Earlier this week Apple (AAPL) held its 23rd annual worldwide developer’s conference.
The conference demonstrated the differing approach AAPL has towards it software (iOS) compared to competitors such as Google (GOOG). The main difference being that AAPL partners with the best content providers, while GOOG with Android and Google+ seem to prefer their own services in competition with everyone, a very different approach. At the conference AAPL announced partnerships in social with Facebook, reviews with YELP and OpenTable for restaurant reservations. AAPL has integrated these services within iOS, seeking to provide the best overall experience for users. We cannot imagine GOOG teaming up with Facebook!
On show was the fierce rivalry between AAPL and GOOG with the announcement of the widely rumoured AAPL mapping system, the upgrade to Siri (voice search/personal assistant) and the social partnerships mentioned above. Siri will be introduced to the iPad, it has also been updated with more languages such as Mandarin and Cantonese. In addition, Siri has knowledge of sports, movies and restaurant reviews from partners such as Yelp. This is bad news for GOOG as Siri totally bypasses GOOG search, putting GOOGs core business at future risk.
The most interesting disclosure was the number of accounts in the AAPL App store. Quoting Tim Cook “we now have over 400 million accounts on the App Store. These are 400 million accounts with credit cards and one click buying, so it’s simple and elegant to buy your apps. This is the store with the largest number of accounts with credit cards anywhere on the Internet that we’re aware of. And thanks to you, we have over 650,000 apps in that store, and 225,000 of these apps have been specifically designed for iPad to take advantage of the large beautiful canvas. This compares to just a few hundred for our competition.”
Check out the developers webcast at
GOOG has not released any account numbers but this 400 million number dwarfs Paypal with 110 million active user accounts and Amazon with approximately 170 million. Making it easier to pay for applications creates a virtuous cycle for the developers as they are more likely to be paid for their efforts, with the money received going to creating better applications thereby attracting more and more customers.
In summary, AAPL and GOOG differ in their philosophy to partnerships and competition, this has resulted in very different products. AAPL is focused on partnering with the best service/content providers with the aim of achieving the best user experience. While GOOGs do everything approach to content and services results in an inferior experience for its android users, this is becoming more and more apparent to consumers every day. A product is only as good as the services and content it provides. Stay long AAPL and stay away from GOOG.
Disclosure: Decisive is long AAPL
The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.
