In 1984 Steve Jobs commissioned one of the most famous adverts of all time, a vision of a dystopian future. You may remember the rows of nondescript people, lit in grey, industrial tones, marching through a tunnel in front of a monochrome telescreen, when a runner appears, sprints and throws a hammer through the telescreen.
People often talk about a dystopia; but I think, with hindsight, the runner won. The future we now have, led by companies such as Apple (NASDAQ: AAPL.US) and Google (NASDAQ: GOOG.US), is about as far from a dystopia as we could possibly be.
Both Apple and Google have a stake in the technology of the now and the future: but which is the better buy?
Apple
Steve Jobs was, above all else, a perfectionist. It was both his main strength, and also his great weakness. It meant that he created — in the iPod, the iPhone and the iPad — devices which were well-nigh perfect (in contrast, remember the Apple Newton?) This is now Apple’s main strength – it makes products and designs software to such an impeccable standard no other company can match it.
That’s why Apple is now the leading brand in the world; it represents in touchscreen, ‘metallic box’ form, Job’s perfectionism and good taste.
But Job’s perfectionism also meant that Apple failed to share its OS with other companies, and this market is now dominated by Google’s Android. It also meant that while competitors such as Samsung would broaden the market by producing a myriad different forms of smartphone, Apple would produce just one phone. So Apple was behind with releasing the larger-format phones that have taken so much of the market.
Tim Cook has realised this and is widening the variety of Apple’s products while still maintaining the premium feel of Apple products and the innovation that Jobs espoused. This more balanced approach is, I think, the main reason why Apple is now even more successful than when Steve Jobs ran it.
If Apple is about perfectionism, then Google is about (how can I describe this?) democracy. Think about Android, Google’s smartphone OS. This is being shared free-of-charge to all smartphone manufacturers.
Instead of imposing its software on people, Google has let people choose its products simply because they are the best products around. Chrome is the fastest web browser, and it is now the most popular web browser in the world. Google’s search engine emerged as the world’s leading search engine because it is better than any other search engine. And Google web pages are ranked depending upon how many people have read these pages – as pure a form of democracy as you can think of.
Likewise, products such as Google Docs, Google Maps and Google Translate are popular because they work so well. Google’s brand is really about speed, efficiency and simplicity.
In a similar way, when it researches future products, Google employees have been let loose to think up ideas about anything and everything, from driverless cars to renewable energy.
If all this democracy and empowerment is a very positive thing, I think it is also Google’s weakness. Why? Because I think it has made Google’s innovation rather disparate and lacking in focus. I just wonder whether Google could learn from Apple’s more focused innovation, and its greater strength in marketing and brand-building.
What’s more, although Apple is the more valuable company: it is on a P/E ratio of 17.8 compared to Google’s 27.9, plus Apple pays a 1.6% dividend.
Because of these reasons, although both are impressive companies, I think Apple, at the moment, just has the edge.
