soon and it works really well, that could also help.
Apple has an amazing following and sells both hardware and software. Google is trying to emulate Apple (Google is a great company), but Apple is in a class all by itself! Nobody make s cool gadgets like Apple…..
Guess I am the only one old enough to have seen this before…
1984 – Apple’s new product ( the Mac ) is stunning, first to market, nothing close to a competitor. Their reliance on closed proprietary hardware and operating system gets people to “buy into” their platform. They enjoy being the only person in the pool for a good 18 months, Apple’s value as a company rises.
But after a couple years of being on top, the market catches up, more and more “personal computers” become available to match the Macs capabilities, plus these competitive offerings are more open gaining third party support. Soon Apple loses it big advantage to the long tail of more generic, open PCs, ultimately regulating it to a niche player…
Sound familiar?
I’m old enough… but its a well known story in IT folflore, many know the narrative. It’s Apple’s resurgence that is captivating. – Sort of like ‘Rocky 2’ in John Lennon glasses.
2007 – Apple’s new product ( the iPhone ) is stunning, first to market, nothing close to a competitor. Their reliance on closed proprietary hardware and operating system gets people to “buy into” their platform. They enjoy being the only person in the pool for a good 18 months, Apple’s value as a company rises…
The market didn’t catch up to Apple. Apple stood still. Jobs wanted to bring down prices to make the Mac more affordable and more widely accepted. Skulley insisted on this insanely high pricing strategy for the Mac so they can make money hand over fist on the few users who were willing to pay premium dinero for a unique product. It’s one of issues that led to Jobs’ ouster. And why Skulley is known as the man who almost killed Apple. “I have a great idea. We have a revolutionary, winning product. Let’s just sell it to people who are wealthy enough or vain enough to pay insanely high prices.” Stupid, greedy shortsighted soda vendor.
this time, they are carrying a whole eco-system (ipod and itunes) with the iphone. this is gonna last much longer than 18 months (granted they continue to execute). also, their laptops are just starting to make a dent in the market. seems to me like they’ve learned from their mistakes.
Sniper rifle over a shotgun always carries further.
It’s not that people believe AAPL is more valuable than GOOG.
People are buying it because they think it will go up more.
Just as people bought houses at the top of the market — because they thought they’d go up more.
You will always find someone who will tell you there is no spoon.
I agree with eideard, Apple is enjoying great success at the moment because of the iPhone, but more importantly because they are laser focused on making your tech device simple and making it “just work”. IMHO, they are the Lexus of platforms, relentlessly pursuing a perfect ux and most of the time they achieve that, so kudos to them.
This also situates them well as the platform becomes more irrelevant. The car is not completely ubiquitous, but people buy luxury cars because they just work. Yes they pay more, but there is value there for them.
I also agree with several folks above that investors are buying APPL because its on the rise, and that’s fine for a market play. But long term, they’ll correct. Just like luxury car makers don’t top the auto industry, the makers with the widest reach usually do better.
Anyway, that’s my two cents.
@jtrigsby
IMHO, stock price doesn’t mean much. Yes, the successful ones will have higher stock price but a lot of it is based on sentiment. Comparison of companies based on market cap (a la stock price) is even more absurd.
Both companies are extremely successful.
But, Apple’s market cap exhibits the belief that they can continue to generate high margins and growth through product innovation that the competition hasn’t proven it can keep up with.
For Google, there may be questions in the market about its focus. They keep expanding out to areas that are not core parts of search (music).
From the stockholder point of view, Apple’s single point of failure is Jobs. It is hard to imagine what Apple would be without him. Jobs drove the second act, and the third act. What’s the next act and how they there is the big open question.
Google has executed brilliantly on its core market. A brief conversation with the execs at Bing will tell you just how brilliant. And the company culture is not built around any single person. The open question is whether there is a second act. YouTube did not go as planned. Android is showing more promise.
Both stocks have risks, but you would be well advised to own them.
Google must not be shiny enough.