The difference between Apple and Google – its a Bazaar vs. Cathedral thing

 Amiens cathedral

But Apple does not pursue profits either!
[Via asymco]

In my essay on Google’s absence of profit (or income or business) motives questions were raised on the stated absence of hunger for profits from Apple and what difference there might be from Google’s philosophy.

Indeed, Jony Ive stated:

“Our goal isn’t to make money. Our goal absolutely at Apple is not to make money. It may sound a little flippant, but it’s the truth.”[1].

He was probably repeating what Jobs had previously stated:

“I remember very clearly Steve announcing that our goal is not just to make money but to make great products”[2]

However, note that both quotes are qualified. In the case of Jobs, he said “not just to make money”. Jobs clearly stated that great products lead to money. That great products are causal to money and therefore that if you make great products you make money. One leads to the other.

Ive also continued in this reasoning:

“Our goal, and what gets us excited, is to try to make great products. We trust that if we are successful people will like them. And if we are operationally competent we will make revenue. But we are very clear about our goal.”

I would paraphrase the Apple logic as ”Great products are the means by which we sustain our business. By focusing on the product, the customer is satisfied and through that satisfaction we create the free cash flows which can be used to fund more products.”

There is a difference between Apple’s “indifference to money” and the “indifference to business models” that Google exhibits.

Google steps even further away from cash flows. Its goals are to build great things guided by their vision and patterns in the data they collect. The value is in the data itself rather than in any transaction.

As long as the source of money is unfettered, its provenance is uninteresting. A business model is a profit algorithm. It could be linked to the data but it need not be. Markets are messy and imperfect. Data provides much clearer views into value. You could conclude that value itself cannot be trusted to the judgement of the public. Value is to be determined through the recognition of patterns on data privately collected.

So when I say that Google has disdain for market mechanisms I mean that they believe they can do better. Apple still values the user as the ultimate adjudicator of its actions. Google looks past the user and interprets their intentions.

Google sees markets as ultimately obsolete.

Notes:

  1. at the British Embassy’s Creative Summing in July 2012
  2. Walter Isaacson’s Steve Jobs

[More]

I think this is right on. Neither company appears to value profits like a ‘normal’ corporation valued by Wall Street. Both are 21st century Institutions which use very different approaches to build financial success.

Apple believes that selling things that customers yearn for will make them a successful company and, in the end, a lot of money. Customers do not care about profits or free cash flow. They care about things that make their lives easier.

And as long as Apple continues to keep a laser focus on the customer, it will succeed. It is the true free market of a bazaar, not the market place of the cathedral, which Google seems more to embrace. (And the Cathedral and the Bazaar  is one of the most important pieces anyone should read.)

Google, on the other hand, does not really believe the free marketplace of a bazaar is where to make its place. It does not really believe the customer will provide value directly. The data on the customer is what is needed and anything that gets that data, no matter how, is what will be applied to its priestly algorithms that it uses in the sanctuary of its server temples.

It does not really focus on what the customer wants. It makes its money off the data the customer gives away for free. Anyway it can get that data, it will.

I’d rather work with a ‘closed’ company whose incentives force it to focus on making me hapy than an ‘opem’ company whose incentives ae to take my value for cheap and sell it for lots, all while making it very hard for me to actually understand the deal.