:format(webp)/cdn.vox-cdn.com/uploads/chorus_image/image/33697789/181312118.0.jpg)
There were two striking pieces of business news this week from America's leading technology brands. On the one hand, Google unveiled a prototype of an autonomous car that, if it can be made to work at scale, promises to end mass automobile ownership while drastically reducing car wreck fatalities and auto-related pollution. Meanwhile, Apple bought a company that makes high-end headphones.
Which is to say that Apple's playing checkers while Google plays chess.
And to be clear about something, in the increasingly partisan smartphone platform wars I am decidedly on Team Apple. Heck, I even used Macs in the 1990s. I was on vacation in Maine when the original iPhone was released, so I drove 30 minutes to buy one — they hadn't shipped any to Ellsworth yet, so I drove back the next day. I even shelled out for a Thunderbolt Display.
But that's exactly why it's so disappointing to see Apple focused overwhelmingly on small-ball extensions of its existing franchise while Google goes for big plays.
I don't particularly want to live in a world where the future of heads-up displays, autonomous cars, and home automation is an elaborate effort to track your daily life in order to display micro-targeted advertising. But at the same time, people aren't going to eschew game-changing technologies just because they're implemented in a slightly tacky way. Microsoft brought the PCs the mass market needed in the 1990s, and the whole world just suffered through a decade of atrocious aesthetics as a consequence.
Like Google, Apple has an enormous amount of brand prestige and engineering talent at its disposal. And while Google has tremendous financial resources to put behind new initiatives, Apple is able to dwarf Google in terms of the mobilization of dollars. But they are choosing to do less with more.
One reason, perhaps, is the sharply contrasting corporate governance models. Apple is a very broadly owned company. Due to his ups and downs with the company in the 80s and 90s, even Steve Jobs didn't own a particularly large number of Apple shares. The fortune he bequeathed to his wife consisted primarily of shares in Disney stock he obtained by founding and selling Pixar. At Google, by contrast, not only do the founders own giant stakes in the company they control it utterly through a three-class share structurethat prevents lesser shareholders from influencing the governance of the company. Nobody's going to cry poverty on behalf of Apple's very well compensated CEO Tim Cook, but in terms of raw power over his firm and its resources he's a minnow compared to the sharks who run Google.
And it shows. The $3 billion Apple is spending to acquire Beats is widely described as the biggest acquisition in the company's history. But it's actually dwarfed by the $44 billion the company has spent on buying Apple stock in recent years.
Those buybacks have been nice for the company's shareholders. A tax efficient way of helping people cash in on iPhone profits. Apple's also been paying dividends in this time, delivering even more cash into shareholders' pockets. And all signs are that if the company succeeded in getting Congress to enact more Apple-friendly corporate income tax proposals even more money would flow out of the company's offshore accounts to its owners.
Whether this is all really in the best long-term interests of shareholders, I couldn't quite judge. But it's clearly what they want.
$GOOG @ 19x2014 est operating profit. At same multiple $AAPL=$1,245 per share. Ridiculous. Keep buying Tim! You still have $145 billion cash
— Carl Icahn (@Carl_C_Icahn) February 7, 2014
Investments in moon shot technology are risky. Not just uncertain, but genuinely impossible to evaluate. It's clear that autonomous cars have a lot of potential. But not only are the technical problems difficult, the regulatory issues are simply unknowable. But the transportation sector — like health care, education, wireline broadband, and energy — aren't more regulated and more difficult to understand than the headphones sector for no reason. They're more important.
I hope that at its big keynote talk coming up on June 2 Apple rolls out something really big in an area that's really new. But the rumor mill doesn't have anything of the sort, and we're almost certainly just going to learn about the latest versions of the operating systems for Mac and iPhone. When Jobs was recruiting John Sculley to come to Apple from Pepsi in the early 1980s, he reportedly asked him "do you want to sell sugared water for the rest of your life? Or do you want to come with me and change the world?"
And Apple has changed the world. But by now, better and better smartphones and smartphone accessories are essentially sugared water. A great business, and one that's even important to people's lives. But not one that's changing anything at this point. The future's going to belong to companies with the will and the ability to take big, uncertain risks on big projects.
