Apple just posted its quarterly earnings and reported a record breaking 4th quarter. This includes $46.3 billion in revenues, 37 million iPhones, 15 million iPads, and 5 million Macs. The most amazing aspect of these earnings is that Apple announced nearly $100 billion dollars in cash. To put this in perspective, the 100 billion dollars is more money than all companies in the world are worth, except for 52.
So what should Apple do with its cash hoard? Some have suggested that Apple buy all Hollywood companies. This idea seems a little unrealistic. Does Apple, led by Tim Cook, really want to own Hollywood? Apple is now an iOS controlled company. The most powerful group in Apple, where even Mac OS X is becoming more and more iOSified, is the present and future of Apple. What are the weaknesses of the iOS eco system?
There are two main areas:
- Navigation: Android offers free turn-by-turn navigation on their OS and also constantly updates their Maps app with new features, while Apple recently only added alternate routes as their main new feature in iOS 5.
- Search Integration: Google makes money off of Androids mainly from integrating Google search into their phones, where users clicking on ads give Google 97% of their revenue. Additionally, Apple uses Google as its default search engine, giving Google a huge boost in online search and more money to its main competitor.
Which area should Apple focus on? With Siri, Apple has taken the first steps in avoiding Google as the main search engine on Google. When searching on Siri, Apple avoid sending users to Google search, but instead tries to find the data using it’s own partnerships with Yelp and Wolfram Alpha. Apple will continue to add partnerships to further prevent sending users to Google. (Apple still sends users to Google search when it cannot find an answer, but they will try to avoid this as much as possible.)
As important as navigation is to iOS, it is much more important for Apple to keep up its battle with Google in search. Apple knows this is the future and its acquisition of Siri shows that. Though Apple’s former CEO Steve Jobs said Siri was an “artificial intelligence” purchase and not related to search, Jobs was most likely being coy about Apple’s future. Apple needs to think about purchasing companies that can help in its quest to beat Google in search. Every dollar Apple earns in search is one less potential dollar for Google. In the usual Apple way, they will not come up with an alternative to Google, like Microsoft is trying with Bing, by doing something completely different. Its first move was different with Siri. What’s next? Only Apple knows, but it’ll probably be a company related to search. We know Apple has the cash to do it.