Google Inc (GOOG) vs Apple Inc. (AAPL): Who Wins in the Ecosystem Battle?

Page 1 of 2

Google Inc (NASDAQ:GOOG)When investors think Apple Inc. (NASDAQ:AAPL), they often think of the company’s ecosystem. Hedge fund manager David Einhorn has long argued for Apple Inc. (NASDAQ:AAPL) based on this notion — if you have one Apple product, you’re more likely to buy another.

On the other hand, most don’t view Google Inc (NASDAQ:GOOG)’s ecosystem as being nearly as robust. Sure, there’s Android, and the Google Inc (NASDAQ:GOOG) Play store, but Android is fragmented and chaotic — there is little incentive to stick around.

Yet, that’s really missing the point — although it’s more abstract than Apple Inc. (NASDAQ:AAPL)’s, Google has slowly built itself a very robust ecosystem — one that many investors likely don’t appreciate.

Apple’s ecosystem

Apple’s ecosystem is fairly easy to understand because it’s relatively tangible. In the past, I’ve written in detail about the factors that comprise Apple’s ecosystem. But briefly speaking, they may be summarized as follows:

  1. All Apple iDevices use the same operating system — people want to stick with the familiar
  2. The devices work well together — they sync and communicate easily
  3. Accessories can be shared among devices
  4. People who purchased a lot of apps and content in iTunes do not want to have to pay for those things again

Thus, Apple Inc. (NASDAQ:AAPL) has a sort of stickiness to its products — if you own an iPhone, and you want a tablet, it makes sense to get an iPad. If you’re upgrading your phone, and you’ve used the iPhone for many years, it makes sense to get the latest iPhone.

Apple bulls have argued this phenomenon puts a kind of floor into the stock — even if the iPhone is outclassed by its competitors, existing iPhone adopters will remain loyal simply because they don’t want to be burdened with switching costs.

Google’s ecosystem

Whereas Apple Inc. (NASDAQ:AAPL)’s ecosystem is built around hardware, Google Inc (NASDAQ:GOOG)’s is composed of web services — comparatively, it’s more a “soft” ecosystem to Apple’s hardware-based one.

The core of Google’s ecosystem is built around the Chrome web browser, gmail, and Google search. But even the company’s lesser used products like Google+ and Google Music feed into the larger ecosystem.

If a user is on the Chrome web browser, they’re likely to use Google search — queries typed in the address bar are run as Google searches by default. Of course, that works the other way too — if you do a lot of Google Inc (NASDAQ:GOOG) searching, Chrome is a great browser to use.

And if you’re going to use Chrome, it would only make sense to have it tied to a gmail account — stored passwords, browsing history, and bookmarks are synced to gmail. This makes browsing the Internet across different devices a better experience — a user can bookmark a page on their mobile phone, then easily pull it up later on their desktop.

From there, all gmail accounts are tied directly to Google Docs — the company’s cloud storage service and free alternative to Microsoft Corporation (NASDAQ:MSFT)’s Office. And once you have a gmail account, creating a Google+ account is a simple click away.

Then, there’s Google Music, which lets gmail users upload their own songs to be streamed from the cloud. There’s also Google Hangouts, a messaging app tied to gmail and Google+, and an alternative to Skype or WhatsApp.

In short, Google Inc (NASDAQ:GOOG)’s ecosystem surrounds what people do on the web — how they access it, how they find things, and how they talk and interact with others.

The future is big data

Unlike Apple’s ecosystem, Google Inc (NASDAQ:GOOG)’s is completely free. This is because Google has a different objective — rather than profit off device sales like Apple Inc. (NASDAQ:AAPL), Google is building a database.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Biggest Airports in the World

The 5 Most Gang Infested Cities In America

The 34 Smartest Countries in the World

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!