Apple is doing it wrong, Apple is living on borrowed time! Apple will Fail Again!
This idea, this meme, isn’t new. For more than 30 years we’ve heard a number of versions of the “Apple is doomed” requiem.
December 12th 1980 — the day of Apple’s IPO, coincidentally — I’m in Geneva, signing my employment agreement with Apple. My mission: start Apple France. Back in Paris I meet a chorus of naysayers: You’re deranged. Look at the respectable companies you’ve worked for: HP, Data General, Exxon Office Systems. (They don’t know that I can’t wait to leave the latter.) And now you’re going to work for these California hippies? They don’t have CP/M; the Apple ][ has a 40-column screen and lacks standard 8” floppies...and Fortune Systems is coming up with a Wang emulator that will wipe Apple off the planet’s surface!
The latest Dies Irae comes from a trio of highly skilled artists: Henry Blodget of Wall Street and Business Insider fame; Fred Wilson, co-founder of the VC firm Union Square Ventures and an eloquent and insightful blogger (AVC blog); and Dan Lyons, the sharp and eerily hilarious author of the Fake Steve Jobs parody blog (currently on hiatus), now writing for the Daily Beast and Newsweek. (See here, here and here but a few examples of their refrain. Google will oblige with more.)
I’ll start by intoning their cantus firmus.
In 1984, Apple comes out with a superior personal computer, the Macintosh. And then they lost the market to an inferior genus: the IBM PC clone.
Why?
Ignoring universal advice -- including Billl Gates’ -- Apple arrogantly refused to license the Mac operating system, leaving the field to Microsoft’s technically inferior product. DOS and Windows clones proliferated and almost exterminated the Mac, relegating it to a minuscule, irrelevant market share.
With the iPhone -- and out of the same deeply ingrained arrogance -- Apple is making the same mistake. Apple won’t license its iOS software platform. As a result, Android-powered smartphones and tablets will do to the iPhone and the iPad what Windows did to the Mac.
The story ends with Andy Rubin at the wheel of the Android steamroller. Behind him we see Henry, Fred, and Dan throwing rose petals on themselves and singing I Told You So.
(I have personal reasons to like Android. Several of my Be associates moved on to Google where they were instrumental in the creation of the platform. I admire what the engineering team accomplished in a very short time. There’s little wonder that Nokia and RIM have lost their footing. One of my two smartphones is an Android device, from Motorola; I see everyday why the platform is so successful. And as an iPhone user, I’m glad Google is fueling Apple’s competitive fires.)
That’s how the song goes. But let’s turn to some discordant facts. Yes, the Mac concept was a stroke of genius, it held out immense promise.
Going back to November ’83, I’m in the auditorium at Apple’s Sales Conference in Honolulu. First, we get the ‘1984’ commercial shock. Lights go down, a Mac descends from Heaven (sorry, from the top of the stage’s machinery). Midway through the descent, the Mac boots and we hear the soon-to-be-famous startup bong. The crowd goes wild.
Steve walks on stage and delivers a fiery speech, repeating the “1984 isn’t going to be 1984,” anti-Big Brother, anti-IBM theme. Bill Gates, Mitch Kapoor (Lotus), and Fred Gibbons (Software Publishing) promise applications for the newborn. We leave Honolulu invigorated, ready to slay the giant.
Unfortunately, the IBM PC already had a three year headstart. A faithful knock-off of the Apple ][, down to the tape cassette and game paddle interfaces, the PC benefited from a 16-bit processor vs. Apple’s 8-bit 6502. More important, it had the IBM imprimatur...and it had a “killer app”: Lotus 1-2-3. Written in assembler, running on a PC AT with a hard disk, 1-2-3 was wicked fast. The PC and its clones quickly prospered in the Enterprise market.
The Mac didn’t get an external drive until 1986, and it was yet another year before it had a color monitor -- a very nice color monitor, but a full six years after the PC. As for the Mac’s killer apps, they didn’t materialize as promised at the Sales Conference. The 1-2-3 Mac equivalent, Lotus Jazz, never quite worked. Software Publishing couldn’t adapt its best-selling pfs: suite to the Mac. Ironically, only Microsoft delivered. Its first Mac spreadsheet, Excel, shipped in 1985. Word came out about the same time.
Late 1984, at another Sales Conference, we’re treated to a ‘‘demo’’ of the Mac File Server and Mac Office. These, too, never materialized. I could go on, I was there: In 1985 I became head of Product Development.
So, in effect, the “Mac lost against an inferior product” mantra is upside down. In the all-important Enterprise market, the Mac never stood a chance, with or without clones. Fortunately, the Mac’s innate graphics capabilities and its great UI won over the more creative users, thanks to Adobe, Aldus, and a few others. The Mac got “niched.”
Skip ahead to 1995. Apple execs, desperate for market penetration, finally decide to license the Mac OS to Motorola and Power Computing. This was generally well-received but eventually hurt the bottom line as licensees took hardware sales from Apple. Two years later, Steve Jobs comes back for what I’ll call Apple 2.0. He immediately cancels the Mac OS licenses and renews Apple’s relationship with Microsoft. Neither move is popular, at least initially, but they save the company -- the $150M MS cash infusion was particularly welcome. (The Microsoft pact included some kind of IP settlement and a promise to port apps to the Mac.)
And, as expected, the closed-system Cassandras begin to intone...but there’s an important difference between 1984 and Apple 2.0: The team of computer scientists Steve brings with him from NeXT are disciplined and methodical. The original Mac was an incredibly clever hack, everything in 64 kilobytes of ROM, including AppleTalk and LaserWriter connectivity! The Apple 2.0 team patiently builds a new foundation while keeping the older superstructure working (at least for a while; the final ‘‘Classic’’ release is Mac OS 9).
In 2002, Mac OS X comes out. The full Unix foundation gives the Mac a strong competitive edge against Windows.
2005, Apple moves the Mac to Intel processors.
2007, Microsoft provides further help to Apple...by releasing Vista (which compels me to finally throw away the Windows machines I thought I had to use at work).
For five years, 20 consecutive quarters, the Mac outgrows the PC industry. Apple is now the fourth or fifth largest PC manufacturer by revenue or units, depending on who’s counting. More important, the Mac is now the most profitable PC line.
Smaller market share, biggest profits.
Let’s return to the notion that the iOS will suffer the Mac’s fate.
We just reviewed the first error. The Mac had great promise, but it hit two obstacles: An entrenched and superiorly equipped PC, and a Product Reality that never lived up to the PR. Jobs and his team took a good five years to rebuild the Mac’s foundation and finally make it superior to Windows. Growth and profits -- and the iOS -- followed.
Then we have the ‘‘history repeats itself’’ misconception. While the Mac was born naked --where are the apps? -- the JesusPhone came into the world (nearly) fully formed. It had, or quickly built, a full support system: apps in the App Store (no waiting for a modern day Lotus Jazz to emerge); the iPod; the Mac; the Apple Stores; and, last but not least, the iPad. (I’ll leave the newer Apple TV running iOS under the hood aside -- for the moment.)
