Apple, Google and the market

Our technology specialist Patrick Stafford is all over the release of Google’s new Nexus One phone today, but he also made a great point this morning about the sharemarket’s reaction to the device.

Despite all the fanfare, Google’s shares actually dropped 0.44% overnight to close at $623.99, while Apple’s share price inched up 0.17% to close at a new all-time record of $214.38 on those rumours that Steve Jobs will soon unveil the Apple tablet.

Since the start of December, when the rumours of the Google phone and the Apple tablet have really cranked up, Apple’s share has jumped around 9%, while Google’s stock price is up a bit over 5%.

As Patrick says, there seems to be a real frenzy developing around Apple’s stock right now, with a new all-time high being recorded seemingly every day.

The market’s reaction to the Google phone has been a bit cooler.

Why is this? It might have something to do with Apple’s ability to create devices that are not only great products on their own, but actually create entire new sectors and, most importantly for Apple shareholders, new revenue streams.

With the iPod came iTunes, a media marketplace that has helped to make Apple one of the most powerful participants in the entertainment sector (particularly the music business).

With the iPhone came the App Store, which has been a phenomenal success, with three billion downloads (and Apple gets a slice of so many of these).

Will the tablet (or iSlate as some are calling it) bring a new market? For eBooks perhaps? Or software?

On the other hand, Google has produced a phone. A very cool one, and one that perhaps might turn out to be better than the iPhone – but it is just another smartphone.

For the moment anyway, investors at least seem keener on the promise of everything that will come with Apple’s new device rather than Google’s impressive bit of technology.

Of course, that might be a short sighted view. What’s becoming increasingly obvious is that these devices – from Apple, Google or anyone else – are basically platforms from which these companies can sell other services.

Google’s breadth across so many parts of the online world could eventually give it more services to sell than Apple.

However this unfolds, it’s going to be exciting for analysts and consumers. Right now the two companies are neck and neck – Google has a market capitalisation of $US197 billion compared with Apple’s $US193 billion – and the battle has a long way to go.