Is is betrayal when a former Google Inc (NASDAQ:GOOG) executive starts partnering with Apple Inc. (NASDAQ:AAPL)?
Maybe, maybe not. But that seems to be where former Google Inc (NASDAQ:GOOG) VP Marissa Mayer is taking search engine Yahoo! Inc. (NASDAQ:YHOO). Rumors abound that Yahoo! is seeking ways to work much more closely with Apple. It appears that the search engine wants to become a greater force for providing data for Apple’s Siri electronic assistant.
Best friends against a monster
No one could blame either Yahoo! Inc. (NASDAQ:YHOO) or Apple Inc. (NASDAQ:AAPL) for wanting to find a partner against Google Inc (NASDAQ:GOOG). The search-engine giant is easily the most powerful tech company in the world. By contrast, Apple is merely frightening. Apple has the larger market-cap, sure, but Google is sending out branches in many directions. From self-driving cars to the soon-to-be-released Google Glass, the number and ways that Google is entering everyday life is amazing.
The attempt at a closer working relationship between Yahoo! Inc. (NASDAQ:YHOO) and Apple Inc. (NASDAQ:AAPL) is an extension of an existing one. Yahoo! is already providing sports, weather and financial data for Siri. By getting closer and working together, Yahoo! can establish itself in a vital role:information provider to the largest source of smartphone and tablet computer users in the world. Collectively, the iPad and iPhone have more than 100 million currently active users. That’s a lot of people that can be pushed towards using Yahoo!’s search and information services.
It would also provide Apple Inc. (NASDAQ:AAPL) with a greater means to push Google away. The company is already wary of Google providing apps for the iPhone, given that it directly competes with Google’s Android operating system. Still, for lack of a better alternative, Apple finds itself dealing with Google on a regular basis. An option out might look pretty good as Apple attempts to pass the 50% mark – it is currently at 32% – for smartphone market share.
Not all friendships are easy, though
Still, making a new best friend can be complicated when you already have a BFF. Preventing a true partnership between Yahoo! Inc. (NASDAQ:YHOO) and Apple is the former’s search engine agreement with Microsoft Corporation (NASDAQ:MSFT). Yahoo’s search is actively powered by Microsoft technology and trifling with that to expand into the tablet market would require some very fast footwork for Mayer and her team at Yahoo.
Still, that doesn’t mean it can’t be done. Heck, Apple Inc. (NASDAQ:AAPL) has a deal with Google Inc (NASDAQ:GOOG) to send searches there. That provides incentive for both companies to find some workaround if they want to extend the partnership to search. It’s unclear how much they want to do so, but it makes sense that they would be discussing it.
Can this marriage work?
The amazing thing here is how complicated it all is. Mayer, a Google exec, leaves to head Yahoo! Inc. (NASDAQ:YHOO), which is already in partnership with both Microsoft Corporation (NASDAQ:MSFT) and Apple Inc. (NASDAQ:AAPL), which has a partnership with Google Inc (NASDAQ:GOOG). Even someone really plugged in needs a scorecard to keep track of things.
Still, it’s likely there’s going to be one real winner in this dance of tech companies:Yahoo!. The others are all truly monstrous firms that won’t be made or broken by how their tablet and smartphone deals are structured. Yahoo!, on the other hand, needs all the help it can get.
Between the four companies, Yahoo!’s market cap ($26.24 billion) is little more than one-tenth the next smallest (Microsoft at $248.02 billion). Yahoo! has had a rough five years, but the market is beginning to believe in what Mayer is doing with the firm.
Over the last year, Yahoo! has outperformed the NASDAQ by a factor of 10, and there are signs — an operating margin of 11.34%, and a 65.66% net margin, for fiscal 2012 — that growth in share value could continue. Yahoo! looks like a better investment every day.
Good luck!
Follow Nate on Twitter:@natewooley
More columns by Nate Wooley:
- Samsung, Best Buy Team to Fight Apple
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Nate Wooley has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft.
