Even with Android and Nexus One, Google Still has Apple Envy

image While the media has enjoyed positioning the recent launch of Google’s Android-based Nexus One “superphone” manufactured by HTC as a direct competitive threat to Apple’s iPhone, I agree with Bill Gurley of Benchmark Capital that this is the wrong question to try to answer as Apple and Google are taking very different approaches to the mobile market.

Apple, as in the personal computer market, has focused on developing the most well designed, highest grossing margin, products they can imagine at the expense of market share. Google on the other hand, by open-sourcing the Android operating system to handset and device manufacturers for free, is aiming to become the most widely used mobile operating system at the expense of Microsoft’s Windows Mobile and, to a lesser extent, Nokia’s Symbian (which is more widely used internationally) platforms. As Fred Wilson of Union Square Ventures alludes to, by leveraging its ability to tightly integrate its applications (Calendar, Gmail, Maps, etc.) into Android, Google can extend the operating system to provide a solution for not only consumers, but the small/medium business market as well, right out of the box.

Having also signaled their intent to develop an enterprise version of Nexus One, Google will be able to challenge Research In Motion’s Blackberry platform for larger, more lucrative business clients as well this year. Combined with a strong pipeline of Android-based handsets being released by device manufacturers over the course of the year, it’s more a question of when rather than if Android will become the largest mobile operating system in terms of market share in the United States.

With such a bright outlook in mobile, why would Google be envious of Apple?

Because Google wants to be more than just a search company.

Google’s mission has always been associated with organizing the world’s information and making it accessible, which enables users to more easily find content to consume. Apple, whose mission statement has evolved to include spearheading the digital media revolution, focuses on delivering this content in the form of applications, music and videos to consumers through its own devices and services. It’s this difference in how content is discovered and where it is consumed  that has enabled Apple to establish a more direct relationship with both consumers and content owners than Google has achieved and, in the process, extract more economic value from both by way of hardware sales to consumers (iPhone, iPods, etc.) and distribution fees (through iTunes sales) from content owners.

image Google is attempting to eliminate this relationship discrepancy primarily through acquisition. DoubleClick and, most recently, AdMob were acquired to provide Google with online and mobile display ad monetization capabilities, respectively, wherever the content is, regardless of device. In an effort to keep a larger revenue share, and further bridge the relationship gap it has with consumers who use Google to search but consume content elsewhere, Google has also entered the content business by, most notably, acquiring YouTube to help keep consumers within its network.

Combined with the company’s recently failed attempt to acquire Yelp, I agree with Simon Dumenco’s assertion in his Advertising Age article that Google is attempting to become a media company in the process. Because Google’s content efforts have focused on user generated content though, the company has entered into partnerships to match Apple’s content offering- cutting deals with television networks and movie studios for premium content for YouTube, supporting an open app ecosystem on the Android platform and exploring partnership opportunities in the music space (though an acquisition of an iTunes competitor such as MOG or Spotify would make sense for Google and Android at this point).

Regardless of the number of phones that are eventually sold with the Android operating system and applications that are added to the platform, the truth is Google will never be able to replicate what Apple does, as the two organizations have completely different cultures which is evidenced in their respective approaches to mobile. Google’s left-brain, quantitative, engineering-driven approach to business isn’t organized to compete with Apple’s right-brain, qualitative, design-driven model. It’s in the design process Apple is able to foster an emotional connection between its products and consumers, something Google is unable to achieve because it provides software-based services. And because Apple design approach integrates both the hardware and software components of its devices content providers, including Google, must work with Apple directly in order to reach their users. Apple’s design prowess will be on display again next week when they finally unveil the long-rumored tablet device which is expected to bring additional types of premium content from print publishers directly to consumers through these devices- adding more fire to Google’s Apple envy.