Google and Apple, Technology Twins?
2007 Was a very good year for both Apple (AAPL) and Google (GOOG). Well, the first 11 months were good but something happened in the last month that hurt both of these stocks.
Apple Inc began the year with a stock price of $83.80 and hit a high of $202.96 on Dec 27, 2007. The stock has since fallen off from that high closing at $171.25 on January 8, 2008. Still, Apple stock has grown by leaps and bounds over the course of the last 12 months but the question remains, can it continue to grow or has the market corrected itself and set Apple on a downward path until it reaches a natural price?
Watching Apple decline these last few days has made me think back to when their stock dropped $7 a share based on news posted on the tech blog enGadget. The Internet was up in arms over that one but Apple quickly recovered. This time there is no Internet blog posting insider information causing this drop.
What about Google? They opened the year with a price of $467.59 per share, reaching a high of $747.24 on November 7, 2007. since that high they have been bouncing up and down around the $700 mark. They are currently trading down in the $630 range.
Google’s bread and butter is online advertising, it seems strange that the high advertising time of the year (December) would see this Internet juggernaut falter. Unless, as in apple’s case, the market is simply adjusting its eyes in respect to the company.
Let’s take a moment and look at the three month chart for these two stocks:
Google vs. Apple Inc, past three months
These two stocks are practically twins! There charts do no exactly overlap but it is close enough.
So, what do these two companies have in common? For one thing they are both media darlings. Not just that but both are often seen as “do no evil” companies, whether they deserve the title or not. Google is seen as the “good” search company while Yahoo is seen as the “evil” one. Apple is seen as the “good” consumer electronic/computer company while Microsoft is the “evil” one. (Microsoft is having a good year, more because of their Xbox360 than their other ventures.)
Because there is so much consumer goodwill towards these companies investors find themselves looking upon these two companies as being worth a long haul investment. So, what could have happened in the last few months to change the consumer’s impression of these two?
Apple shows its evil side
Apple has a love-hate relationship with its fans. The fans love Apple and Apple returns that love with hate. Just look at the fate of Think Secret. Apple sent their lawyers after them and ended up shutting them down. Why did they do this? Because Think Secret was posting information that Apple considered to be a trade secret that was nothing more than inside information on upcoming Apple products.
So, in essence these fan sites are just trying to promote new Apple products and Apple will have none of it. If apple had a company logo it would be, “Look at me, I’m different, just like all those other people dressed just like me.”
Android crushes Google
It was secrecy that also did in Google. Not the same type as Apple but secrecy none the less.
Earlier in the year rumors of the G-Phone began to circulate and Google said nothing. (Apple had the same policy about the iPhone but some real information was leaked.) Many people thought that it was legit and Google would soon be competing with Apple in the cell phone marketplace. Yeah, about that G-Phone…
The G-Phone (or Android) turned out to be a let down. It was not a phone at all, just a clever phone operating system designed to get Google applications onto cell phones. Yes, everyone was underwhelmed.
This was soon followed buy Facebook’s disastrous entry into online snooping advertising with a system designed to sell things to your friends based on what you did. This was seen as a threat early on but was quickly killed after a user revolt. Even with its demise the fact that it existed (without Google) was enough to remind people that Google is not the only advertiser on the Internet and that sites can make money without them.
Closing
What will the future hold for these two companies? I don’t know. I think 2007 was a banner year for these two but I do not see it continuing into 2008. My money is on Sony (SNE) with its PS3 and Blu-ray technologies. With HD-DVD just about dead I think the future lies with Sony.
I’m not saying that Google and Apple will be stagnant, I’m simply pointing out that 2007 will not be repeated in 2008 and you can make a better investment putting your money somewhere else.
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