The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, Abbott Laboratories and AbbVie, La Monica does not own positions in any individual stocks.
Google has stolen all of Apple's thunder and Apple needs to try and reclaim some of it.
During the past few years, Google (GOOG) has become the most innovative company in the tech industry. It has used its cash to buy extremely interesting startups. The $3.2 billion deal for connected home/Internet of Things (we need a better buzz phrase) hardware company Nest on Monday is just the latest example.
Google bought mapping company Waze last year for nearly $1 billion. That could have been a smart deal for Apple (AAPL), given how maligned its map apps are. (To be fair, Apple has also announced several map-related deals in the past year. But none were as splashy as Waze.)
And last month, Google announced a flurry of acquisitions in robotics, most notably the purchase of military robot maker Boston Dynamics.
What has Apple done in the past few years? Since Steve Jobs passed away in 2011, the spirit of innovation seems to be gone. Apple has mainly been getting by on product updates that are not all that exciting. Ooh. A smaller iPad! A bigger iPhone! iYawn!
Maybe Apple is employing the rope-a-dope strategy that Muhammad Ali famously used against George Foreman in the Rumble in the Jungle in 1974. Google could be expending a lot of energy (and cash) on various acquisitions while Apple sits back and waits for the best opportunity to finally punch back. (Since Google is Foreman in my analogy, does that mean Nest will soon make an indoor grill that talks with your fridge? Hmm.)
But even if Apple is biding its time, absorbing everything Google has to throw at it and hoping that Google will suffer a misstep from doing one deal too many, it's clear that Apple will eventually have to fight back. And sooner rather than later.
This may not be the 12th round (or 15th to go old-school boxing on you) of this epic tech equivalent of the Rumble in the Jungle -- The Tally in the Valley? -- but Apple is behind on the judges' scorecards.
The most important judge is Wall Street. The market seems to be as "super excited" about Google as CEO Larry Page is. Just look at how Google's stock has fared since Jobs' death versus Apple.
Google is near an all-time high. Apple is not. Of course, it is ridiculous to expect Apple CEO Tim Cook to completely live up to the legacy of Jobs. Nobody could do that. But investors hoping that Cook would at least keep the company's innovative spirit alive have legitimate reasons to be concerned.
Now does that mean Apple has to go out and spend a lot of money to prove to Wall Street that it's not about to get knocked out in this battle of tech heavyweights? Not necessarily. But it does need to prove to Wall Street, beyond the shadow of any doubt, that it is still innovating.
The iPhone 6 (or is it iPhone Air?) probably won't cut it. A long-rumored iTV may not even be enough, given that there has been speculation (and high expectations) for such a product going back to when Jobs was alive.
Apple has to show that there are other new product lines that it is working on. Trip Chowdhry, an analyst with Global Equities Research, wrote in a note Monday that Google's Nest deal should be a "wake up call" to Apple.
He added that the potential for Google with Nest's smart devices, robots, self-driving cars and wearable tech (even if Google Glass is still clunky and makes you look like a dork) is a much grander strategic plan than what he deems Apple's "myopic vision of a connected living room."
Chowdhry also noted that Apple's sagging stock price could create morale problems at the company and make it more difficult to retain key employees.
Of course, I'm not trying to suggest that Apple is on the verge of obsolescence. That's silly.
Apple is still supercalifragilisticexpialidociously profitable. (Perhaps Apple's next big hit could be an Internet-connected, smart flying umbrella?)
One Twitter follower was quick to remind me that Apple is hardly struggling.
Very true. According to FactSet Research, analysts predict Apple will report net income of $39.5 billion in the calendar year of 2014, while Google is expected to post a profit of "just" $15 billion this year. (Apple's fiscal year ends in September but I used calendar year estimates so I could make an, uh, apples to apples comparison with Google.)
But another Twitter follower agrees with me. Apple needs to operate with a greater sense of urgency.
The iPod came out in 2001. The iTunes music store was launched two years later. The iPhone hit the market in 2007 and was followed by the App Store in 2008. The iPad debuted in 2010.
The tech industry is littered with examples of companies that once were on top and did not do enough to stay there. Google isn't resting on its laurels. That's why Apple needs something else new. Now.
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