Tuesday, June 12, 2012

Map This! Apple's Move Into This Arena Creating Immediate Winners And Losers.....

MacRumor has confirmed what listeners to Apple's presentations suspected, even Apple needs a "little help from their friends" when undertaking a massive effort such as this! It appears that Tom Tom is a key player in the development of Apple's announced iOS6 turn by turn, 3D, interactive mapping service.

As of this writing, TomTom stock is up 53 Cents and is trading at $3.80/share. This is a 16.2% increase on the day. Even with the deal's details undefined, clearly the market sees potential significant upside for the company which has a negative EPS (earnings per share) at this time.

Conversely, Garmin's stock has plummeted. Garminn is actually trading at $39.51 which is up nominally ($1.31 +3.4%) on the day. However, the stock's value has been drastically trimmed over the past several months and is trading well below its $50.67 52 week high. Please see nearby chart.

No matter how this war develops, one thing is sure, the days of $50 TomTom and Garmin GPS Apps being downloaded are history!

Of course Google is the most obvious loser in this transition. Mobile ads are increasingly important as users abandon desktops and laptops in favor of smartphones and tablets. There have been a number of reports suggesting half of all Google's map inquiries are derived through Apple iOS devices (this despite Android's currently superior international hardware marketshare. As the nearby graph suggests (source: Nielson), iPhone is gaining traction against Android but still has not overtaken the freely distributed Google operating system.

For whatever reasons (and one could write a column speculating on the various factors involved), iPhone users are greater consumers of data, than Android users. I have read past studies claiming iPhone users consume up to 50% more data than Android owners. The loss of the iPhone map application will not topple Google, but it does present the first truly significant "loss" on Apple's platform. Apple's distain for Google extends to Steve Jobs's obsession. He vehemently felt that Google had copied iPhone features within Android and he vowed to destroy Android prior to his death. The announcement of Apple's in-house map application is clearly intended as one nail in the proverbial coffin.....

But Apple could be a loser too! Users expect Apple to provide polished, beautiful, seamless, experiences. While Siri has failed to live up to some expectations, the uneven user experience can be "excused" allowing for Siri's beta status. (Some argue that Siri had to be released in this unfinished format in order to collect enough data-- speech across context and language-- in order to improve its results.) Maps are a different story! If Apple were to deliver a product which fails to faithfully and accurately get customers from A to B the first time, and every time, there will be severe backlash. You cannot offer the world a "beta" map product.

It is no secret that Apple inhibited Google maps. Voice enabled turn by turn instructions have been available on Android devices for some time. Apple refused to allow Google to implement this key feature, and others, over the past several iterations. The war has been on for some time.....

Tim Cook and Apple must deliver out of the box. If you caught the related announcement concerning key automobile manufacturers buying into the Apple Kool Aid (see my updated post on this subject re-published yesterday) you can begin to grasp the scope of Apple's ambitions for mapping (and a continually evolving Siri assistant).

Developers must see the benefits to this tightly integrated iOS feature. (Beyond just making it (much) easier to integrate Apple maps via API hooks.) Google maps is integral to many Apps which promote location based services. There is no doubt that Apple wants its product to supplant Google in providing this data and advertising rich information in such products as FourSquare and Camera+.

Like many, I have grown accustomed to, and dependent upon, interactive maps to get me from A to B to C..... I have had Garmin portable units; SmartPhone Apps and built in, dedicated, GPS car systems. My father who was not a technologic early adopter, purchased an early Garmin car unit, christened her "Gertrude" and had a long term first name "relationship" with this device. He would have probably reluctantly traded "her" in for a new, improved, Siri focused travel companion, but only if "she" can reliably get from any given point to another. After all, it doesn't matter how nice and calm a voice is coming over the car's speakers if you are driving in circles around Boston.... Who cares whether Gertrude says, "Please turn around" or Siri smartly comments, "I think you may have just missed your restaurant. Please turn around when you get a chance..." Ouhhh.....

The stakes are high. This may be Tim Cook's first acid test. Siri is a novelty, getting to grandma's house for Thanksgiving is a necessity. Here's to TomTom shareholders, congrats! Garmin devotees I see more rough roads ahead.... Apple shareholders, the jury is out at the moment on this announcement.

Google, well Google, my advice to you is take back Android! Stop letting third parties add layers and layers of crapware on your devices. Force manufacturers to stay current with operating system updates (which will thrill your developer community! Open source may be conceptually great, but Apple's "walled garden" has made it easier for developers to deploy great Apps quickly and monetize them (even forgoing 30% for the privalege of doing so). You can't make Apple promote your mapping software, but you can make the Android experience superior and promote your innovations in this way. If Google maps can more reliably get me from a foreign airport to a new resort in a country I have never set foot in, that is what I will turn to. In the end, I don't need a 3D rendering, I need to park the car and get on with the adventure of life.

Interesting times for developers, investors, and those simply trying to find the nearest ATM in an unfamiliar city. Here's to getting wherever you want to go safely!

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I currently hold a Long Position in $APPL;  $GOOG

Companies: Apple; Google

This commentary is not meant as an endorsement of any company or to provide financial advice.  If the author has any financial interest in any company mentioned at the time of this article’s posting, it will be explicitly noted. I welcome feedback and comments. 

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