Thursday, September 27, 2012

Apple's Blunder Not A Blunder... Yet

You've probably seen the flat Eiffel Tower, post-apocalyptic San Francisco, Brooklyn's new location in Manhattan (and vice versa), and other hilarious (or annoying, depending on your level of iPhone maps dependence) gaffes included in the new iOS 6 maps program. Apple's decision to replace Google Maps in their new iPhone operating system with.a far inferior navigational tool has caught a lot of heat, and for good reason.

But Apple's stock fell from the $700 dollar level to around $678 at recent trading, and already, some analysts are calling the fiasco "Apple's undoing."

Okay, let's hold up a second. This might not be so bad for Apple. Actually, it might work out quite well.

This is undeniably a hiccup in Apple's mobile dominance. Whether it's more than that depends on the next moves by Google and Apple...

1. Google's move. Clearly, Google has emerged a big winner from Apple's iPhone maps blunder. Like the locked out NFL referees, their value to the iPhone was largely taken for granted. It took Apple "locking Google out," for iPhone customers to recognize Google's superiority over "replacements." It goes beyond maps... Google is also responsible for the phone's default search capability and the algorithms that figure out from your typos and bad grammar what you really mean to look for. Before this episode, users rarely distinguished the built in Google apps from the iPhone package. Suddenly, the wonderful, amazing iPhone looks like a wonderful, amazing piece of hardware running some pretty wonderful, amazing Google apps.

And here is the advantage for Google: without Google Maps and other Google products on the iPhone, Android phones are suddenly much more attractive. The fact that these popular and useful services are available on Android phones could cause some users to switch, and attract new smartphone buyers. If GPS and getting around is a priority for you, you'd be hard-pressed to make a case for the iPhone's cribbed-from-GPS-devices-crica-1999 navigation quality.

Google could, in theory, not release its products to work on the iPhone, releasing them exclusively for Android.

However, indications are that Google is developing a Google Maps app to be available through the Apple App Store. A modest charge for these apps could potentially make up for the loss in licensing fees Apple used to pay them. Or the app could make money by being ad-supported, and we all know Google is the king of mobile advertising.

Either way, Google wins. If they hold onto Google maps for Android, they gain a marketing advantage. If they sell it through the Apple App Store, or offer the app with ads, they retain some marketing advantage (its free on Android, $$$ or ads on iPhone) while making money on the side.

2. Apple's move. Apple certainly could block Google's apps from the App Store. But doing so wouldn't provide any benefit for them. By shutting out Google, they'd be conceding a pretty big advantage to Android. Use the iOS maps for 5 minutes and argue that Apple is EVER going to catch up to Google. You can't. The "search" company has spent more than a decade and millions of dollars on development, and it's created the most up-to-date, most detailed digital representation of our world that's possible with current technology. Apple took out a dusty atlas and painted Salvador Dali images on it.

Also, Apple has nothing to lose by allowing the Google Maps app and other Google apps to be sold. Apple reaps a large percentage every time someone makes an App store purchase. In effect, instead of paying a licensing fee to Google... they can  now make money every time a Google app is sold.

As stated earlier, Google could offer a free app, supported by advertising. Apple wouldn't make any percentage from that. But they also wouldn't lose any marketing advantage to Android, and they still wouldn't need to pay Google a licensing fee. 

If this all goes according to plan, then really, the shift to those terrible Apple maps wasn't a blunder at all, but a calculated move to save money on licensing fees and possibly make more money by taking commission off of Google app sales.

The only way this doesn't work out for Apple is if Google withholds their apps exclusively for Android. But Google would have to calculate that the income raised by increased Android purchases would outweigh the money to be made by selling apps in the Apple App Store or selling advertising against a free app. Clearly, Google is developing an iOS app, so they've made their decision already.

"Apple's undoing?" Hardly. This blunder could end up being a money maker for both Apple and Google. In essence, its a more efficient way of getting the companies to work together, without pesky contracts and licensing fees littering the battleground.

1 comment:

Apple Maps said...

Very good collection of necessary information and this is very Informative blog & Many thanks for sharing. In Apple Maps the interface is changed, though not negatively so, and the performance will depend on the speed of your connection. Of course, that was also the case with Google's app, but the browser is a different feature so performance will vary.

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