The notion that the iOS platform will lose to Android “the way Mac OS lost to Windows” ignores history and disregards facts such as the growth of the iPhone and iPad. (Apple’s mobile share grew 115%, Q1/2010 to Q1/2011). It ignores the fact that Apple has the biggest market cap of the entire high-tech industry. In market cap terms: 1 Microsoft + 6 Adobes ≈ 1 Apple.
Still on Microsoft, Apple now has more revenue and, this last quarter, more profit than its old frenemy. And more cash, about $65B and counting.
In a NY Times piece on a somewhat related subject, Professor David P. Redlawsk writes about “Motivated Reasoning”:
People often ignore new contradictory information, argue against it or discount its source to maintain existing beliefs.
[…]
We are all somewhat impervious to new information, preferring the beliefs in which we are already invested. We often ignore new contradictory information, actively argue against it or discount its source, all in an effort to maintain existing evaluations. Reasoning away contradictions this way is psychologically easier than revising our feelings. In this sense, our emotions color how we perceive “facts.”
Does this explain the persistent “Apple will fail again” meme? Possibly. I recall thinking that the iPod couldn’t succeed, and that Apple had no business competing with its retailers by opening Apple Stores.
As for our trio of doomsayers, perhaps they’re just having fun. These are exceedingly smart and well-informed people who are at the tops of their respective professions; they understand what I just discussed and much more. So why do they insist that “Apple will fail again”?
For Henry Blodget, it must be an exercise in cryptic humor. He enjoys tweaking his audience and — this is business, after all — beaucoup pageviews in the process. I’m sure he’s having a grand time.
I doubt Fred Wilson believes a word of his doomsday scenario. He’s a world-class business model expert and isn’t confused about the difference between (almost) free licensing to support advertising and a hardcore hardware business model such as Apple’s. He, too, is pulling our leg and advancing one theory as an IQ test, as a way to separate people who believe too easily from those who take the time to gather facts and think for themselves — a breed of people we VCs are always on the lookout for.
Of the three, Dan Lyons is the most gifted at humorous misdirection (look at the best of his Fake Steve Jobs posts). My guess is he’s beating the bushes, throwing ideas left and right, looking for reactions, hoping he’ll find another opportunity for the delicious combination of sneaking into another mind and satirizing it at the same time. He must be feeling Andy Rubin. Or Larry Page. I can’t wait.
Related columns:
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- Mobile World Clusterf#^k — 2011 Edition TweetPlus ça change…et plus. We are at this year’s Mobile World Congress, held last week in Barcelona. One of the usual suspects, AT&T CEO Randall Stephenson, stands and delivers the new and improved party line: App Stores are bad. Stephenson wants cross-platform apps delivered through the Wholesale Applications Community (WAC), whose “commercial launch’’ takes place [...]...
91 Comments
You just can’t argue with the instant replay. This is the best recitation of the history of Mac versus PC that I’ve seen since the whole iPhone versus Android meme was raised.
The Mac had a much better UI, but it was not a better computer. Desktop publishing was the Mac’s killer app, and without it and Microsoft’s inability to copy the graphical UI until 1995, it probably dies.
Quibble Dept, Courtesy of Wikipedia:
“Multiplan for the Apple Macintosh was Microsoft’s first GUI spreadsheet… Bill Gates was repeatedly heard in 1985 saying that Microsoft made more money on Multiplan for the Macintosh than any other platform. Multiplan for the Macintosh was in fact one of the few spreadsheets available for that platform. It was proficient at making graphs and charts and was often bundled with some Macs. However, Multiplan only lasted for about a year before being overtaken by the more successful Excel.”
@JLG, you are incredibly generous to these individuals who, you say, are feeding us BS that they don’t believe, two of whom don’t get any incremental benefit from pushing a “birther” class story.
Being “exceedingly smart” does not shield one from the effects of Motivated Reasoning”.
Blodget and Lyons have clear monetary interests in driving webhits. Wilson, however, seems to be suffering from Motivated Reasoning. Unless he’s lying, which I don’t believe he is, he’s telling developers to build apps for Android and not iOS.
@KenC and @Walt French: Yes, I was being generous and I’m rewarded: You saw through it
JLG
@Walt French: You’re right. Multiplan came out first. Excel displaced it for having much better UI, speed and functions. This said, I loved Multiplan on the Apple ][ for having the named variable VisiCalc missed. And VisiCalc… what a sad story! JLG
@All: Further reading on the broad topic.
InfoWorld’s Galen Gruman: http://bit.ly/kKcpWv
The always sharp Macalope Weekly: http://bit.ly/lDB8ww
Jim Dalrymple: http://bit.ly/lDajCr
Brian s. Hall: http://bit.ly/lcEQND
And the Associated Press jumps in: http://apne.ws/lLJQXq
@sscutchen: Thanks! JLG
Well, Blodget seems link baiting for traffic. Wasn’t he a famous tech analyst from the dot-com era? I suppose one does what one is good at.
As for Wilson, isn’t he vested in the success of Android via his VC investments, and thus just doing his part in helping himself along?
Having been out for my Sunday jog, I’ve been able to formulate a more serious concern with @JLG’s narrative: Apple’s motivation and logic in controlling its ecosystem while Darwinian experimentation ruled elsewhere.
As an individual with a Mac but as a business owner running on PCs, I had incremental choices in the PC world not available on Apple gear. One machine had a Hercules graphics card: capable of text or switching to hi-res monochrome (a weird orange) graphics. Our data analyst valued that. My machine got the first 5MB hard disk. Our secretary got the PostScript card (a PC within a PC) and laser printer ($2K cheaper than the LaserWriter). Many of these were incompatible with one another; many were consigned quickly to the dustbin of history. Some were problematic— Sharon had to reboot after printing to prevent her subsequent work from being trashed. But all provided valuable service not available from the more rigidly controlled Apple world.
Today, Apple again rigidly controls its ecosystem, relying on, and profiting from, its services but not third parties. The app network is an obvious counter-example, and the meme that applications will some day define phones may be true. But experimentation with alternate keyboards, voice control, services where apps coordinate with each other, integrated cloud services and so much more: this happens more on Android.
As with the early PC, most of it is junk. (Take Flash. Please!) Or, like Swype, corrects for a lousy keyboarding experience that hardly needs correcting on the iPhone. But in enthusiasm if not in app revenues, it generates an ecosystem with positive feedback. Critical mass is building in Android land while Apple sniffs at the clumsiness and lousy customer experiences.
Apple has apparently learned that it must provide for third parties to share in the Apple success. How generously, versus how well that works on other platforms, seems still an open question.
The key point of the durability of a tech company as apple is how long can you be aggressively ahead of your era. Innovation before the others. On every rule there is an exception. We are still wondering, after 20 years, how far can apple go. My question is simple: Can Jobs clone himself?
Of course, when you look at the extreme number of comments on Henry Blodget’s Business Insider article(s) (the hit count I saw last week was 330K), you know this is all about pageviews. These guys are striking a balance between income and respect. Nothing new here.
