Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Who's the Winner and Loser in the Apple (NASDAQ:AAPL) / Google (NASDAQ:GOOG) Maps War?

By

Consumers certainly are, at least in the short run.

PrintPRINT
MINYANVILLE ORIGINAL A week into the release of the iPhone 5, the backlash over Apple's (NASDAQ:AAPL) decision to drop Google (NASDAQ:GOOG) Maps and introduce its own less-than-precise mapping application is out in full force.

Apple, to its credit, has come out and owned its decision to launch a flawed product. "We own this; we manage the vendors. This is no one's issue but ours," an unnamed Apple executive told the New York Times, adding that the company will "pour as much time and manpower into repairing Maps as it takes."

It has now emerged that the Apple/Google maps contract had another year to go before it expired, so the decision by Apple to drop Google was a purely strategic one. As Matthew Yglesias of Slate notes, the Cupertino, California-based company is hoping to "take advantage of Apple's extraordinarily strong market position right now to release an inferior map product in hope that doing so will let them build a superior product down the road."

While Apple users may gripe about the poor user experience of Apple Maps, they are unlikely to, say, switch over to an Android-powered Samsung (PINK:SSNLF) device or a Windows Phone 8 (NASDAQ:MSFT) that incorporates Nokia (NYSE:NOK) maps just because of this issue.

Thus, Apple's willing to tolerate some customer dissatisfaction because there is an enormous upside in having its own mobile mapping service, especially in the growth potential of location-based services and advertising, a battleground in which other tech giants such as Amazon (NASDAQ:AMZN), Yahoo (NASDAQ:YHOO) and AOL (NYSE:AOL) are also competing.

"If you own a mobile ecology, as Google does, the other mobile ecology owners are not going to allow you to own tons of data in their world," Scott Rafer, chief executive of Lumatic, which makes city map apps, told the Times. "And so neither Apple nor Amazon were going to let Google know where every one of their users was at every time."

However, Jordan Hudgens, Senior Software Engineer at software design firm MCW Services, points out that Apple's decision to cut the Google Maps cord was prompted by more than the promise of future location-based revenues.

"Though I'm sure that future location-based advertising possibilities played a role in the decision, the true motivating factor is the growing disdain Apple has for Google and the Android OS. If this was simply about the maps application, Apple wouldn't have simultaneously removed YouTube as a native app," he tells Minyanville.

"Despite the bugs with the product launch, becoming independent from Google was a necessary step for Apple and the iOS ecosystem. Considering the fact that Google has positioned itself as the de facto competitor for Apple's main product line, [Apple] management couldn't let Google Maps attain ubiquity on a cross-platform basis," Hudgens asserts.

While Apple is scrambling to improve its Maps application and smooth the Google-to-Apple transition, Google, caught off-guard by Apple's decision, is also working to develop a maps application for the iPhone and iPad by the end of the year.

Google CEO Eric Schmidt is confident that losing mobile maps traffic from iOS 6.0 users will not hurt his company, telling reporters at a product launch in Japan, "Apple is the exception, and the Android system is the common model, which is why our market share is so much higher."

Todd Haselton, senior mobile analyst at tech site TechnoBuffalo, also believes Google will be unfazed by this development, telling Minyanville, "I don't think [Google's] worried about rushing out [a Maps app for iOS 6.0]. It doesn't need to and, in fact, it almost makes Android more desirable."

On the contrary, Hudgens thinks Google walked out as the loser. "This is definitely a loss for Google since they're now losing out on tens of millions of daily users for their maps app," he says. "Mobile and location based advertising is a key factor in Google's long term growth, therefore losing Apple as a distribution partner will dramatically decrease their reach."

Singapore-based iPhone and Web app developer Hwee-Boon Yar also points out to Minyanville that "Apple's maps will be the sole source of built-in and free map tiles for iOS developers, so the majority of third party apps will use those too. This restricts Google Maps on mobile to only Android devices, and perhaps whichever mobile platform cementing a third place in the space."

The real loser in this battle of tech giants, at least in the short run it seems, are the millions of iPhone 5 customers now stuck with a poor Maps app, as they await refinements to Maps.

But if there's one good thing that has emerged from this fracas, it's the hope that heightened competition will spur innovation. As Peter Krasilovsky, the program director for marketplaces at media research firm BIA/Kelsey, told the Times:

"Apple Maps are apparently not ready for prime time, and that's a loss. But a long-term loss? No. With all the incredible technology being developed by everybody, consumers are the winner."

(See also: A Walk With iOS 6 Maps: Apple's (NASDAQ:AAPL) Horribly Revamped App Does New York.)

Twitter: @sterlingwong
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
PrintPRINT

Busy? Subscribe to our free newsletter!

Submit
 

WHAT'S POPULAR IN THE VILLE