Can Apple Overtake Google Long-Term?

Brittney Barrett |

When investors consider technology stocks, the mega cap power houses that come to mind are Apple (AAPL) and Google (GOOG).  As investments, the companies are similar to one another. Both seem to absorb economic volatility easily with little disruption to their share prices. Both are pricey but have proven worth it from a historical price standpoint.  Each of the companies have enormous cash reserves. Both Apple and Google are credited with groundbreaking innovations that have reshaped the way many people interact with the world around them. Until now, the majority of these similarities were more related to their status within the tech space and the breadth of their achievement than they were to overlapping aims. Conceptually, the companies have aspired for different things, but, as they’ve expanded exponentially in a multitude of directions, their paths are increasingly overlapping.

Google shot into the spotlight as a result of its breakthrough search engine while Apple initially made waves for developments within personal computers. Today, Google is still a search engine and Apple still makes personal computers, but their scopes are now much broader than they once were. Both companies have also entered, and thrived in, the mobile phone market. The iPhone has become the number one mobile smartphone by market share and the Android, Google’s offering, is not terribly far behind. Both phones, typical to their respective histories have revolutionized what it means to have a cell phone. The former though, with its latest offering, the Iphone4S has gone beyond streamlining mobile technology.

Apple has remodeled not only the cell phone, but the search engine. Apple’s latest phone comes equipped with a feature referred to as “Siri.”  Siri is a voice activated and controlled search engine that relies on artificial intelligence. Gone are the days of googling, Siri bypasses traditional means of information mining, to arrive at a conclusion tailored to the details spoken into the phone. Siri farms its conclusions from specialized data bases ranging from Yelp to Wikipedia and Wolfram Alpha, that help to create not just an answer to "where's the nearest mini golf course?" but to "what is the best minigolf course nearby?" In employing these databases, Siri is able to achieve a response as much based on  opinions as it is on facts, an important but overlooked advantage in a day of digital access and too many choices. It is accessing public opinions alongside public data bases and tailoring its response to best serve the situation.

A lot of people have purchased the Iphone 4S. The company is projected to sell in excess of 30 million handsets before the year is out. Those 30 million customers can be predicted to make significantly fewer trips to Google, putting its business model in jeopardy. The more people that purchase the Iphone 4S and the phones that will follow it, the fewer will be visiting google. Google makes the majority of its search engine profits from the most basic searches. Siri specializes in retrieving answers to these queries in a way that is faster and smarter than Google’s current method, meaning it will continue to eat away at those profits in the long term. A piece by Nigam Arora published on MarketWatch adds that Apple has succeeded in upping the operational ease of other elements of the phone including the contact list and the calendar. In doing this, Apple succeeds in getting people familiar and dependent on Siri so that, when it comes to performing searches, they won’t hesitate to employ the feature.

Short-term, Google and Apple are likely to continue sharing the similarities of reliability and strength they have exhibited through the economic crisis and recovery. Google’s recent earnings were impressive and helped the company reach new heights, but the more Apple is able to detract from search engine and advertising revenue at Google, the weaker their earnings can be predicted to become in the coming quarters. Considering the speed at which the tech world moves, voice control and automatic functionality born from artificial intelligence are likely to become the standards in searching within the next few years. The faster this occurs, the harder Google will have to work to woo visitors back to their site for the types of searches that drive ad sales and revenue.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
AAPL Apple Inc. 112.18 -1.77 -1.55 35,886,990
GOOG Alphabet Inc. 775.01 -6.55 -0.84 1,314,746
LNC.WS Lincoln National Corporation Warrant expiring July 39.60 0.80 2.06 100

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