But why do we keep on bothering to push back with reason and facts? Does it really matter if we do or don’t? That’s what I’m curious about.
One other key variable that is different this go around is that whereas Apple struggled mightily during the PC Era relying on uneducated indirect sales channels to espouse their value proposition, now Apple has an educated direct sales channel through Apple retail.
By contrast, the competition has…Best Buy? That and the halo effect that Apple has systematically created across their products is one reason that Apple’s success in iPod fed iPhone and now iPad, and why I belIeve Android powered tablets will struggle to find a market until they discover a killer app.
Cheers,
Mark
@CyberEddie: “how long can you be aggressively ahead of your era” Bingo. That was another failure of the Mac versus PC era. Mac seemed to quit innovating and simply started adding hardware just like the PC guys were doing. The OS went to seed (remember OS 8?) My Mac was being rebooted multiple times per day due to crashes. We loyalists put up with it, but that was no way to build the brand. The twin moats of Apple’s quality and their perceived ease of use were both lost. This lesson is now deep in Apple’s psyche; hence focusing on just a few products and pushing the envelope at every chance. Whether it is features or design or construction, Apple is accelerating faster than others can even attempt to catch up. As long as that continues, Apple will continue to be successful.
@Mark Sigal: Even head to head in the provider’s store, the iPhone has had a huge advantage over the top Android phones. I think it was Horace Dediu that had data last Fall that showed 13:1 at AT&T after the iPhone 4 was generally available. Verizon’s numbers for Q1 were also dramatic. In the tablet arena, OEMs are going to have a hell of a time competing with the Apple Stores, on-line and brick and mortar.
The iPad may well change everything. If it’s growth continues to explode,it will open a new larger chapter…
My only question is: what will be Apple’s big product when the iOS line is reduced to being as relevant as the legacy iPod line?
Let’s be honest, you Apple guys failed in the 80′s and 90′s. You can’t rewrite history. iOS is a brand new platform and a new battle with no ties back to the PC platform. Apple nearly went bankrupt, and would have without intervention. Bottom line, you were part of the failure and now want to claim part of the success. It’s only natural. But this is just spin, and you can’t change the past. The only Carnival Barking going on is your claim that somehow Apple has had it right for 30 years. The facts just don’t support the claim.
@Jim T: Reread the article and the comments, and take your time this time.
The theme here is why the circumstances of iOS versus Android are not the same as the circumstances surrounding Mac versus PC, and why those pundits that foretell Apple’s doom redux are wrong. The assertion is that Apple is not repeating the mistakes of the 80s and 90s, not that the mistakes of the 80s and 90s didn’t happen.
@Jim T.: May I direct you to the part(s) in the note where I state the original Mac’s great promise was betrayed by an immature, inferior reality at the time, causing a fair loss against a mature, well equipped PC?
Please also note the part where the agreement and the $$ from Microsoft saved Apple.
Where’s the spin?
Two central points: 1. History doesn’t repeat itself. The Mac lost the first battle, not because of licensing issues but for lack of maturity. In its second act, the Mac has been gaining market share for 20 quarters and is now the most profitable personal computer line.
2. iOS/iPhone/iPad is in a much stronger position at birth than the Mac ever was.
This said, I have no doubt the sum of all Android (and mutant) devices will inevitably become larger than the sum of all iOS devices. But, one or two iOS devices (iPhone, iPad, Apple TV?) will dominate their category and reap large (or the largest) profits.
And yes, non one is infallible, Apple included. A competitor could create a superior device, a bettter software platform, a new category and take the prize.
Nowhere in the piece do I say or imply “Apple has it right for 30 years…”. On the contrary, it took Apple 2.0, Jobs’ return, to right the ship.
Just in case: I left Apple 21 years ago. And Be, the company I co-founded, lost against NeXT in a well-publicized battle to be acquired by Apple. No hard feelings, I like the results, but have no affiliation. No vested interest, I don’t own any publicly-traded stock, Monday Note doesn’t take ads.
Thanks for the opportunity to clarify. JLG
@Jarek Piórkowski: Interesting question. The iPod is or will soon be 10-years old and is being supplanted by the iOS devices. More generally, the MP3 player genre is becoming a smartphone ingredient.
I don’t know if 10 years is the magic number, history doesn’t repeat itself.
Some day, I’ll write an Apple TV piece. But I’m not ready.
Perhaps we ought to expect the unexpected.
Or look for old ideas, temporarily shelved. One example: Jobs started a Mac Phone project in ’84, and tried to buy Palm in ’97… JLG
No argument about Apple 2.0 getting it right for its current shareholders. But for the industry? Is the future a mono-culture where Apple defines success? Apple has set itself up to compete against everyone, Computer and phone hardware manufacturers, retailers and it appears to be set to compete head on with Google in areas beyond a phone OS.
By setting itself up to compete against everyone, they are _the_ target in the industry. History shows that just when a company looks invincible, the seeds of their demise are laid.
@JLG and @ssc, I stand corrected.
A propos de la programmation:
Les jeux, et je suppose en général, sous Apple II utilisaient abondamment les peek et poke.
MacOS est sous Pascal.
iOS a sdk.
L’amélioration sur ce point n’est elle pas fondamentale?
@Marius: This is one of the reasons that I’m glad that Android exists. Apple needs to be pushed. It is why I was such an Apple fan in the 90s; without Apple, we’d probably be at about Windows 3.1 or so by now… heh. Microsoft needed to be pushed.
But I will say that I don’t think Apple should back off or be forced to back off. Others need to step up.
There was a time where Tiger Woods looked unstoppable. No one else seemed to be able to apply skill, athleticism and focus to compete. But even prior to his sexploits, others began to step up. They began to apply the methods he used. They became competitive. Someone will eventually do that to Apple as well. I just hope I sell first. heh.
@ Jim T.: Very gentlemanly. JLG
@ Fafnir: Oui, vous avez raison, très important. JLG
One of the first “public” uses for [6502] the design was the Apple I computer, introduced in 1976.
http://en.wikipedia.org/wiki/MOS_Technology_6502#Introducing_the_6502
The 16-bit Motorola MC68000 microprocessor was used in the first Apple Macintosh.
http://en.wikipedia.org/wiki/Motorola_6800#Personal_computers
The centerpiece of the machine was an 8 MHz Motorola 68000 microprocessor connected to a 128 KB DRAM by a 16-bit data bus.
http://en.wikipedia.org/wiki/Macintosh_128K#Processor_and_memory
I think the first IBM with 16 bit CPU was http://en.wikipedia.org/wiki/IBM_Personal_Computer/AT but this wasn’t released until August 1984.
Jean-Louis,
When do you sleep exactly ?
Good info. Great story! Thanks.
Part of the problem with the comparison is that email didn’t exist as a corporate staple until 1994-1996. Before that, there were numerous workers in America without a computer on their desk. Everyone seems to ignore the importance of this.
