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Apple Was Wrong on Waze

Posted
6/11/2013 3:10:00 PM
By: Chris Ciaccia
Referenced Stocks:AAPL;GOOG

Maps are seen as the hot, new feature to have for technology companies, with seemingly everyone trying to get into the geo-location game. The latest hot company is Waze, a Israeli-based startup, which was just bought by Google (GOOG) for a reported $1.1 billion. Apple (AAPL) had the opportunity to right a major wrong in the eyes of public perception, and it blew it.

It's no secret that Apple Maps has been a black eye for the company since it was released in late 2012. Directions were wrong, places were missing, and the public outcry against it was so bad, it forced Apple and CEO Tim Cook to apologize. It even led to Scott Forstall, then Apple's head of iOS, being ousted, because he supposedly would not sign the public apology letter.

By not acquiring Waze (Cook said at a recent technology conference Apple "did not make a bid for Waze"), Apple has missed an opportunity to enhance its technology, and chance the perception that Apple Maps is no longer a subpar offering. Since the release of the application, it's become markedly better, with directions, places and buildings showing up where they are supposed to, but that's not enough; it's about perception. For the reported purchase price (Google did not confirm the amount), Cook could've changed the perception the public has about Apple Maps. $1.1 billion isn't a lot of money to Apple, which had $145 billion on its balance sheet as of the end of its fiscal second quarter.

Waze is a nice product, but a slightly dangerous one, as it allows users to update traffic in real-time while they are in the car. Perhaps Apple did not want to be associated with a product that allows the driver to update their status while they are driving. However, for $1.1 billion, that's a risk the Cupertino, Calif.-based technology giant has to take. Waze has more benefits than detriments, and would have been a sign that Apple is willing to use its cash for strategic investments to build up its software and services.

Apple is transitioning itself into more than just a hardware company, by constantly playing up its software and services. Apple Maps is now available on Apple desktop computers via the new OS X Maverick, but a purchase of Waze would've made a major statement that Apple is serious about changing perception, even if it isn't entirely accurate.

With the acquisition, Google not only gets the maps aspect and data it so craves, it also continues to build up its social network. Google+ has been something of a disappointment, and Waze could help amplify this aspect of Google even further. Google Maps is already an incredibly popular mapping application on both Android and iOS, and the inclusion of Waze will only help grow its popularity, as well as keep the competition at bay.

Apple had the opportunity to right a wrong for not a lot of money, and change public perception that the company's cash is just sitting there, never to be put to work. The company didn't do it. Apple is going to have to ask Google for directions. That's not the "one more thing" shareholders and Apple enthusiasts want to hear.