In Apple vs. Google, YouTube Could Be the Difference
- by Ross Fadner , May 24, 2012
If there’s one thing the late Steve Jobs may have gotten wrong as CEO of Apple, Inc., it would be the decision not to build or acquire a YouTube competitor.
As Google, now firmly established as one of Apple’s main competitors, only just begins to monetize the video-sharing site it bought for $1.65 billion in 2006, Apple execs must be ruing that day in 2007 when the company decided to tout how beautifully its iPhone would display YouTube videos.
Why -- because just as Google is to search, YouTube is synonymous with video search, and both dominate across devices.
Moreover, Marketwatch columnist Cody Willard claims that with the acquisition of Motorola, Google’s sights are firmly set on improving its mobile offering from soup to nuts, and that mobile video will be a huge part of that. He says it’s no wonder the search giant is letting its official YouTube app languish in the App Store, driving users to its mobile site instead, as Google doesn’t want Apple to have access to its YouTube search data.
This puts Apple in a tough position, he says. Apple can’t block YouTube the same way it killed Adobe Flash for mobile, precisely because access to YouTube videos is seen as a feature of its iPhones. In other words, Apple has no answer.
Meanwhile, Citi has said that YouTube is turning into one of Google’s best assets:
“Over time, we have become increasingly impressed by the size and growth of Google’s YouTube asset. Furthermore, we view YouTube as giving Google a great platform against two of the biggest trends on the Internet today – the Migration of TV/Video Ad Budgets to the Internet and the Rise of Social Networks, specifically Facebook. Put it this way, we believe that Google’s long-term value would be materially less if it didn’t own YouTube.”
How much less is hard to pin down, particularly as Google refuses to discuss YouTube’s financial performance. Barclays Capital has pegged YouTube’s 2011 revenues at $1.6 billion. If you gave the video site a P/R ratio of 12.5 -- which Willard points out is half of what Facebook went public for—, suddenly YouTube is worth about $20 billion on last year’s revenue. Not a bad return considering what Google paid for it in 2006.
