MorningStar
Apple vs Google and Facebook Vs Twitter
Jason Stipp: (Site Editor, Mornigstar.com)I’m Jason Stipp for Morningstar and
welcome to the Friday 5 Ohio State versus Michigan, Batman versus the
Joker, Jiff versus Skippy if you can’t tell it’s rivalry week on the Friday 5.
We’ve got 5 rivalrous headlines that we’re going to talk to about today
and joining me fresh back from sabbatical is Morningstar Markets Editor
Jeremy Glaser. Jeremy, welcome back.
Jeremy Glaser: (Markets Editor, Morningstar.com) Thanks Jason glad to be here.
Jason: So what do you have for the Friday 5 this week?
Jeremy: Well we’re going to take a look at some competition between Pepsi and
Coke, between AT&T and Verizon, Apple and Google, private and public
markets and finally we’ll take a look at a social network showdown.
Jason: Well way back in my memory I remember the Coke/Pepsi challenge
what’s going on with Coke and Pepsi this week?
Jeremy: Yeah Jason as you know Coke and Pepsi are some of the longest standing
corporate rivals in America. Pepsi really up the inch when they bought
their bottlers, they said they’re going to get all of these efficiencies and
synergies in being able to patrol the distribution and get new products out
to market faster and when they announced the court of results it seems like
it’s actually the case.
Pepsi was able to release a new line of Gatorade products that really
gained some traction helped them show up with their somewhat struggling
North American beverage business but with all you know great
competitions Coke wasn’t just going to stand still. They announced that
they were going to buy their bottlers and this week that dealer actually
closed and they’re going to be able to get some of the same efficiency that
Pepsi has so this is definitely a short term advantage for Pepsi or is it
something that they can turn into a long term competitive advantage over
Coke and the beverage space time will have to see.
Jason: Big rivals in the telecom space AT&T and Verizon were in the news
because the iPhone will be available to Verizon starting next year, is that
going to be a game changer for these two rivals?
Jeremy: We’ll have to see, Verizon and AT&T have certainly been trading barbs
over the last couple of years. Over the quality of it, that were and a set of
other bunch of issues but consumers continue to the fact really both that
works for different reasons Verizon people wanted more reliable network
and AT&T they wanted the iPhone. It seems to be you know where people
are going. I think with the iPhone moves to Verizon AT&T is certainly
going to hurt. There’s a lot of people are on that network not because they
have some relationship with AT&T or they have a lot of family on it, it’s
because they want that one phone and I think they’re going to be pretty
willing to move to Verizon if the pricing is roughly similar. If they think
they can get the same tone out of a better network but I think there’s other
people who could also be heard by the steal.
Motorola has done a pretty good job of selling phones like droid into
Verizon with Google’s Android software on it and they could really be
hurt. If Verizon customers walk into the store and have to choose between
the Droid X and the iPhone I think they might still go for the iPhone if
they have that option could hurt their selves when that business is starting
to get back on its feet.
Jason: Speaking with Apple and the battle in the living room Google announced
Google TV this week could be a competitor for the Apple TV which I
think has been launched a couple of times now. What’s it look like as far
as whose going to control the TV and that space going forward?
Jeremy: They did hooking up your internet to the TV is nothing new. Web TV has
been around for a very long time, people have been hooking up home
theatre PCs, the original Apple TVs but around for a while there’s been
lots of said top boxes. A lot of people tried to figure out this space and no
one has been really successful so far and now there’s a new part. Apple
released their new Apple TV at a $99 price point very competitive and but
all it can really do is stream that flick shows and stream 99 scent rentals
that you get from apple itself. Now Google is taking this slightly different
track with a more open architecture which they announced a while ago but
we really saw the first products come up this week.
For example Logitech announced a product this week. The review that
will cost $299 that is a lot of similar things the Apple TV but also gives
you full web access and will be able to run applications and it runs on
Google software as well. So it’s certainly is a market that people are trying
to get back into but I think it’s an open question of consumers how much
connectivity they want out of their TV. They’ve been able to potentially
access the internet on their TV for a while. People don’t want to check
their emails or surf the web. It’s seem like they really just want to get that
content over there so we’ll see if Apple is kind lighter model works better
or if Google is more open.
Your heavier model is more successful but I think this is a battle that’s
going to wage for a few more years.
Jason: I can swap to stay tune Jeremy?
Jeremy: Exactly.
Jason: So Jeremy in the broader markets after an absence starting the financial
crisis it looks like private equity has come back to compete for public
companies what do you see going on the net space?
Jeremy: Sure there’s always been a tension between private equity and be the
privately held company and being a publicly held company. You know
certainly there have been just about you got the flexibility. You can do
what you want as a private company not having to answer the shareholders
but you lose the liquidity that you get from being a publicly treaded
company. This week we saw KKR potentially make a bed for Sarah Lee
nothing is confirmed yet but the market really been up certainly shares
after news of this potential bad lead. I think it shows that people think that
private equity coming to take out a relatively large company is a credible
threat that the financing is there that there aren’t any regulatory hurdles
that after kind of nursing their wounds from you know the peak of the
private equity bubble that they’re kind of back out. They’re making deals
again. I think we’re going to hear a lot more from private equity. There’s
still a lot of money there looking to get invested another thing to keep by
on.
Jason: So remember if you can in 140 characters or less please explain to me the
significance of the new CEO at Twitter?
Jeremy: I don’t know and I can do it a lot less than 140 characters. You know this
week there was a lot of news about social network showdowns. You know
what the Facebook the social network will be released. There’s a lot of
discussion about the founding of Facebook. Facebook released in a few
new features but one of the things that really made the news was that the
CEO of Twitter is now going to become the CEO. It doesn’t seem that
there’s going to be a lot of changes in terms of direction and strategy but
Twitter is certainly a company looking for a business model.
It’s very difficult to monetize the way that people are tweeting you know
they tried sponsors display advertising. There’s lots of things they can do
but it’s really going to take someone with a lot of vision to figure out how
to make a lot of money out Twitter other than just have a lot of users. It’s
something that they’re going to be working on for awhile. It’s something
Facebook is still working on you know where you all get very wrapped up
and your with social network is going to win but the questions investors
need to ask is when will any of these social networks truly be profitable
and are any of them good businesses and not just cool products.
Jason: When I’m going to update my Facebook sadest Jason Stipp welcomes you
back from vacation Jeremy thanks for joining me.
Jeremy: You’re very welcome.
Jason: For Morningstar I’m Jason Stipp thanks for watching.
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