Google vs. Apple: Who Has the Most to Lose?
Google's (NAS: GOOG) plan to challenge Apple (NAS: AAPL) with an enhanced voice-search feature for iOS is another strategic jab in an ongoing feud between the two tech gods. According to Reuters, Google's updated search app is expected for iPhone and iPad devices within the next few days.
While the search giant has not yet named its new service, the technology is meant to directly compete with Siri, Apple's voice-activated personal assistant. Let's take a closer look at how the two services measure up, and which company has the most to lose as they battle for mobile supremacy.
Mapping the future
Tension between Apple and Google has been building for years now. However, things came to a boil a few months ago, when Apple decided to drop Google Maps in favor of its own mapping software. As a result, upcoming smartphone and tablet devices from the iPhone maker will contain new location-based services, directions, and mapping tools.
This is one of many new directions Apple is taking in an apparent effort to amputate the hand that it has tied to Google. As an iPhone user who has come to know and love the current maps format powered by Google, I'd be lying if I said I wasn't nervous about the transition to this new software. But before we slap all the blame on Apple, let's not forget that it was Google that selfishly restricted Apple from offering turn-by-turn navigation, while using its API on iDevices.
Going forward, Apple's independence from Google Maps will undoubtedly allow it to offer a far superior mobile mapping solution for iPhone and iPad users. Still, the war waged on, with Apple announcing plans early last week to cut Google-owned YouTube from its preloaded apps on the iPhone.
Speak for yourself
Google fought back by launching a rival to Apple's Siri technology. However, early reviews of the beefed-up Google Search app for Android have so far failed to live up to Siri in terms of speed and accuracy in answering questions. In fact, Laptop Magazine took Google, Apple, and Samsung's voice-enabled services for a trial run by asking each of them the same 10 questions.
Overall, Siri was the standout, with the best response times and responsiveness. Yet Google's service gets a gold star for basic inquiries such as sports scores. Samsung's S Voice, on the other hand, still needs some work -- particularly in terms of timeliness.
Apple supplier Nuance Communications (NAS: NUAN) is the company behind Siri, which stands for "speech interpretation and recognition interface." Apple first introduced Siri last fall on the iPhone 4S and since has experienced record demand for the Siri-capable products.
All told, I doubt Google's voice assistant will have an immediate impact on Apple, especially considering Apple is due in the coming months to release its iPhone 5, which will feature updates to its Siri software. I should note that Apple's Siri assistant still heavily relies on Google for information in answering a user's question.
A June review by Piper Jaffray analyst Gene Munster found that 60% of Siri's results were generated by Google, followed by Yelp with 20%, Wolfram Alpha 14%, and Yahoo! a mere 4%. However, I agree with Munster's opinion that we'll see a steep decline in Google's contribution to Siri results after Apple's upcoming iOS 6 launch later this year.
Mobile domination
Bigger picture, this could become a dangerous game for Google. There's always the option that Apple swaps Google search on its mobile devices for Microsoft's (NAS: MSFT) Bing product. While I doubt this will happen, it's not out of the question, especially considering Microsoft is desperate for a piece of the mobile market.
Microsoft tried and failed to increase its share of the smartphone pie earlier this year through a strategic partnership with Nokia (NYS: NOK) . Unfortunately, the Finnish company's launch of its Windows-based Lumia 900 in the U.S. was plagued by weak demand and technical difficulties. For Microsoft, any future ties to Apple could give it a more meaningful entry point into the fast-growing mobile industry.
For now, there's no debating that both Google and Apple are solid companies that will continue to reward shareholders in the year ahead, though I think Google has the most to lose in this ongoing war with Apple. In the near term, a better way to gain exposure to the mobile computing industry is through shares of Nuance Communications.
Play for the gold
Nuance is credited with the technology used in Siri. Considering Apple has already built a strong supplier relationship with the company, I expect Nuance to lock down future deals with the Mac maker for next-generation devices. In addition, voice-enabled services such as this are still in the early stages, which means there's plenty of growth to come as the technology evolves. For these reasons, I stand behind my CAPScall of outperform for shares of both Apple and Nuance Communications.
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The article Google vs. Apple: Who Has the Most to Lose? originally appeared on Fool.com.
Fool contributorTamara Rutterowns shares of Apple, Google, and Microsoft. Follow her on Twitter, where she uses the handle@TamaraRutter, for more Foolish insights and investing ideas. The Motley Fool owns shares of Google, Microsoft, and Apple. Motley Fool newsletter services have recommended buying shares of Nuance Communications, Google, Microsoft, and Apple and creating bull call spread positions in Microsoft and Apple. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.
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