Case scenario 1 - HPFIIE fl UDDgIEI KEIEIIDHEHIF stratus...

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Unformatted text preview: HPFIIE' fl UDDgIEI KEIEIIDHEHIF stratus Lnange At one time, Google sold advertising and Apple sold hard- ware. This case explores how a surge in mobile device usage has changed the way users are accessing the Internet. This in turn has created a growing competition between Google and Apple in mobile computing, mobile applications (apps), and other related products. In 2006 when the iPhone was unveiled, Google CEO Eric Schmidt was on stage with Apple CEO Steve Jobs. Google had collaborated with Apple on mapping for the iPhone, and Schmidt sat on Apple‘s board of directors. The companies were strategic allies, and the CEOs often spoke favorably of one an- other. In the next few years, however, significant changes took place in the smartphone market and the relationship between the two companies:M Competition between the two companies began when Googlc announced its mobile phone and Android operating system—and when it became clear that smartphones would be the computers of the future. Soon the Google CEO gave up his seat on the Apple board of directors. The late Steve Jobs is qUoted as saying, “Eric’s effectiveness as an Apple board mem- ber would be significantly diminished, because he will have to recuse himself from even larger portions of our meetings.“ The rivalry grew when Google opened a Web-based store for apps that run on mobile devices powered by its Android software, including Motorola's Droid and HTC Corporation's Ever"S Both Apple and Google are hyperfocused on the growing mobile computing market. Compared to the Web, dollars in mobile advertising are small—but studies show that more users have begun to access the Internet through their mobile devices as compared to the traditional desktop computer. Marv Meeker .egsthotice | Privacy Policy | Permissions | Support | Feedback and consulting firm, forecasts that spending for ads delivered by mobile applications will increase to $8.4 billion by 2015 and spending on ads delivered through a mobile browser will reach $113.9 billion.” As the race to deliver content intensi- fies, it appears that the two companies aren’t as friendly as drey once were. What's Your Take? I. Is this just a situation of capitalism and friendly competi- tion? Do you have any ideas as to what the future holds in terms of the competitive landscape betwem these two companies? 2. As the competition between Apple and Google continues to intensify, do you think that Apple may decide to dump Google as the default search engine on its mobile devices? If they do, who might they turn to for search or how they would deal with search on their devices? 3. Are there any benefits for the consumer of increased competition? 4. If you were considering purchasing a smartphone tiFhone, HTC, or Blackberry}, or rcplacing an older model, 1Would any of the competitive issues outlined in this case be a fac- tor in your purchase? Explain why these issues would or would not affect your decision. 5. In an effort to take greater control and to increase profits, Apple is moving to a system of delivering and billing for electronic content viewed on its devices by requiring publishers of books, magazines. and newspapers to con- U1 Nlfll'gfll'l Ellfll'llfljr' PI'ELIICLS Ll'lfll. Wlll'lll'l lWE FEMS lTlUl'E “SEES will tap into the Intemet via mobile devices than desktop PCs:M Morgan Stanley’s global technologyr and telecom analysts pro- ject that mobile devices will eventually,r outship the global net— book and notebook market, and that by 2012, smartpbones will also outship the global PC market, which includes notebooks, netbooks, and desktops.W It is not surprising that the race for delivering content is intensifying; the research firm Gartner projected that the revenues generated by apps would triple in 2011 to more than $15 billion, and by 2014 revenue from apps would reach $53 billion.TE The companies are also competing for mobile ad- vertising dollars. Borrell Associates, an advertising research UHCI Salli-ti U1 CUI'ILISIII WILDI" 51131351 l'lflJ'lUltu D)“ “It lllll'llfibi billing system.“ Publishers are not pleased with Apple's announcement because if the only.r way for users to pur- chase electronic content, newspapers, and magazines is through the “Device, the}r lose valuable information about their subscribers. Subscriber information is the lifeblood of an online seller because it is used to market and build long-term relationships, and of course, upsell or mar- ket similar products based upon information from past purchases.SI As a user, if you wanted to purchase content, would you have an issue if you had to do so through the content publisher’s website, for example, or an iTunes store? CHAPTER1 Starting out 29 ...
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