Google will risk defeat to compete with Apple

5 Reasons Android Actually has a chance against Apple in 2012

By Louis Bedigian
Benzinga Staff Writer
December 28, 2011 11:01 AM
 Every month, Android inches closer to smart phone dominance. But how? And why?

Now that Sprint (NYSE: S [FREE Stock Trend Analysis]) and Verizon (NYSE: VZ) have the iPhone, you would think that consumers would be ready to make the switch to Apple’s (NASDAQ: AAPL) beloved platform. But Google (NASDAQ: GOOG) remains a strong competitor. With 10 billion app downloads from the Android Market and more than one billion apps downloaded every single month, Google’s mobile OS is quickly gaining on Apple, which sold its 15 billionth app in July.

Yesterday it was revealed that Android and IOS achieved a new Christmas day record with a combined total of 6.8 million activations. While it is unclear how the activations were divided among smartphones and tablets, TechCrunch reported this morning that Google activated 3.7 million Android devices on December 24 and December 25. If Google had achieved this number in just one day, it would have easily eclipsed Apple’s activations. Spread over two days, however, and it’s hard to imagine that Google matched Apple’s numbers. For that to occur, Android would have needed 3.4 million activations on December 25 (half of the 6.8 million Android/IOS activations for the day). This would have left only 300,000 Android activations for Christmas Eve, which just happens to be one of the biggest smart phone activation days of the year. Considering that Android has an average of 700,000 activations per day, this scenario seems very unlikely. Android wouldn’t suddenly drop on one day – least of all Christmas Eve – and rebound the next. Thus, Android likely scored somewhere around one million activations on December 24 and 2.7 million on December 25, leaving Apple as the Christmas 2011 leader with 3.4 million IOS activations in just one day.

This, however, does not mean that the Mac maker can rest easy – far from it. The fact that Android has grown so quickly proves that Apple has something to worry about. It’s enough to make you wonder: which OS will be the first to cross the 30 billion download mark?

In the coming months/years, it could be Android. And that’s not the only reason Android is a threat to Apple. Here’s why.

5. Google Has Money to Blow

If anyone can compete with Apple financially, it’s Google. The company can afford to spend billions acquiring new firms that will make it a stronger and more competitive entity. Without Android and YouTube – two of Google’s most prominent acquisitions – the company’s profit margins would be much, much lower.

Considering this, Google has continued to make major acquisitions in 2011, and will likely to continue to do so in 2012. Which company will the search engine giant acquire next? In looking at the pattern of acquisitions thus far (Android Inc. in 2005, Motorola (NYSE: MMI) six years later), it appears that Google will not make another device-related acquisition for a while. Rather, the company’s next acquisition is likely to be one that complements its existing portfolio.

4. Google Isn’t Afraid to Fail

How many times has Google attempted to get into the music industry? How many times has the company created a social media site, closed it, and started anew? If it had a choice, Google would be successful in everything. But when it fails, the company picks itself up off the floor and tries again.

This makes Google the most dangerous opponent Apple will ever face. It may not end up being the most powerful opponent – in many ways, that title still goes to Microsoft (NASDAQ: MSFT), whose Windows 8 platform could be a game-changer for tablets. But Google isn’t afraid to lose. If it fails to produce a great tablet in 2012, it will just try again in 2013, and again after that until the day comes when it has finally produced a serious iPad competitor.

3. Google is Willing to Buy Your Love

Just a few days ago, All Things reported that Google had agreed to pay Mozilla nearly $300 million per year to maintain its status as the default search engine in Firefox.

As silly as this sounds (you could start 300 new startups for less!), Google is fully aware of the importance of maintaining that status. When consumers search with Firefox, they either type keywords directly into the URL bar or enter them into the Google search box. In either case, Google gets the traffic. With millions of people using Firefox everyday, Google stood to lose a lot of visitors if Bing or Yahoo! (NASDAQ: YHOO) were to become the default search engine.

If Google was willing to pay for Firefox’s support in this scenario, who knows what it will do in other situations. Google may be willing to buy its way into any venue – including those that Apple holds most dear.

2. Google is Making its Own Tablet

The cat’s out of the bag – Google wants to destroy the iPad 3. The company is determined to build a significant tablet competitor to Apple’s long-awaited 10-inch device.

While many will argue that it can’t be done and that Apple will rule 2012, Android has never been about immediate success. Google is a gradual, sneaky, deadly beast. Just a few years ago, Android was nothing in the smartphone market. Now it’s the number-two player in America.

If Google becomes as serious about tablets as it is about smartphones, Apple had better watch out.

1. Google Wants to be a Content Leader

“Content is king.” You’ve heard that a million times, I’m sure. But as annoying as that statement may be, it is 100% accurate. Without an amazing App Store, a digital warehouse that’s jam-packed with video content, and a music library unlike any other, Apple wouldn’t have been able to convince us to buy an iPad. Sure, the tablet is the most intuitive available. But it’s the content that sealed the deal and sold the device to millions of consumers worldwide.

Google could produce a similar success story. In addition to YouTube, one of the biggest streaming video sites in the world, Google has considered the potential of a Hulu acquisition. There have been numerous reports suggesting that Google will go the extra mile and hire Hollywood talent to produce original and exclusive content for YouTube.

As Google becomes a stronger player in content delivery, the company will offer new reasons for consumers to choose its tablet over the iPad.

Another tech giant is already making progress in this department. While it is no secret that the Kindle Fire’s $200 price tag is the primary reason for its success, Amazon’s (NASDAQ: AMZN) massive video library – which includes both free (via Amazon Prime) and paid content – surely played a significant role.

If Amazon can accomplish so much with a tiny, lower-priced tablet, just imagine what a higher-quality, 10-inch Google tablet could do.

ACTION ITEMS:

Bullish:

Those who believe that Google will rise above the competition and become the number-one iPad competitor should:

  • Remember that Apple performs better when the competition is fierce. Thus, Google’s rise could actually improve the quality of the next iOS, as well as future iPad, iPhone and iPod Touch iterations.
  • Understand that Google still has a lot of work ahead of itself. Even if it becomes the leading iPad competitor, it will take an enormous amount of effort to maintain that success.

Bearish:

While Google’s tablet venture might be a win-win for some within the tech industry, there are a couple of losers to watch out for:

  • Hewlett-Packard (NYSE: HPQ), Dell (NASDAQ: DELL), and other computer manufacturers, who are finding it increasingly difficult to sell laptops now that tablets have arrived.

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