In 1988 I got my first job because I knew how to use a Mac and could use Quark(2.0). I was a softmore in high school. I was looked at like a complete genius. All I had done was picked up a mouse without fear. No one had any idea what I was doing, not even the computer scientists I helped at ancomputer lab at the university during the evenings. (I used the cover of night to score free laserprints)
This experience simply did not exist in IBM world. It wasn’t about 1992 that the Windows world could perform like the Mac for the average user.
I’m sure from an enterprise perspective it was different. But the Enterprise was 10 guys in 1988.
By 1992 that would change. Purchasing PCs at scale during the 90s boom while Apple coincidentally fell to bits made Windows a unique juggernaut that will not repeat. Neither company nor the scale of dominance.
Henry Blodget: In 2003, he was charged with civil securities fraud by the U.S. Securities and Exchange Commission.[5] He settled and agreed to a bar from the securities industry. He paid a $2 million fine and $2 million disgorgement.
http://en.wikipedia.org/wiki/Henry_Blodget#Fraud_allegation_and_settlement
Jean-Louis, the IP settlement was a big deal and got under-reported: http://en.wikipedia.org/wiki/San_Francisco_Canyon_Company
Love the piece, loved the IIcx/IIci too!
@Walt French,
“Apple has apparently learned that it must provide for third parties to share in the Apple success.”
I am not an expert, but it seems to me what Apple learned is not to put itself at the mercy of third party developers. If there is a key category that is not being addressed effectively, Apple is prepared to provide in-house solutions. It did it with iWork and iLife, Aperture, Final Cut, Apple retail, iWeb, MobileMe, and, one could argue, iPad, iPhone. Remember the state of mobile phone connectivity pre iPhone? Remember Razr?
Third parties are welcome, but Apple will not be at their mercy, or be held hostage, so that they may provide decent apps.
The idea that licensing matters in today’s world of contract manufacturers is laughable. Ask Apple, they’re literally laughing all the way to the bank having sold over 150 million (proprietary) units they didn’t produce in the last 12 months. With a lower end phone introduced this Fall they could triple that next year.
Multiplan was Microsoft’s first Mac spreadsheet; it shipped in 1984.
>Love the piece, loved the IIcx/IIci too
LOL, this reminded me — had Apple shifted to the LC strategy in 1987 — going for the LC in parallel with the II, and the LC III in parallel with the IIcx in 1989 — Apple might have had a much bigger footprint in the 1990s.
But JLG allegedly had a “high right” product strategy that emphasized margins over market share.
Kinda the same thing going on in phonespace now. Apple was flying pretty high in 1989, too, but it was Windows 3 coming out for the PC clones that trimmed its sails.
Another thing that is not taken into account in the current Apple-is-doomed meme is that iPhone/iPad are not Mac 2.0, they are iPod 2.0 and 3.0. These doomsayers act as if the iPod just never happened. But iPod/iPhone/iPad are all ARM architecture, flash storage, touch interface, batteries, headphones, PC sync, ultra-personal, ultra-portable.
> My only question is: what will be Apple’s big product
> when the iOS line is reduced to being as relevant as
> the legacy iPod line?
All iOS devices are just iPods. iPhone is “iPod phone,” iPad is “iPod PC.” If you put everything-but-the-Mac in one category (call it “post-PC devices”) you see steady growth and diversity from 2001-2011. In that context, iPhone is not as big a surprise, it is just the continuation of moving Mac features into a tiny ARM/flash/battery/touch device.
The legacy iPod line is the same as iPhone 3GS: an older model kept around to fill a pricing niche. Theoretically, Apple could replace iPod classic with a 160GB iPod touch, but it would cost $1000. They could probably make an iPod nano running iOS, but again, $1000.
So to answer your question: Apple will just continue to cannibalize their early iProducts with newer ones. When today’s iPad is no longer relevant, what replaces it is an iPad with 32 ARM cores, Retina display, Artificial Intelligence, super fast cell connection, a lot more cloud services, and so on.
> Today, Apple again rigidly controls its ecosystem
Another myth. All HTML5 apps install locally and run best on iOS. You can side load any music or movies or books through iTunes. You can use an app like Air Sharing to download anything you want, just like you are using a netbook. The controlled parts of Apple’s ecosystem are optional. They’re just so popular that we forget they are the alternative option.
> But experimentation with alternate keyboards, voice control,
> services where apps coordinate with each other, integrated
> cloud services and so much more: this happens more on Android.
No, experimentation by (or on) the user happens more on Android. On iOS, the experimentation is just happening a layer back. Yeah, iOS doesn’t have Swype, but Android doesn’t have AirPlay, or Copy/Paste that works right,
> But in enthusiasm if not in app revenues, [Android] generates
> an ecosystem with positive feedback.
Most users with Android-based phones don’t know they are running Android. They have zero enthusiasm for Android. Their enthusiasm is that their previous free phone was a feature phone with a tiny screen and no browser or apps, and their new phone was also free yet has a big screen and has a browser and apps. Period. They have as little loyalty to Android as they had to Symbian.
> Critical mass is building in Android land while Apple sniffs at the
> clumsiness and lousy customer experiences.
No, critical mass is not building in Android. There is no Netflix, Hulu, and even Angry Birds only runs only on some devices. Major League Baseball runs on all iOS devices, but it only runs on 20 Android phones, a tiny minority, and runs poorly there compared to iOS.
> Apple has apparently learned that it must provide for
> third parties to share in the Apple success. How generously,
> versus how well that works on other platforms, seems still
> an open question.
No, question closed. Apple is the only one who is sharing their success. They have built what is essentially a commercial World Wide Web in iTunes Store and App Store and iBook Store. Clicks cost 99 cents instead of free, and it’s as easy to get your content in there as it is to put it on the Web. The issues are different, but the ease is the same. For example, in Apple’s stores you don’t have to deal with e-commerce or scaling issues, but on the Web, there is no approval process. It balances out.
Even the handset makers do not make money on Android, and the developers are fighting off homelessness. The RIM and Nokia stores have higher revenues. There is no platform for Netflix or Hulu yet. Bootlegging is the norm. Most users don’t even use apps and barely use the Web. Even ad revenues are not as good as iOS. And there is no native C development. That is closed. Most developers are shut out entirely from Android simply because you have to write or rewrite your app in Java.
So Android is leading the change from feature phone to low-end smartphone, which is basically a smart feature phone. What that has to do with iOS, you would have to do a better job of explaining. Apple hasn’t even done a low-end phone yet. They don’t even have a mid-range phone. And Android has about 2x the addressable market, they are on carriers that do not have Apple phones. The argument could be made that they are helping iOS ultimately, by teaching feature phone users to want iPhones.
