Apple's Board Gets Googled

Google (Nasdaq: GOOG) CEO Eric Schmidt has been named to the board of directors of Apple Computer (Nasdaq: AAPL), a move some say could portend future cooperation between the two tech giants and spell bad news for common rival Microsoft (Nasdaq: MSFT).

Schmidt was elected the eighth director during a meeting of existing board members at Apple headquarters on Tuesday.

"Eric is obviously doing a terrific job as CEO of Google, and we look forward to his contributions as a member of Apple's board of directors," said Apple CEO Steve Jobs. "Like Apple, Google is very focused on innovation and we think Eric's insights and experience will be very valuable in helping to guide Apple in the years ahead."

Schmidt, who also serves on Google's board and is a member of the Board of Trustees of Princeton University, described Apple as "one of the companies in the world that I most admire."

"I'm really looking forward to working with Steve and Apple's board to help with all of the amazing things Apple is doing," he added.

Schmidt joined Google in 2001 from Novell (Nasdaq: NOVL), where he also held the CEO title. He played a major role in helping the search giant gain legitimacy on Wall Street as it prepared for its blockbuster IPO in the summer of 2004. Schmidt now runs the company's day-to-day operations and consults with founders Sergey Brin and Larry Page.

Implications Mulled

Schmidt joins Jobs and former Vice President Al Gore on the Apple board, which also includes the CEO of clothing company J. Crew and the former head of software firm Intuit (Nasdaq: INTU). Genentech CEO Arthur Levinson, another Apple director, will be a familiar face for Schmidt, since he also serves on Google's board.

Exactly what the cross-link means for the two companies immediately became a subject of intense speculation. Google could be eager to have Apple install versions of its software applications and tools onto its desktop and portable computers, as well as other devices. It already has struck similar deals with Dell (Nasdaq: DELL) and others to have desktop search tools and Web toolbars factory-installed.

The two also may have common interests on the Web, where Apple dominates online music and Google leads the search field.

Microsoft may be waiting for the other shoe to drop. That could happen in a big way if Apple should begin offering built-in versions of the new line of business applications Google rolled out earlier this week. Those apps are meant to compete directly with Microsoft's Office productivity suite.

The near-term implications of the deal are far from clear, though.

"I'm not sure there's too much to be made of this connection -- yet," said search engine expert and Google book author John Battelle.

Burnished Reputation

Battelle acknowledged that the two companies are a logical fit, though, and noted that "in corporate history, logo color choice and brand values, Apple shares much in common with Google -- that is for sure. There's plenty of conspiracies to be theorized here."

Certainly, partnering with Apple would also fit with Google's new approach of striking deals with established third parties to expand its reach, as witnessed by this week's ad alliance with eBay (Nasdaq: EBAY), as well as recent pacts to deliver ad-supported video clips for MTV and to provide search functionality for MySpace.

Technology companies' boards often include other high-ranking executives both from inside and outside the tech industry. eBay's board members, for instance, include Intuit Chairman Scott Cook, and Dell's board features Procter & Gamble CEO Alan Lafley.

Strong boards with high-profile executives can help companies ensure proper corporate governance and build credibility with investors, especially institutional stock buyers and analysts.

For Apple, another positive is to have someone as trusted as Schmidt join the board when it deals with its own corporate governance issues, notably Apple's involvement in the widespread stock options timing manipulation scandal.

That situation has prompted Apple to say it would restate some earnings and has posed the risk, albeit a slight one, that the company could lose its listing on the Nasdaq stock exchange.