In a recent Wall Street Journal article, its clear, Google Inc (NASDAQ:GOOG) has turned its attention to Amazon.com, Inc. (NASDAQ:AMZN). Over the years each company has branched outside its core business looking to expand its ecosystem. For Google, it has sought to move beyond its core search algorithm and for Amazon it has sought to become more than an online bookseller. Now, both companies want to be all things to all people. And both have the size and scale to entertain such visions.
Google’s focus on Apple Inc. (NASDAQ:AAPL)
For years, investors have seen Google Inc (NASDAQ:GOOG) and Apple battle for marketshare in smartphones. Apple has its popular iPhone with its iOS and Google has the even more popular Android OS. Android commands 75% of total smartphone shipments and iOS has 17.3% of the market. Google has also sought to battle Apple Inc. (NASDAQ:AAPL)’s iPad with its Nexus line of tablets.
Just this month, Google Inc (NASDAQ:GOOG) was able to secure first-mover status against Apple by launching a streaming music service. The All Access service costs $9.99 a month and is available on Google Play for Android. There have been rumors about Apple launching a competing service similar to Pandora Radio. So far, Apple Inc. (NASDAQ:AAPL) recently signed an iRadio deal with Universal Music.
Google’s focus on Facebook Inc (NASDAQ:FB)
Google Inc (NASDAQ:GOOG) also has an eye on Facebook. To combat Facebook’s growing popularity, Google launched Google +. Even though Google + has not developed the mainstream popularity of Facebook, it’s still used by many businesses to increase their brand awareness in the Google search rankings. By posting on Google +, a brand can get their postings ranked in Google searches.
Google Inc (NASDAQ:GOOG) also competes with Facebook Inc (NASDAQ:FB) for acquisitions. When popular messaging app Whatsapp was mentioned as possible acquisition by Facebook, Google entered into discussions with the company. Just recently, Facebook wanted to buy Israeli mapping startup Waze. Now Google has now thrown its hat in the ring.
Google’s new focus on amazon
Recently, Google Inc (NASDAQ:GOOG) has been tracking Amazon.com, Inc. (NASDAQ:AMZN)’s moves. Last April, Amazon launched AmazonSupply. This e-commerce site sells industrial goods and will remind you of an online Home or Office Depot. Later, Google followed suit with Google Shopping for Suppliers. Both companies are going after the business-to-business niche.
Besides online industrial goods, Google Inc (NASDAQ:GOOG) also launched corporate computing, same-day delivery, and a division that provides lockers for consumers to receive their e-commerce orders. All three new forays take a direct aim at businesses of Amazon.
Amazon.com, Inc. (NASDAQ:AMZN)’s cloud computing business is called Amazon Web Services. This segment offers data storage space to companies like Netflix and Pinterest. Google’s direct competitor is called the Google Inc (NASDAQ:GOOG) Compute Engine. According to estimates, Amazon Web Services is a $2 billion a year business for Amazon. And Google wants a piece of this growing market.
Since 2011, Amazon.com, Inc. (NASDAQ:AMZN) has been installing lockers in malls and convenience stores in Seattle, New York and San Francisco. This allows consumers to receive their online orders when they’re away from home. Last year, Google bought Canadian company BufferBox which offers the same services in Canada. After the acquisition, Google Inc (NASDAQ:GOOG) opened its first BufferBox location in the U.S. And it just so happened to be in San Francisco.
Once Google launched Shopping for Suppliers, the company announced the availability of same-day delivery with Shopping Express. This is a direct shot at Amazon.com, Inc. (NASDAQ:AMZN) Prime, the popular two-day delivery service.
How all 4 companies stack up
| Amazon | Apple | |||
| Market Cap | $289.74B | $119.16B | $417.84B | $58.79B |
| Revenue | $53.50B | $63.98B | $169.10B | $5.49 |
| Y/Y Rev Growth | 31% | 22% | 11% | 38% |
| EBITDA | $16.81B | $2.71B | $57.38B | $1.31B |
| Net Income | $11.22B | -$87.00M | $39.67B | $112.00M |
| Gross Margin | 58% | 25% | 40% | 73% |
| Operating Margin | 25% | 1% | 31% | 10% |
| P/E | 26.13 | N/A | 10.63 | 528.53 |
Foolish assessment
In going up against Amazon.com, Inc. (NASDAQ:AMZN), Google is facing a competitor unlike any its faced before. Amazon CEO Jeff Bezos doesn’t appear to care about margins. Some will say, he’s in business to win at any and all costs. Basically, Bezos has sacrificed profits for growth. Google will not see high margins in any business that Amazon is in.
You’d have to agree with Google Inc (NASDAQ:GOOG)’s expanding ecosystem and its quest to be all things to all people. But, competing with Amazon.com, Inc. (NASDAQ:AMZN) will not be easy. As it is, there isn’t a large enough pie to feed these two behemoths. Ultimately, Google may be left fighting for crumbs.
Mark Yagalla has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Apple, Facebook, and Google. The Motley Fool owns shares of Amazon.com, Apple, Facebook, and Google.
The article Google Setting Its Sights on Amazon originally appeared on Fool.com.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
