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I find this whole Eric Schmidt-is-a-Google-spy thing terribly amusing, and not because the Fake Steve Jobs is still doing his thing with joyful aplomb. No, the whole situation is funny because Apple's (Nasdaq: AAPL) board of directors doesn't direct Apple. Seriously, in the history of corporate boards of directors, can anyone think of a board that is less needed than Apple's?
At least, it's not needed when CEO Steve Jobs is at the helm, and it might not even be needed when he's out of the office.
Of course, some industry pundits have been all fired up over the dissemination of medical information surrounding Jobs and his pancreatic cancer, hormonal imbalance and liver transplant. Basically, the notion is that the medical information was a PR snafu at best and a willful shielding of critical information from shareholders at worst.
And through it all, what happened? Apple turned out stellar financial performance, a season so freakishly good that it's the envy of most tech companies in the world. Recession? What recession?
Two Basic Flaws
There are two core flaws with the Schmidt-as-a-spy/conflict-of-interest thing. The first flaw with the line of thinking is the fact that Jobs and his crew run Apple, not the board.
Does anyone think the board is giving Apple product and strategy direction? Take Al Gore, for instance. Losing his presidential bid was a terrible blow, no doubt, but I bet he thought being on Apple's board of directors was a great consolation prize. That is, until he realized that Jobs doesn't take advice or listen -- Jobs mostly sets expectations and gives orders.
The only way the board can protect Apple shareholder interests is to stay the heck out of the way. Jobs' string of successes has pretty much proven that, and even when he was on medical leave, Tim Cook, Phil Schiller, Jonathan Ive and the rest of the execs had the Jobs playbook memorized.
The second flaw in the line of thinking is that Schmidt is getting a dose of Apple's secret sauce and that he could take it back to Google (Nasdaq: GOOG).
Core Computing Issues
This stuff is not rocket science. I can't imagine why Google's foray into online applications, and in particular a browser, is surprising. Sure, Chrome competes with Safari, but how could Chrome be surprising to anyone in the tech industry? Consider this: Google sells ads, and Google is creating a portfolio of online applications, both of which rely on an excellent and secure browser experience in order to be successful. Microsoft (Nasdaq: MSFT) has the largest browser market share with Internet Explorer, plus the company has a lot to lose in the office productivity app space if Google's online play works out. Does anyone think Google would be willing to stake its end-user experience on third-party innovation? And what if Google has to wait for cool new things to be developed in order to take advantage of them?
For a company with Google's reach and coffers, relying so completely on others would just be a dumb business strategy.
While we're on the issue of the browser, can you imagine Schmidt going back to Google headquarters and saying, "Whoa guys, Steve -- remember, I get to call him Steve because I'm on the board -- just demoed the new version of Safari, and guess what? Those Apple geniuses put the tabs on the very, very top edge of the browser! This changes everything!"
(And then while the Chrome team worked furiously to save some vertical space with their own browser, Apple went back to the old tab position. Right. These guys had better not be this stupid.)
Enter Android and the Mobile World
Then there's Android and mobile phones. If Schmidt had to attend an Apple board meeting to realize that Google has to go after a massive stake in the mobile phone/computing market, he should walk away from computing right now. I mean, this is obvious. For Google to stay relevant, it has to play everywhere, and it has to try to direct and control the end-user experience.
Take the Android Market, for instance. Again, imagine Schmidt walking out of an Apple board meeting, slapping his palm to his forehead and saying, "Oh man, we've got to generate an Android mobile developer program and get an Android Market store up and running, just like the Apple App Store."
Seriously, by the time he could have gotten any inside information on anything Apple was doing, he might have just barely scooped the Apple-focused rumor Web sites. (But probably not.)
Besides, Knowledge Isn't Action
Even if Jobs told the board that, a) we're building an iPhone; b) we're creating an iTunes-like lock on it by creating the App Store; c) we're going to entice developers with a profit-sharing deal; and d) we're going to deliver a 1.5 billion app downloads within the first year ... there's jack that Schmidt could have done about it.
All I'm saying is that the core moves by either company are hardly secrets or surprises. The iPhone? Surprising? Really? Remember the Motorola (NYSE: MMI) iTunes phone fiasco? I bought one. I've never been more disappointed in a blinking, flashing monstrosity in my life. The iPhone writing was on the wall ages ago.
How about a tablet? Whether or not Apple actually delivers a tablet or a big iPod touch this year or next isn't the point. The point is, if Google isn't working on a mobile tablet and touch-based interfaces for its suite of apps, projects and solutions, the company is just getting too old to stay relevant. Having a seat on Apple's board isn't going to point out these big important areas that Google needs to be throwing research dollars at.
In fact, if Google and its Android buddies don't create some e-book/tablet-like devices, they either don't believe there's a market there or they don't have the technical ability to get it done. It's really that simple, and it has little to do with anybody's board of directors.
Besides, I would be surprised if Apple's cloak of secrecy did not fully envelop its board of directors. Instead of showing the board the real latest and greatest products, it likely shows the board fake products and prototypes. And the board knows that if they talk to anyone, Jobs will find out and they'll not only lose their spot on the board, they'll also lose the public illusion that they've got his ear. (Of course, I'm being facetious here, but you get the point.)
If anything, the App Store's rejection of Google Voice shows that there's little conflict of interest in having Schmidt on the Apple board -- if Google Voice messes with Apple's business plan, and if Apple's business plan is tied to AT&T's (NYSE: T) revenue stream, then sorry Google, no Voice.
There's one last thing to laugh about here. In the press release announcing Schmidt's resignation, Jobs noted, "Unfortunately, as Google enters more of Apple's core businesses, with Android and now Chrome OS, Eric's effectiveness as an Apple Board member will be significantly diminished, since he will have to recuse himself from even larger portions of our meetings due to potential conflicts of interest."
Despite Jobs' words, I'm still not buying the notion that the Apple board of directors ever hears anything particularly important far enough in advance to create any conflict of interest. It's just an illusion, and the resignation is just a move to stave off conflict with the Federal Trade Commission.
So by resigning, Schmidt might have been doing his job for the Apple board after all.
