Apple And Google's Awkward Mobile Marriage (AAPL, GOOG)

The relationship between Google (GOOG) CEO Eric Schmidt and Apple Inc., on whose board he sits, must, at times be incredibly awkward.

Google is developing Android, an open source operating system for mobile phones, which is directly competitive with Apple’s iPhone. One would think that Apple (AAPL) would not be happy with this, and would ask Schmidt to step down. Yes, I know Schmidt leaves the room when they talk about the iPhone in board meetings. But this still must feel a bit like Apple having Microsoft on its board.

But here’s the thing. Apple *needs* Google.

Like it or not, Google is — and probably will continue to be — Apple’s most important iPhone developer. Google “gets” mobile in an incredibly deep way. And they are passionate about it. This “getting it” thing stems, in part, from Google’s pioneering almost every great idea in online mapping since the concept was invented. Mapping is also an incredibly deep area to mine, and depending on what you are trying to do, it can be very expensive work with no immediate opportunities for monetization. Perfect for Google. Not so great for anyone else.

The interesting thing about all of this is that, if you think about it, mapping is far more important to a phone than playing music or particularly watching movies. That’s not to say that music is not important. But if you let your imagination run wild, you can see that the potential for location based services and mapping tied to a mobile Internet connected device is profound. And no one on the planet is likely to do that better than Google.

Unfortunately for Apple, this cuts both ways. Apple loves the work Google does on the iPhone. But Google is so passionate, they want every phone on the planet to be as cool as the iPhone so they can deliver great experiences (and eventually ads —Ed.) for every phone. Hence Android, a free operating system that they are expecting to licence to almost every major cell phone manufacturer. For Google, volume matters, profits not so much. For Apple, that formulation is reversed. From Apple’s perspective, that has got to suck.

More unfortunate for Apple: Google is now demonstrating features that, in this arena, are far more sophisticated than anything Apple has shown or is likely to show on the iPhone without Google’s help. The most stunning concept they have demonstrated is a kind of virtual reality for cell phones.

This new feature is based on a part of their web based mapping service called Street View. Street View allows users to go to a particular location and to see the street in moving pictures. You can turn 360 degrees and even walk down the street and get a kind of animated walk through effect.

What Google demonstrated was that Street View has now been implemented inside Android so that when you move the phone it detects where you are and what direction the phone is aimed, and shows you the view of the street on your phone. As you move the phone, the view changes. The effect is stunning. Of course this is much easier to see than to read about and so I recommend viewing the video below.

Presumably, at some point, these kinds of features will find their way into the iPhone, but probably not without Google’s help. Google’s innovation in this area means that, in some respects, Apple is really beholden to Google. This is because Google is the only company with the real chops and resources to deliver mobile mapping in a truly robust way (not including Microsoft, which is unlikely to develop for the iPhone).

And what Google is demonstrating is just the first little peek into what location based mobile services will bring. Google is baking programming interfaces (APIs) into Android that will allow *all* Android application developers to leverage their mapping and location based tools. So far there is little evidence that that will happen on the iPhone to the same degree, at least in the near future.

And so, while Steve Jobs is used to having the upper hand with his partners like the now supplicating record labels, this relationship is different. Indeed, Steve may hate the whole idea of Android, but he may soon need to get used to his new Google overlords just like the rest of us.

SAI Contributor Hank Williams is a New York-based entrepreneur. He writes Why Does Everything Suck? Exploring the tech marketplace from 10,000 feet.

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