Google Has a Bigger Problem Than Apple

Focus: STOCKS

Jim Jubak Image Jim Jubak Founder and Editor, JubakPicks.com

The search king may have to rustle up a new tablet or smartphone to get the edge on Amazon’s Kindle, before it gets marginalized in the push for Internet ad revenue, writes MoneyShow’s Jim Jubak, who also writes for Jubak’s Picks.

Some analysts and investors who read Apple’s (AAPL) December quarterly earnings report yesterday are now anticipating the big fight in the tablet market between Apple’s iPad and Amazon’s (AMZN) Kindle Fire.

But there’s an increasing wave of opinion that argues these investors are looking at the wrong war. (For my take on Apple’s earnings, see my earlier post.)

Oh, there’s going to be a battle, no doubt about it, but the first combat, this view says, will be between Amazon and Google (GOOG). I know that Amazon’s Kindle runs Google’s Android operating system, and that it’s therefore logical to think of the two companies as allies.

It was certainly intended to work out that way. But Google isn’t getting nearly the share of the tablet market for its apps that it thought it would from Amazon.

And with other tablet hardware companies set to follow on Amazon’s model, it looks like Google will have to launch its own Android-based tablet or get less of this fast-growing market than it wants.

Here’s the problem from Google’s point of view: Amazon has built the Kindle Fire on Google’s Android operating system, but it’s skipped preloading Google applications such as Gmail and Google Maps.

Chinese Internet companies such as Baidu (BIDU) and Tencent Holdings (TCEHY in New York or 700.HK in Hong Kong) are following the same strategy.