Schmidt quits Apple board, no surprise there

August 3, 2009

Few observers expressed much surprise over Google CEO Eric Schmidt’s decision Monday to step down from Apple’s board. Analysts said the writing was on the wall, as Google’s Android smartphone software competes in the same market at Apple’s iPhone, and Google’s forthcoming Chrome operating system prepares to enter a market against Apple’s Mac OS.

Schmidt said earlier this month he expected to chat with Apple about his role on its board, and what with increased regulatory scrutiny about the company’s ties, many say it was only a matter of time.

“It’s the collision course that they’ve been on for a while, I think they’ve managed it well up to until now,” said Todd Dagres, a venture capitalist whose firm Spark Capital funded Twitter. “I think Eric getting off the board may be an indication of sort of the last straw here.”

The ties between the two companies do run deep, he said, noting that current Google director Ann Mather was CFO at Pixar while Apple’s Steve Jobs was CEO. But he said competitive juices among folks at both companies will start to flow as their empires bump into one another and “it affects your performance, your bonus and your market share.”

This is not the first time a CEO has stepped down as a director of another Silicon Valley company against a backdrop of competitive concerns, noted JMP Securities analyst Sam Wilson, who mentioned Carly Fiorina — then CEO of Hewlett-Packard — who left the board of Cisco Systems in 2003.  The two companies partner in some areas but are increasingly competitors in others.

Wilson said technology companies are always looking to branch into new markets, meaning today’s allies are tomorrow’s rivals. “Tech overall isn’t growing that fast, the pie isn’t growing that fast, so everybody is looking at everybody else’s piece of the pie.”

He said Apple’s recent rejection of the Google Voice app for the iPhone should be read as a sign.  “They’re no longer friends. I think when Apple turned off Google Voice it was clear they’re no longer friends.”

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