Apple is the new Tiger Woods
Many golf fans will appreciate this analogy. Prior to Tiger's spectacular fall from greatness that began with him crashing his SUV in his driveway and being attacked by a club wielding wife he was the most feared golfer on the planet. His competitors would wilt at the very sound of the gallery that followed Tiger. His competitor's wind tunnel tested golf swings would melt down playing under the cold icy stare when paired with Tiger. Many top rated golfers would change their schedule to compete in the events Tiger skipped as he prepared for only the top tournaments and major golf championships. For many of the game's top players who had competed and won top honors their entire careers, they became happy with chasing 2nd place when Tiger was in the field. Since smashing his Escalade in the front yard and the public humiliation that followed Tiger has crashed to earth and is no longer a threat to the top tier players. Not to worry, for fans of totally dominating leaders and the devastating effects they have on the competition there is a new leader to watch with fascination. Two leading stories in the business news this week bestow the mantle of the new Tiger to Apple Computer. The first in chronological order was waking up to the news Monday morning that Google intends to acquire Motorola Mobility. The mighty Google, whose meteoric rise from Stanford project to global behemoth that dominates search engine marketing and whose Android O/S is the fastest growing phone operating system on the planet is going to spend $12 Billion dollars to buy a struggling handset maker who happens to have 17,000 patents and another 7500 patent applications. Has Apple's dominant patent portfolio forced Google to do the unthinkable, to acquire a hardware company that operates on razor thin margins in a hypercompetitive business? Did Apple's winning strategy to create a consortium with Microsoft, RIM, Sony, and EMC to buy Nortel's patents force Google to buy Motorola? Did Apple's $385 Billion dollar valuation and recent eclipsing of Exxon as the most valuable company on the planet force Google to buy Motorola in order to mimic Apple's hardware strategy? Google was not alone in the Smartphone and Tablet industry to hear Apple's footsteps just like the Tiger Woods pre-crash. The two leading Android Handset makers, Samsung, LG and HTC released press statements that were eerily similar and heartily supported Google's acquisition of Motorola. How crazy is that? Google is buying one of their competitors which threatens their market leading position and they applaud the move? That is the Tiger effect that Apple has now evolved to, anything that takes them down is good for the under classes of competitors. It is breathtaking to watch and understand.
The second news item of the week that reinforces that Apple is the new Tiger Woods was HP's announcement that they are considering selling their PC business and that they will not compete with Apple on Handsets or Tablets. The strategic move away from the PC business is the result of the "Tablet Effect" on the sales and margins of personal computers and Net books. It is also the result of Apple's dramatic impact on computing, moving from fixed to mobile computing which has propelled the sales of IOS and Android mobile devices globally. Think of it, HP's PC business is over $22 Billion and they are seriously considering selling it off completely and not competing with Apple on PC's or mobile devices. They also announced a $10 Billion dollar acquisition of Autonomous software. They are going to try and mimic IBM and move away from PC hardware and focus on services and software. That is another way of saying they don't want to play on any course where Apple competes. Sad, but that is the reality that faces them, they cannot win against Apple and they have decided not to try. Shareholders punished HP for these announcements amputating over $12 Billion dollars in the company's value in 1 day. How proud would founders Hewlett and Packard be today watching their company run and hide from the mighty Apple?
There are many unknown outcomes from the events of this week with Google and HP. My first concern was that Google's fears drove an acquisition that would damage the growth trajectory of Android. Since our business is based on Android and the idea that it will hurt the growth trajectory worries me. Is one of the unintended consequences of the Motorola acquisition that Samsung, HTC and others diversify their use of Windows 7 phone O/S and other operating systems? Is there a potentially perverse outcome where HP becomes the new Google with their WEB OS? Web OS (formerly Palm OS) was universally considered a world class O/S and was about to enter the game as a serious contender with IOS and Android. Obviously, HP was late to the game and has pulled back from this strategy but this will not stop them from licensing Web OS to the Android ecosystem who may feel the need to hedge their bets. Yes, there will be a cost to license Web OS, but given the fear of Apple and the cost to litigate, Android is not really free.
I used to enjoy watching Tiger dominate the men's PGA tour. I enjoy it more now in the post Tiger era where any number of players can win any given week. I look forward to that type of level playing field in the mobile arena but fear it won't be any time soon.
