The Valley giants both want to determine how users access the mobile Web. Eric Schmidt's exit from Apple's board may be the shot that starts the race in earnest

Over the past three decades, a few titanic rivalries have defined the technology industry's megatrends, ultimately determining which products eventually end up in consumers' and companies' hands.

Now, adding to the annals of competition that include Microsoft's (MSFT) clashes with Apple (AAPL) in the '80s, IBM (IBM) in the '90s, and Google (GOOG) in this decade, the new defining rivalry in tech may be between Google and Apple. Google CEO Eric Schmidt's resignation from Apple's board on Aug. 3 highlights the degree to which these companies are more foe than friend.

By most measures—revenue growth, stock appreciation, magazine cover stories—Apple and Google are the two most successful and influential companies of the past decade. Yet their visions for how the computer industry will shape up in the next one could hardly diverge more. "They are both very innovative companies with very different ways of innovating," says Henry Chesbrough, director of the Center for Open Innovation at the University of California at Berkeley. "They've both been very successful, but there's a contest of different approaches going on here."

Google is the standard-bearer for a wide-open world of Web standards in which programmers should be able to run nearly any software on almost any computing device. From Google's perspective, the more the merrier—so long as those programs, devices, and Web sites create places for Google to sell online ads.

Open World vs. Tight Control

Apple's view is sharply different. The company keeps its ecosystem of software developers carefully manicured and maintains tight control over what software can be sold for its iPhone. The reasons range from filtering out schlock applications to what some observers say is putting the kibosh on applications that compete with Apple's own offerings or those of iPhone wireless carrier AT&T (T). That may have been why Apple blocked Web-calling software Google Voice from the iPhone last month.

Apple and Google take different approaches to computer hardware, too. Google seeks out many hardware makers to manufacture cell phones and other devices that run its Android operating system, and it will probably take the same approach if it releases its Chrome OS software as a commercial product. Apple doesn't let anyone else build Macs, iPods, or iPhones. "Apple thinks it's all about selling hardware. There's a deep, deep confidence at Apple that they can continue to make the best devices—and why shouldn't there be?" says Trip Hawkins, CEO of game developer Digital Chocolate and co-founder of game giant Electronic Arts (ERTS) in the 1980s.

Until now the companies' differences have been papered over a bit by Schmidt's presence on Apple's board, which he joined in 2006. Both companies insist their relationship is fine, and to be sure, there's collaboration between the two. "Eric has been an excellent board member for Apple, investing his valuable time, talent, passion, and wisdom to help make Apple successful," Apple CEO Steve Jobs said in an Aug. 3 statement.

[businessweek]