I initially hated the whole iPod thing, and I think now mainly because I couldn’t afford one, so I had to justify spending money on a crappy one. However once I brought all my gadgets into one device, a Palm Treo 650. About then I realized that none of the available smart phones were particular good media players. Nokias were great phones, but symbian was terrible, Palm OS was on it’s last legs, and windows mobile kept crashing. Then iPhone came along and was good enough at everything that even at NZ$1200 for one without a data plan or contract made saving on a separate phone, PDA and media player worth it. Then after 6 months I realized I had never rebooted it! It just kept working (if that were only true now) but iTunes, what a turd! I like everything about my Mac execept having to deal with iTunes, and it constant upsell, spend more money now, attitude. And why cant I just select some tracks and burn them to a cd, why do I have to make a play list? why can’t I just sync my non drm music wherever the he’ll I want to? Wireless ly too please. My iPad makes me realize how bad it is to need to tether with a cable. I can’t charge the pad from my mini, so the only reason I dock is to get movies and podcasts on to take away. Everything else streams just fine. Thank god the battery lasts 10 hrs though as I can’t even charge it at work, the PC there doesnt have enough power on the USB either , and I’m not going to tote the power brick with me everywhere.
As to whether Android will dominate, Android phones are mostly all cheaper than iPhone, so they will of course win people who might not afford an iPhone and it’s accessories, but the iPad is cheaper than almost any other quality android competitor (especially if you only want an iPad 1), so it will stay in the lead for a while
@Hamranhansenhansen: First of all, I’m glad the Mac has copy and paste… heh.
.
You mentioned the iPod a lot. Another thing that is seldom talked about is that NO ONE has yet created a device that truly competes with the iPod. What are the chances with the iPad? Does anyone really expect an iPad killer? Not unless they can come up with some technology that is disruptive to the iPad. Attempting to copy features won’t cut it.
.
> My only question is: what will be Apple’s big product
> when the iOS line is reduced to being as relevant as
> the legacy iPod line?
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A Jobs quote: “We figure out what we want. And I think we’re pretty good at having the right discipline to think through whether a lot of other people are going to want it, too. That’s what we get paid to do.”.
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If anyone knew, they would go build it now. That is the genius of Apple.
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Another Jobs quote: “People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully.”
While I agree with you that iOS-Android is not a replay of MS-Mac, I think you are missing Fred Wilson’s perspective. Fred invests in consumer Internet and mobile companies, many of whom use advertising as a primary driver of revenues. If I am understanding his perspective, it is that consumer software companies should develop for Android first. I have never taken his comments to be exclusive and his belief that Android will likely be the most used operating system may very well be right. That doesn’t mean that it will generate the most income in app sales nor the most income for the inventing company, and he never claimed that. But his company relies on eye balls and Fred believes that companies focused on eyeballs should develop for the platform with the most of them, and he believes that is Android.
@Peter02l, yes, absolutely Apple learned about the third-party dependency thing upon Jobs’ return to Apple. Apple’s software environment was a mess, and Microsoft plus Adobe effectively vetoed Jobs’ preferred path. Apple ended up with a fence-straddling mess that resulted in two critical “partners” dictating terms that met THEIR needs for cross-platform ease, not USERS’ need for excellent apps.
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Apple’s relationship with Adobe never recovered and I doubt it ever will. I think that Adobe will yet rue its decisions of the time.
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But it cost Apple dearly, too. My earlier post is about Apple having learned the lesson of independence too well. Apple benefits when other powerful organizations are out promoting Apple’s platform.
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A profit-maximizing Microsoft would come out with a superb PortableOffice for iOS, and give Apple yet another competitive advantage; instead, Good Software gets credit for BabyOffice on the Playbook. (I cannot see how Microsoft will EVER make money on WinPhone7, but I suppose Ballmer has to try.) Adobe would have found a way to spec a sensible subset of Flash that would run on iPhones, and Apple would’ve had one less talking point from the Android crowd. These hypotheticals, while only that, are distinctly possible.
I like this. If you are correct about their motivations, then the tired line they continue to tow makes sense. If you are incorrect, then they truly are idiots. But either way, you’re being highly critical of them. Brilliant!
@Steven: Aha! Yes, you caught me! JLG
Why, one wonders, is mention consistently omitted of the development work done 1989-1996? Perhaps the blog could at some point consider the work that is unmentioned and undiscussed, and nonetheless is at the foundations of graphic information processing today?
Best wishes,
Henrik Holmegaard
@Henrik Holmegaard: You’re right, a franchise was built, no doubt.
@Walt French: You’re right about Adobe. Their turning to Windows while the Mac wan’t doing too well was the right move. But not “thinking different” about Steve’s Apple 2.0 wasn’t. Then, when the iPhone came out, they had and missed an opportunity to help Apple – and help themselves. And, with the Mac App Store, they’re letting the market door wide open to come in a slowly erode their franchise. It’ll take years, but these things happen, the Incumbent Curse. But there is time, Adobe people are smart, they probably see what’s going on and can react, make peace and join the fun on the Mac and future versions of the iPad. JLG
I distinctly remember OSX being launched spring 2001, not 2002. I worked with it. Well, I tried.
@Walt French: at least some Darwinian experimentation is going on in Apps. I mean, 300000 applications, really? Apart from half being glorified bookmarks, there is an amazing amount of cruft in there, and the store is not doing a very good job at helping us filter out the good stuff. But some cruft might turn out to be innovation.
Great article as always.
Here’s my summary (or oversimplification), I expect Microsoft’s OS licensing business model – and the resulting network of hardware partners – was the reason they were able to offer the corporate market a viable computing ecosystem at an acceptable price before Apple could on its own. A licensed OS business model offering more hardware solutions and affordability (through competition) was always going to suit the corporate world’s needs. While Apple’s vertically integrated business model and user focus would suit the consumer market.
And believing rightly that “everyone would someday own a computer” Apple kept going, making computers for consumers and end users. But their problem was the product/price/consumer market stars didn’t align quickly enough, taking them to the edge.
Fast forward to Apple 2.0, they haven’t changed their business model or target market. The difference now is the consumer market likes what it can get for it’s money.
Jean-Louis,
in your opinion, did the original Mac sales suffer from the other 68000 machines like the Atari ST and the Commodore Amiga, that were as least as efficient and way cheaper?
Bonne nuit, à bientôt pour de nouvelles aventures !
@Vincent I think Apple never look at Atari or Commodore as a threat; although they have great software and cheap hardware:
http://www.youtube.com/watch?v=s_Y29Jyk7Ao
(Atari Mega ST Laser Printer Commercial – this was the first “software” laser printer, as I remember
)
I think that this comparison is not correct.
How many companies had the experience to predict the computer “forecast”. The winners are not exactly a winners, then and now. Because iOS is distributed on one device (soft of), on other hand you can find Android on so many devices, that is difficult to count.
The same is with the Mac 20 years ago. Windows is so popular just because every one could use it, as long as they keep the hardware standards.
My point is that iOS can be found on that one device and still it is better than the millions Android devices. The closed environment prevents malicious attacks, which is good for the customer. I am sure that Android will turn this statistics eventually, but this won’t make it better OS, definitely.
I saw a great comment above – it is not about the distribution of the technology, it is about innovation of new technology. Because as the history teaches us – one person creates, others steal. And that is what is great about Apple, they innovate. Micro$oft doesn’t.
