A couple years ago I watched the movies The Island and Repo Men. Afterwards I joked to my friend that one day Apple Inc. (NASDAQ:AAPL) was going to rule the world. The corporations in the movies researched and developed a new product, harvestable organs, which people incorporated and relied upon in their daily lives. The technological barriers to entry and demand for the organs helped them expand seemingly without limit. At the time Apple Inc. (NASDAQ:AAPL) had come out with several revolutionizing products and became the largest company in the world. It was said that Apple knew what you wanted before you did.
Since then other companies have taken the fight to Apple Inc. (NASDAQ:AAPL) and established footholds in markets Apple Inc. (NASDAQ:AAPL) once dominated. How does this relate to Google Inc (NASDAQ:GOOG) and its long term prospects? Google has created an ecosystem of almost irreplaceable free products and services for users. They have also been able to effectively monetize this ecosystem.
Irreplaceable Products
Got a question to ask? Go Google Inc (NASDAQ:GOOG) it. Looking for a video? Hop on YouTube. Need directions? Simply enter two addresses and Google Maps will tell you how to get there. All of this is free to use and, as anybody who has used Apple maps can tell you, is higher quality than the competition. All Google asks in return is the ability to gather our information. This information on our habits, searches, and activities is what makes Google such a valuable advertisement platform.
Google Chrome was released on September 2, 2008 and since has become the global leader with nearly 33% market share. Google Inc (NASDAQ:GOOG)’s success with the Android system is even more profound. Since releasing the Android system in September 20, 2008; phones powered by Android now make up 75% of the dynamic smart phone market.
Only a select few companies in the world have the resources to even compete with Google. Microsoft Corporation (NASDAQ:MSFT)’s Bing is the biggest challenger to Google Inc (NASDAQ:GOOG)’s bread and butter, search. Microsoft Corporation (NASDAQ:MSFT) Bing was released May 28, 2009 and has made some gains. Despite this, as of April 2013, Google still has a 90% global market share of search. Not the type of success you’re looking for in a project costing over a billion dollars a year. Also not the type of success Google has had with Chrome and the Android OS.
Google Inc (NASDAQ:GOOG) has used horizontal integration to establish a dominating position in providing services and advertising. It is here Google distinguishes itself from Apple Inc. (NASDAQ:AAPL). Google Inc (NASDAQ:GOOG)’s growth is not dependent on the fickle nature of consumers. Google’s growth is dependent on technological innovations, expansion of the internet, and the need of businesses to advertise and grow. You can see the difference in their stock performance since Apple Inc. (NASDAQ:AAPL) began showing chinks in its armor.
