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CNBC ON DIGG

Apple to Schmidt: C-ya!

Published: Monday, 3 Aug 2009 | 10:32 AM ET

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By: Jim Goldman
Silicon Valley Bureau Chief

Eric Schmidt
cnbc.com
Eric Schmidt

If there were any doubts about where Google goes from here, and what Apple is trying to become, look no further than Eric Schmidt's resignation from Apple's board.

I, and so many others, have been calling for Schmidt's departure for months. Google's [GOOG Loading... () ] foray into the mobile phone world with its operating system Android was bad enough.

But then, a joint hardware deal with HTC and T-Mobile [DT Loading... () ] for the G1 smart phone made it all the worse. Oh, but that was merely the beginning. Mix in a little Chrome operating system for new netbooks and the conflicts of interest became too much to ignore.

Last Friday was the tipping point when the FCC launched an inquiry into Apple's [AAPL Loading... () ] decision to prevent Google Voice and related third party applications from being listed on Apple's wildly popular App Store. Neither of these companies need any more government scrutiny, since the feds are already taking an interest in Schmidt - and Arthur Le vinson - sharing seats on both companies' boards of directors. (Al Gore serves on Apple's board and is also a special adviser to Schmidt.)

Schmidt has routinely and publicly dismissed the critics, saying he simply recuses himself from discussions involving Apple's iPhone. But that was always a red herring since Steve Jobs has maintained that iPhone is the critical platform for Apple's future. In fact, last quarter the device surpassed iPod as Apple's second biggest revenue generator behind the Mac.

And yet, Schmidt, as late as this past Saturday in an interview with The San Jose Mercury News, reiterated the benefits of his cozy relationship with Apple and how it benefited both companies.

The fact is, mobile anything is where the action is with Tech right now, so it stands to reason that so many big names in so many sectors of technology are gravitating that way. But for Schmidt to dismiss critics of his role on Apple's board always smacked of hubris to me. Board members are expected to occasionally recuse themselves from issues -- especially here in Silicon Valley where so many companies experience various shades of overlap. But Schmidt's regular, and increasing recusals, were always a problem, and Apple investors deserved more.

Apparently there were some colorful and vocal discussions about Google's exclusion from Apple's App Store.

And there should have been.

It became the clearest example yet of just how direct Google's competition with Apple has become. It's amazing to me that Schmidt lasted as long as he did, and Apple investors may want to ask why that was.

Meantime, Schmidt's resignation signals to me the coming of a new age for Google; that a year or two or three from now, we'll be talking about Google not as "Search Giant," but "Tech Conglomerate" as the company uses the net, the cloud, mobile, software and hardware to create a vertically integrated company the likes of which we really haven't seen before.

That is, unless Apple beats it to the punch. And with the groundwork already laid, along with an incredible record of execution -- and that $31 billion war chest, the smart money's with Apple. At least it is today.

On CNBC.com now: