Google-Apple: The Goopple Alliance

The dominant IT story of 2007 is revealed clearly by the chart below, which shows this year’s change in value, by market capitalization in $billions, of the 10 largest IT companies in the world. A year ago the list, in order, of the most valuable IT companies was:

1. Microsoft
2. Cisco
3. Google
4. IBM
5. Intel
6. HP
7. Oracle
8. Apple
9. SAP
10. Dell

In a year, Apple has leapfrogged Oracle, HP, Intel, IBM, and Cisco, with a remarkable increase in value of 138% (measured in dollars). Google achieved 53%, with Oracle 38%, Intel 33%, HP 25% and Microsoft 21%. It is tempting to suggest that Cisco, SAP and Dell simply trod water, but if you take into account the decline in the value of the dollar (about 10% for the whole year) they all actually lost value.

It is not likely that Apple will be able to repeat its stellar performance in the coming year (if it did it would pass Microsoft). In my view, the stock market now recognizes that Apple is no longer a niche vendor in the PC market and is going to become the dominant vendor. That, coupled with the success of the iPhone and the continuing dominance of the iPod explains the valuation. None of these value drivers is likely to fade away any time soon.

Goopple

While Apple has moved firmly to “the edge of the network” to become the device manufacturer par excellence, Google has moved right to the center of the network. They are behaving as natural bedfellows, in the same way that Intel and Microsoft once did, a kind of Goopple alliance, made more intimate by the fact that Google CEO, Eric Schmidt, sits on the board of Apple. The truth is that what’s good for Apple is probably good for Google too, and vice versa. It’s all very complementary.

The worrying question for many companies is “how long before the network is Google?”, and this is not just Microsoft’s headache, the whole of the publishing industry is deeply alarmed by its rapidly dissolving business model. It is a rabbit paralyzed by the headlights of an oncoming truck. It is likely that the rest of media industry will, in time, follow suit and take its place in the middle of the highway.

The Goopple alliance is the marriage of the cloud computing to the consumer’s access device, driven by the provision of content. It’s tomorrow’s world. I’ll have more to say about this in the coming year.