At the other side is Google. They created a good operating system, but in the hurry to beat Apple, they forgot about the customer. At this point Android is mess. There is no control of the quality, that’s why the experience on iOS is better than the other options.
Just think why they did not release the Honeycomb that fast as usual.
They will come to the same conclusion – a 100% open system is not more open than the closed environments.
@Jon Alper I didn’t know that one of the other reasons for the M$ settlement was the theft of quicktime via a third party. I knew QT was good, but not that good
@Henrik Holmegaard I think we also tend to forget the role of the underlying foundations of X & iOS, arguably dating back to the 60s but that was bypassed in the DOS route that M$ was founded on, right up to the time OS X was introduced if not beyond. This is another factor crippling their ability to switch CP architectures as nimbly as Darwin. Of course there are many other related tech factors..
@Paul, I am talking about all the mutations to the system per se. The iOS app system is marvelous, to be sure, but there are lots of ways for apps to interact with one another, background services such as keep my Mac going.
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This shows most with a Chinese-English “dictionary” app I have used for study, and which the developer has built into an entire language system: real-time OCR from the camera, tap on a character in your file collection to pop up a translation, many marvelous features, only some of which are implemented elsewhere, and nowhere quite so well.
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Every one of these really great features would be better if a user could integrate it into the OS, so it worked in the browser, in Pages, etc. iOS is capable of Chinese, but it has none of the services of this developer.
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Today, this app is effectively iOS-only, but the dev is very clever and ambitious: who knows what he will be able to do in the more flexible Android space, where he has said he’s working. I’ve come to expect great things of him and if the Android Marketplace can support his work, it’ll be fascinating.
“They will come to the same conclusion – a 100% open system is not more open than the closed environments.”
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@Petar, I think your conclusions are correct but you are overly-deferential to Android’s bogus marketing claims of openness.
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Android is NOT open. If it were, the Facebook phone, running Android 2.3, would be for sale (or “free.”) If it were, the Playbook would have a v3.0 compatibility box for apps. Motorola would’ve put Skyhook location services on the Atrix, and many OEMs, looking to fatten margins, would’ve worked out deals with Bing.
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And the Android Open Source Project, which IS wide open, is not Android. Developers may NOT use the name “Android” for products based on previous versions of the OS, which is all AOSP has. It lacks huge numbers of features associated with Android, notably Google apps, Flash and the drivers a developer would need to run on any given device. AOSP is a brilliant marketing move by Google, letting the Open Source community feel needed and wanted at Google, but resulting in effectively ZERO actual input into actual Android phones — bugs found in AOSP have probably already been worked out in the main thread and the support framework for Android makes it extremely unlikely any corrections would ever get released, anyway.
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The Android business model is a mess: Google makes virtually no money from it, while shouldering significant costs; developers make relatively little money there and the carriers don’t make much more with it than they do with other OSes. Only the OEMs benefit and they are not very powerful players in US smartphones, given the carriers’ excellence in controlling their distribution channels to keep ‘em all barefoot and pregnant.
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It’ll be interesting to see how the Android business model evolves. I imagine you’ll see it become more closed, and possibly charging a license fee to use it; at a bare minimum Google has already announced they will clamp down much more on what competitive features can be bundled with it and people who want to load Baidu will have to use increasingly-outdated versions of the software.
Very interesting @Walt French, but is Baidu? Of course I assume you meant http://www.bada.com/ , the mobile OS from Samsung for low end hardware. Still, why does it go out of date so fast?
> My only question is: what will be Apple’s big product
> when the iOS line is reduced to being as relevant as
> the legacy iPod line?
Don’t think it makes sense to take an OS/platform that is the foundation for many products targeted at many markets, each multi-billion in size, and ask this question. That oversimplifies/overgeneralizes (like asking: what’s next for IBM beyond computers, or what’s next for Walmart after consumer goods?). Let’s look at the products as products:
- iPod (2001-present, but clearly the growth days were mostly 2001-2006)
- iPhone (2007-present, still growing. With smartphone market still growing, this product line still has legs (growth for AAPL), for 5 years?)
- iPad (2010) — early stages, growth foreseeable future
- Next up (IMHO): TV/media center/family room app console — but there’s 3-5yrs to think about this before iPhone/iPad growth tapers into iPod-like growth. Certainly Apple is not infallible and their growth/innovation may stagnate, but that is not today’s problem. With half the company revenues and a similar % of profits driven from smartphones and with low smartphone penetration, the problem is scaling execution. For the next 12-24 months.
A great exercise in rhetoric. Inverted ad hominem. Maybe pro hominem. Butter them up!
Two things that are also ignored in the ‘history repeating itself” argument are:
1. Apple initially being friendly towards games on the Mac – e.g that wonderful ‘Alice in Wonderland’ chess game (I kept the original box & disc for years!) – and then deciding that people interested in games should be steered toward the Apple II, while the Mac concentrated on ‘the enterprise’.
1a. Software developers were then encouraged by Apple to -raise- prices on their products to give the impression that they were ‘serious’ applications which a corporate buyer could trust, and not something written by a ‘hobbyist’.
That ‘professional’ pricing of software was a part of the “Macintosh Tax” is something that I rarely see mentioned.
And I lost track, over the years, of how many people have questioned my use of a Mac with: ‘But you can’t play any games!’
iOS devices don’t have those disadvantages against Android devices
2. Once IBM PCs became popular with corporate buyers – i.e. ‘you’ll never get fired for buying IBM!’ – the ‘Halo Effect’ of people buying the same type of computer they used at work – so that they could bring work home (…shudder…) and/or get software ‘for free’ (equally shudder-inducing) – kept a lot of people from every considering a Mac.
iOS devices don’t have that disadvantage against Android devices.
“Unfortunately, the IBM PC already had a three year headstart. A faithful knock-off of the Apple ][, down to the tape cassette and game paddle interfaces, the PC benefited from a 16-bit processor vs. Apple’s 8-bit 6502. More important, it had the IBM imprimatur…and it had a “killer app”: Lotus 1-2-3. Written in assembler, running on a PC AT with a hard disk, 1-2-3 was wicked fast. The PC and its clones quickly prospered in the Enterprise market.
I think JLG is wrong about a few things here. The Mac had a 16-bit processor from the beginning in 1984- the Motorola 68000. I think PC’s at the time still had 8-bit processors. I think in 1984, most PC’s had Intel 8088s in them. I don’t remember 80286 & 80386 processors becoming popular until the early 1990′s. The first 80386 machine I ever used was in 1991.”
I think what sealed the original Mac’s fate against the PC didn’t even arrive until early 1992 and that was Windows 3.1. I read an article once that claimed that the Mac’s market share was growing every year until Windows 3.1 arrived. Win 3.1 marked the point at which, regular users could not differentiate between running a Mac app or running a Win app- it didn’t matter that Win 3.1 didn’t have a true desktop interface (Program Manager + File Manager < Finder).
