Apple Is Apple, Not Google

NEW YORK (TheStreet) --Just when I thought it was finally over, TheStreet's Dana Blankenhorn brought it back to life.

Leading up to Apple's ( AAPL) announcement that it would cave in to normalcy and issue a dividend and buy back stock, all flavors of people floated ideas about how the company should spend its billions. I rarely involved myself in that type of talk. Whether I have been bullish or bearish short-term or long-term, I have generally stuck to the premise that Apple, not shareholders or the media, does the best job of managing its money.

I won't name names, but participants in that game made a case for why Apple should buy everything from Dell ( DELL) to Sirius XM ( SIRI). It was just all so absurd.

Now Blankenhorn, who is anything but absurd, brings back the loony Apple M&A discussion in Why Apple Buying Facebook Now Makes Sense.

Blankenhorn argues the deal makes sense for several reasons, including:
  • Apple does not have a good social presence.
  • Facebook (FB) investors would appreciate it if Apple paid a premium to pluck them from under water.
  • Apple can afford to do it.
  • The U.S. Department of Justice wouldn't try to stop it.
  • Facebook would make Apple "younger" and the latter could groom Mark Zuckerberg to be Tim Cook's successor.
  • I'm not quite sure if I will ever be able to understand this seemingly collective desire for Apple to make indiscriminate, multi-billion dollar purchases. It makes more sense to challenge the company to close the state of California's budget deficit (actually, I don't think that's completely crazy).

    It's tough enough for run-of-the-mill firms to integrate after major mergers and acquisitions, let alone one that has Apple's quirks. Why would Apple want to go through that process, particularly at a time when it has never been more successful? And, if I am correct in my belief that the company will fall from greatness over the long-term, is buying Face book -- or any other company for that matter -- the answer?

    In an article published by TheStreet on Tuesday, I discussed Apple's position of strength vis-à-vis Google's ( GOOG) frustrating lack of focus.

    While I understand that just about everything Google does comes with the same end goal, I just cannot endorse what Google has become. Back when the company bought YouTube in a $1.65 billion stock deal, Pete Cashmore at Mashable said: Google's mission is to put ads on as much content as possible .

    While it has certainly accomplished that, where does Google go from here? Pull up a YouTube video. It's like watching public access television as the spam-like Google ad appears at the bottom of the screen. There's little thought -- or so it seems -- around how the ad gets served. Just churn'em and burn'em. While I have been a Google bull historically, I am not sure how much longer I can hang with what I perceive as a lack of focus and innovative forward momentum.

    This type of approach smacks of Microsoft's ( MSFT) decision to drop $8.5 billion for Skype. I understand why Microsoft made the move. It's all becoming more clear as we get a peek at Windows 8. But as bullish as I am on Microsoft these days, I have to wonder if there was a better way to compete in the space.

    The same strategy that often backfires on sports teams appears in play at companies like Google and Microsoft. We're big and we can become even bigger by spending money on acquisitions. And the bigger we become, the more proceeds we can generate. At some point this approach runs a high risk of implosion.

    I prefer the Apple model. Create amazing products and then do one of two things to deliver the content: build the platform yourself or partner with companies capable of delivering at a high level. No good reason exists for Apple to spend billions of dollars to get something it could get for much less via an in-house effort or external collaboration.

    The Google and Apple have different business models line does not fly here. They really do not. Both companies monetize platforms, content, what have you. Google leverages these things for advertising revenue, while Apple does for hardware sales. Google takes the if we build it really, really big by assembling 8,000 different moving parts, they will come approach. Apple runs lean and mean, banking on quality, not quantity, to drive mammoth results.

    At the time of publication, the author was long MSFT.

    At the time of publication, the author was long MSFT.

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