Sunday, May 23, 2010

Apple and Google: head-to-head competitors

Apple and Google have become the Coke and Pepsi of mobile advertising, digital devices, and related markets. And their competitive furor is clearly reflected in the companies' recent merger and acquisition activity. From mobile ad systems to music services, Apple and Google are engaging in blow-by-blow M&A combat.

And strange dynamics are resulting from the AppGoog competition battles. For example after a six-month investigation, the Federal Trade Commission on May 21 approved Google's acquisition of AdMob. The commission stated that its fears that Google would dominate the mobile advertising market were allayed by Apple's emergence as a competitor in this space. Not hard for Google to "love its enemy" for at least one day.

Here are three examples of the heated tit-for-tat dealmaking:
1) Social Search
  • February 2010 -- Google acquires Aardvark for some $50 million. Aardvark is a social search solution that allows users to ask questions and find information from people in their network through instant messaging and email. (Afternote: in September 2011, Google shut down the Aardvark initiative, as the search group concludes Q&A will not play a major role in search.) 
  • March 2010 -- Apple acquires Siri, a developer of a mobile search and virtual personal assistant that utilizes voice recognition technology. Apple’s acquisition of Siri is not only part of its strategy to become more involved in the search market, but also a response to Google's buy of Aardvark. Apple values Siri’s voice recognition technology and will likely keep it out of Android, Google's mobile device.
2) Semiconductor efficiency
  • March 2010 -- Apple acquires Intrinsity for $121 million. Intrinsity enhances mobile processors to improve performance and battery life by making faster processors that use less energy. Intrinsity engineers partnered with former PA Semiconductor engineers to design of the A4 chip. Apple is using the A4 microprocessor in the iPad and future iPhones.
  • April 2010 -- Google acquires Agnilux, a a stealth chip design company founded by former employees of PA Semiconductor. (PA was acquired by Apple in 2008 to build custom chips for iPod, iPhone, and other mobile devices.)
3) Mobile advertising systems
  • November 2009 -- Google plans to purchase mobile advertising start-up AdMob for $750 million in stock. AdMob sells ads that appear on Web sites geared for cellphones. The company was a first-mover in developing technology to deliver ads on Apple's iPhone as well as on devices that use Google's Android mobile operating system.
  • January 2010 -- Apple acquires Quattro Wireless, a mobile advertising company for a reported $275 million. Apple’s acquisition of Quattro is part of their strategy to play in the mobile advertising market. Apple will add its own advertising system (iAd) to its next version of iPhone and iPad sofftware. Importantly, the Quattro acquisition is also a response to Google’s plan to buy AdMob, a mobile advertising company that Apple was interested in purchasing.
Want to pitch a company to sell to Apple or Google? Convince Jobs (or Schmidt) that a response to his arch competitor is critical. See
Renu Senjalia contributed