Then, there was the price difference between a Mac and a PC Clone. I remember when the first $999 color Mac (that I was aware of) hit the scene in 1993. The price difference just doesn't exist in the smart phone arena the way it did between 1984 – 1993 when a Mac could cost $2000 – $2500 and a PC clone could be had for $999 – $1299. Paying $49 or $199 to get an iPhone with a contract is not anywhere near as big a difference even if a Droid phone is "free" with a contract, as $6500 for a MacSE 30 was against a $1299 clone running MS DOS 5.
The other thing I think JLG is forgetting is how much harder it was to develop for a Mac in the beginning. Apple and the 3rd parties charged a premium for development tools. It was so much easier to develop for DOS in the 1984 – 1992 (i.e. pre Win 3.1 era) than it was to develop for Mac. There were cheaper dev tools for DOS and you only had to develop for a character based display rather than learn the cryptic Mac APIs (the Mac Toolbox as it was known). I remember taking a Pascal course at the local community college in early 1993 and realizing that everything I was learning would allow me to produce apps that ran just fine on the 386 PC running DOS 3.3 at work, but that nothing they were teaching me would help me make a Mac GUI app. And, even though I was able to get a copy of Symantec's ThinkPascal at student prices at the book store ($99 vs. $399), I would still need a copy of a set of expensive books from Apple just to be able to see the Mac Toolbox documentation. Fast forward to today's world, where XCode was free (now $4.99 from the Mac App Store) and there are multitudes of free web tutorials or $20 – $30 books that will teach you what you need to know to start coding for iOS. There just isn't anywhere near as large a barrier to entry to be a Mac or iOS developer that there was back then. I think if anything, Apple has learned that in order for a new platform to be successful, it has to be easy to develop for it. I can't believe JLG missed this point.
And, this is where a lot of people are currently missing the point about iOS vs. Droid. It is easier and more rewarding to develop for Apple's iOS controlled ecosystem than it is for Droid's "open" ecosystem. This is why any of the iOS nay sayers are wrong and why really cool, compelling apps will probably continue to debut on iOS and then get ported to Droid if the dev feels that they can make any money over there. It's a 100% reversal of how devs were thinking in the days of the desktop PC wars.
Re: the doomed meme: In the old days, we used to say that the SJ Mercury thought “beleaguered” was part of Apple’s corporate name.
Henry Blodget just posted a new piece in Yahoo Finance guaranteed to attract all you smart people over there to chime in and set everyone straight. Don’t miss this opportunity to make Yahoo Finance pageview counter spin off it’s gears! Hurry. Henry needs you.
@Mark Hernandez: Henry’s piece: http://yhoo.it/lFpG2U
I had seen it elsewhere, sans video, and thought to make a snarky comment here. Something like: Henry is pivoting.
But, on his Business Insider we also see this chart: http://read.bi/m7QcHr
It pirports to show iPhone traffic going down while Android goes up. Oops, this scientific fact is about… traffic to his own Business Insider. Lovely.
Of course, we can all torture numbers, they’ll confess.
See also this NPD story: Android Dips For The First Time In Two Years, on Venture Beat: http://bit.ly/muqRlb
Ah well… JLG
@Russell Martin: You’re right. The Mac had from the start a superior Moto 68K processor. The headstart referred to the PC coming out in 84, 3yrs before the Mac, having time to build what proved to be an insurmountable lead in the Enterprise market. Add what I didn’t mention: Apple anti-establishment posture. I liked it then, I still like it now, even if Apple has become the Establishment in some ways, doomed, naturally. JLG
@ mikiev: Yes, there were very good games on the Apple ][, I have fond memories of Bill Budge's Pinball Construction Set, an amazing achievement. "Computer Professionnals" I demoed it to couldn't believe PCS ran on a 1MHz 8-bit 6502...
JLG
The Mac didn't lend itself to the kind of hacking the Apple ][ encouraged and that was it for serious gaming.
Thankfully, the iPhone is back in the ... game
@Troy: Ah… The Low Cost Mac. It’s been a continuous fight internally. Once, when I suggested we give the job to Sony or another Japanese manufacturer (China didn’t “exist” yet), I was called un-American…
Later the PowerBook Duo was done with Sony, if memory serves (I was no longer at Apple). I loved it, just as I love my 11″MB Air.
This said, in 1989, I also made the mistake of telling John Sculley we ought to raise prices…
No, we read “Designed in California, Made in China”, or in Brazil some day… JLG
@ Hamranhansenhansen: I enjoy reading your comments, here and on Asymco as well. I like the “iPod” characterization!
One of the many things I failed to discuss is the “cannibalization issue”. There _must_ be some taking place within Apple, but it’s not easy to see in Apple’s numbers, only at Acer’s and elsewhere. (In my own limited sample od one, the 11″MB Air has cannibalized some iPad use… But I love really small computers, I still miss my Toshiba Libretto.) JLG
@JLG said, “Later the PowerBook Duo was done with Sony, if memory serves (I was no longer at Apple). I loved it, just as I love my 11″MB Air.”
It does, and I did, too. I upgraded my “Comet” 3500, IIRC, with a PPC 603 daughterboard. Mine still boots up (!) and is as good a note-taker as machines costing maybe 10X its approximate $35 eBay value (which is why I still have it).
@Walt French: We should trade. My Duo was stolen in Paris…
JLG
And now this from Horace Dediu: http://bit.ly/inh1bD
I failed to mention David Yoffie, the HBS Professor (and Intel Director, but we won’t talk about that) who, for years, explained how wrong Apple had been and still was. Perhaps he’ll write a new and improved case study using Horace’s site as source material
If your point is that the “history will repeat itself” argument is flawed, then let me congratulate you at saying the obvious. DUH!
One of the big reasons (if not the most important) why people are saying that Android is going to dominate the phone market is b/c of one simple fact:
IT HAS GROWN A BAZILLION PERCENT in just the past year alone. Android has absolutely exploded and it doesn’t show any signs of slowing down any time soon.
Another major reason is that Android is simply a better OS. What frustrates me the most in these type of arguments, whether it be Windows vs. OSX or Android vs. iOS is that those on Apple’s side have this faux sense of superiority.
Windows didn’t just dominate the market on desktop b/c of things like prices, superior apps, and availability. It dominated b/c more people just like it. In recent years, Apple has grown a little, sure. But that has more to do with the internet making user experiences platform agnostic. When it comes to the OS itself, OSX isn’t in the same class as Windows. I use both OS’s everyday, (osx for work, windows for play), and in sooo many more ways, Windows is the best.
The same can be said for Android. iOS has some very good features, and I’m very glad it exists (pushes Android to be better), but for a lot of people Android is simply more functional. Better multitasking, an open platform (which allows third party apps to do more with the device), better looking form factors and options, the freedom from iTunes, etc etc.
@ Hirsch: Thank you for the compliment. Speaking of bazillions, perhaps you want to look at this: http://bit.ly/muqRlb. NPD reports where Androis and iOS stand.
