Last week I presented at Stanford Graduate School of Business in a session on Mobile Computing called, “Creating Mobile Experiences: It’s the Platform, Stupid.”
As the title underscores, I am a big believer that to understand what makes mobile tick, you really need to look beyond a device’s hardware shell (important, though it is), and fully factor in the composite that includes its software and service layers; developer tools and the ecosystem “surround.” Successful platforms, after all, are more than the sum of their parts’ propositions. They are not simply a bunch of dis-integrated ingredients.
Having built hardware and software platforms since 1994, this thought process has led me to harp endlessly on why the iPhone platform (and its derivatives) is such a game changer. By contrast, I would argue that the long-term success of Android is anything but a given.
It’s human nature to look to the past in an attempt to understand the future. As such, I was unsurprised when I was asked during my presentation if Apple and iPhone vs Google and Android in mobile computing is “destined” to play out as Apple and the Mac did when confronted by Microsoft and Windows in the PC wars.
As I have provided “big picture” analysis on this topic before in other posts (here and here), I want to share what I see as the five “little picture” reasons Apple vs Google isn’t destined for the same outcome as Apple vs Microsoft:
Retail Distribution: During the PC Wars, everything came down to distribution and presence on limited retail shelf space. To be successful, you had to be on the shelves of retailers like ComputerLand, CompUSA, Circuit City, Office Depot and MicroAge. Given the wide variety of hardware OEMs making Wintel-based PCs, both shelf-space for Macs and the technical know-how to sell them were severely limited, making a differentiation story like Apple’s a hard sell. Today, Apple Stores drive a superior environment for consumers to experience hardware hands-on and get educated about the full breadth of Apple products. An aside, this is a consumer touch point that Google absolutely lacks.
Pricing overhang: A primary reason for Apple’s crushing defeat by Microsoft was Apple’s misguided notion that it could charge grossly higher dollars for Mac products than Windows-based PC offerings. Contrast this with the present, where Apple is consistent in their assertion and awareness that it cannot and will not leave pricing overhang (i.e. a sufficient pricing gap between its products and the competition). This avoids the past dynamic where consumers saw picking Apple products as an either/or decision, in terms of price vs premier experience. iPod, iPhone, iPod Touch and iPad all have followed this course.
Developer ecosystem: It is a truism that in platform plays he who wins the hearts and minds of developers, wins the war. In the PC era, Apple forgot this, bungling badly by launching and abandoning technology initiatives, co-opting and competing with their developers and routinely missed promised milestones. By contrast, Microsoft provided clear delineation points for developers, integrated core technologies across all products, and made sure developer tools readily supported these core initiatives. No less, Microsoft excelled at ensuring that the ecosystem made money.
Lesson learned, Apple is moving on to the 4.0 stage of its mobile platform, has consistently hit promised milestones, has done yeomen’s work on evangelizing key technologies within the platform (and third-party developer creations – “There’s an app for that”), and developed multiple ways for developers to monetize their products. No less, they have offered 100 percent distribution to 85 million iPhones, iPod Touches and iPads, and one-click monetization via same. Nested in every one of these devices is a giant vending machine that is bottomless and never closes. By contrast, Google has taught consumers to expect free, the Android Market is hobbled by poor discovery and clunky, inconsistent monetization workflows. Most damning, despite touted high-volume third-party applications, there are (seemingly) no breakout third-party developer successes, despite Android being around two-thirds as long as the iPhone platform.
Consumer technology adoption: During the PC era, large enterprises essentially dictated the industry winners by virtue of standardizing on a given vendor or type of solution. This created a winner-takes-all dynamic, inasmuch as consumers would ultimately buy the same solutions that had been blessed by large enterprises. By virtue of its conservative nature (remember the motto, “No ever got fired for buying IBM”?), staid Microsoft always felt like a safer choice than crazy Apple. And besides, accounting could solicit bids from multiple hardware vendors, which they liked.
By contrast, today’s breakthrough adoption begins in the consumer realm and filters back to enterprises, not the other way around. This change deeply favors a consumer products and marketing force like Apple. While Google has done a reasonable job in the consumer arena, its approach is decidedly design-lite and techie focused, not mass-market friendly.
Microsoft-like resilience: I remember too well the Microsoft mantra “Embrace-Extend-Extinguish,” which basically meant that any segment worth owning Microsoft would ultimately dominate by the 3.0 version of its competing product. Part of this was a by-product of the incredible “unfair advantages” Microsoft had built for itself by virtue of channeling items 1-4 above. Part of this was its ruthlessness in squeezing the lifeblood out of competitors through any means necessary. But, give Microsoft full props for manifesting an unyielding resilience to keep working its product offering and market assault until victory was at hand.
Considering Apple’s rise from the ashes to re-create a very profitable Mac business — the dominance it has created with iPod and iTunes; the powerhouse iPhone and iPhone platform and the ambitious, and already well-regarded iPad — does anyone wonder about Apple’s resilience? By contrast, Google remains almost completely dependent upon search and advertising, despite launching so many new product offerings and seriously pursuing M&A over the past several years. Arguably, Google’s famously loosely coupled structure leads to a lot of seeds being planted, but so too, it seems to a less than laser-like focus on seeing those seeds to cultivation and full harvest. It begs the question, “Can a tiger change its stripes?”
Obviously a lot can change in the next couple of years. It’s easy to lose sight of the fact that the mobile industry that exists today looks nothing like the one that did before iPhone came on to the scene. Just ask Nokia.
Clearly, the best case for Google with Android is that mobile technology and mobile platforms become sufficiently commoditized for its device OEM-centric, horizontal model to tip the balance in its favor.
Never say never, but paint me a skeptic — barring as =yet unseen missteps by Apple.