Why Google's Schmidt Resigned from Apple's Board

By Josh Quittner Monday, Aug. 03, 2009

Google CEO Eric Schmidt announced that he is resigning from Apple's board of directors, a position he has held since August 2006

Tony Avelar / AP

In a shockingly unsurprising move, Google CEO Eric Schmidt resigned from Apple Inc.'s board of directors today. This was inevitable, since both companies are staking their future growth on the explosion in mobile computing. So why did it take so long?

Three years ago, the mobile horizon looked very different from how it has turned out. Google was working on Android, its open-source-ish operating system for cellular phones. Its strategy: Let a million mobile phones blossom! So long as Google products — search, maps, documents — ran on them, Google would win, since Google ads would, presumably, continue to flow. Google would be baked into Android, of course, but it would also be on BlackBerrys and Nokias and Windows Mobile phones. And when the first iPhone went on sale two summers ago, Google apps, including YouTube integration, were core to the experience. (Schmidt even joined Jobs onstage when the first iPhone was announced.) (See the best iPhone applications.)

In fact, when that first phone launched, most people believed that the apps it would run would be retooled Web apps — you'd visit a New York Times mobile website that was optimized for the iPhone's browser, for instance. (One popular theory advanced by Apple insiders is that Steve Jobs himself was against an Apple apps play for a long time and only came around to the notion late in the iPhone's development.) Look at the lip service Apple itself paid to the "Web 2.0" integration — developing for the iPhone would be as open and easy as creating websites!

But a funny thing happened on the way to the App Store: native apps took off, probably beyond anyone's wildest expectations. Given a choice between using the browser and using native apps, for most iPhone users there was no choice. Native apps won, hands down. With more than 65,000 apps available for the iPhone today, some pundits speculate that apps use, rather than Web use, will be where all the action is within a decade. (See the 25 best blogs of 2009.)

That threatens to marginalize Google, limiting its growth. The mobile world is becoming bifurcated: On one side sits the Google-dominated, browser-based Web and its related Web apps. On the other sits native applications that you download to the iPhone (and other closed-platform phones), that keep the user occupied and contained in a world that's as cut off from Google as is Facebook, another Google bête noire.

This trend will only accelerate in the coming months, further widening the rift — and that's what terrifies Google. With Apple rumored to be about to enter another potentially huge market — it's allegedly coming out with a tablet computer within the next six months — Google had to step up its game. Android phones weren't enough. Google needed its own operating system that would not only power the new generation of smartbooks and other mobile Internet devices but also keep them on the wide-open Google Web. That's why it announced the Chrome operating system last month. (I think the common wisdom — that this was a move aimed mainly at the king of operating systems, Microsoft — is flat-out wrong. Getting into mobile operating systems is a defensive move for Google, not an offensive one.) (Watch TIME's video about the Palm Pre vs. the iPhone.)

While some have speculated that the last straw was the recent FCC investigation into Apple's refusal to carry a native Google Voice app — supposedly on the grounds that it competes with partner AT&T's visual voice mails — the split was inevitable.

"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," Steve Jobs said in a written statement on Aug. 3. "Therefore, we have mutually decided that now is the right time for Eric to resign his position on Apple's board." That's right: Schmidt was not fired; he quit.

Finally.

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