Also this: http://bit.ly/inh1bD. Profit numbers. Not bazilions, gazillions
Also read what developers say about developing for Android vs. iOS: the latter offers better tools while Android suffers from fragmentation.
As for the Android is open line, look at what carriers are doing, look at the games Google is playing.
As I wrote in the Monday Note above, several of my ex-Be colleagues now work at Google developing the Android platform; I like what they’ve accomplished and I’m an Android and iPhone user myself. JLG
Yeah BeOS mentioned!
Woot it lives on in Haiku, http://www.haiku-os.org, haikuware.com
@JLG
Both your links are misleading. For the first link, instead of comparing market share in one quarter and in one country look at the total growth of market share in this link.
http://read.bi/hvgotg
Your second link, with all due respect, is pointless. How does it relate to this argument exactly? Plus, most of the content people pay for on Mobile, whether it be gaming or productivity, are available for free on the desktop, which a big reason why there is such a gap between iOS profit and OSX profit.
As for developing on Android vs iOS. Certainly, it is true that currently, the App Store brings in more revenue technically speaking. But then again, the Android Market grew 860% in one year.
And on top of that, the Market numbers for each app store don’t take into account that a lot of the major apps that people pay for on iOS (angry birds, words with friends…) are free on android. And to top it off, major developers like Rovio and Pocket Legends have said that Android makes more money for them than iOS because of ad revenue. That’s what it really comes down to.
The openness I mentioned isn’t about what carriers and google are doing to block tethering applications, it’s about developers having the freedom to use all of Android’s resources to make better apps. Google Voice for example.
Plus at this point, what advantage in Apps can one platform have over another. Neither platform has a killer app anymore that the other one doesn’t. All it really comes down to is which OS offers a product that is more appealing to the customer.
The numbers have shown that while many prefer iOS, many many more are going to Android.
@Hirsch: Thanks for the feedback. You’re right about one the links, I agree it’s not too helpful.
Turning to your http://read.bi/hvgotg “Android Blows Past iPhone — Even If You Include iPod Touch”
It was published on April 10th. At that time, commScore had similar data.
But…
Later, commScore published two surveys with more up-to-date numbers:
“Apple iOS Platform Outreaches Android by 59 Percent in U.S” http://bit.ly/jAWr45
and
“In Europe, Apple iOS Ecosystem Twice the Size of Android” http://bit.ly/mze3HD
You can also look at IDC’s report: IDC claims “iPhone marketshare has grown 115%” http://aol.it/l030rD
And this AllThingsDigital article today: “Apple Will Take 76 Percent of App Market Revenues This Year” http://bit.ly/lcYcS6
My own view (I’m behind the Opinions window, not the Truth one) is this:
Android phones, note the plural, are already selling more units that the iPhone (singular). In particular, Android (and related mutants oPhone, Tapas) will lead in converting all dumbphones to smartphones.
This is trouble for Nokia, in particular, see Tomi Ahonen’s piece: Smartphones Bloodbath Year 2, Q1: Now Nokia. Ouch, this is painful http://bit.ly/inAV18 and RIM as well. They are the ones in big trouble.
Apple has become the largest smartphone supplier, larger than Nokia now, and the most profitable. This with a meager 5% share of all phones and 19% of smartphones.
In the PC business, Apple 2.0, with Jobs at the helm, has a small unit share, less than 10%, and is the most profitable manufacturer.
The PC makers have the units, Apple has the $$.
I only predict the past, but it seems smartphones are going in the same direction — without the Mac’s early travails.
Tablets are another story entirely.
Smartphones existed well before the JesusPhone: Nokia, Palm Tréo, Windows Mobile and King BlackBerry (I loved mine).
There were tablet attempts before the iPad, of course, but the “mayonnaise” didn’t take, so to speak.
In the tablet market Apple enjoys a first-mover position, a large market share. The iPhone and the Mac are clearly priced higher than their competitors, not the case with the iPad. Apple’s strategy is markedly different. Why, for how long? I have some ideas but not frim enough in my mind yet. Suugestions welcome.
Thanks again for this opportunity for a lively discussion. JLG
@Hirsch said, “And to top it off, major developers like Rovio and Pocket Legends have said that Android makes more money for them than iOS because of ad revenue.”
Citation, please? I’ve seen Rovio make many comments about the two platforms, but that wasn’t one of them.
Marketplace downloads HAVE grown greatly. However, see Communities Dominate Brands for the shocking fact that an app in the upper half of popularity could generate as little as 3¢ of ad revenue per download. This is sustainable only if apps are built at very low cost, or usage goes 10X the current level. If further fragmentation of Android marketplaces continues (Amazon, Verizon, Nook, Playbook, AT&T, …) developers will have even more cost/revenue issues. Google will have to address this.
And BTW, one of the issues around revenues is of course the profitability of the platform FOR GOOGLE, and here there are major business issues. That’s why Rubin has said they’ll be controlling releases much more carefully going forward, restricting OEM from bundling Bing, etc. According to a recent story in Wired, even Google’s 30% of Marketplace revenues goes to the carriers, leaving them with a remarkably small revenue stream that they wouldn’t otherwise get thru other platforms like Apple’s. So that’s part of why I expect to see even more changes to make Android profitable for Google.
@Elia Freedman: As you know, I went over to The Dark Side: I’m a VC.
I place Fred Wilson higher in the experience and achievements hierarchy in my new profession. No false modesty, just the facts.
This said, look at this: “Apple Will Take 76 Percent of App Market Revenues This Year” http://bit.ly/lcYcS6
As a venture investor my job is to help entrepreneurs make money — and get our minuscule share as a result. Going Android first is questionable. This could change, of course. But, with the iPad and the opportunity for higher app prices, I would start there. JLG
@All: Expletive Inserted » The Emperor’s New Network Effects — http://bit.ly/kPtXYU
This is long-form reading, a “fair and balanced”, really, disquisition of platform war questions. Better than the intellectual Muzak fom most anal-ists…
Enjoy!
Much Different Environment / Many Lessons Learned
First, thank you Jean-Louis for a most interesting and insightful article, and thank you all for a very stimulating thread of thoughtful comments.
The tiresome meme described is perhaps overly facile and certainly riddled with its share of inaccuracies. I think it’s easy to give more credit to the software licensing effect on the PC’s success than to recognize how important and significant was IBM’s imprimatur during the early years of the personal computer. Computers then were quite expensive, and they were very much a mystery to most people. When in 1981 IBM outlined what it believed a personal computer should be, people (particularly businesses) listened. For most people in the early years, whether or not a prospective computer was “IBM compatible” was a critical question affecting their buying decisions. Computer makers offering products that were not IBM compatible and didn’t run Wordperfect, Lotus 123 and dBase faced very much an uphill battle in what was then a much smaller market. In these early years, computers simply couldn’t be found in most homes as they can be today. The World Wide Web was then a decade away, email was a rarity, digital imagery and digital music were yet to make their marks, and even hard drives were an expensive luxury. Of course, looking at the recent astounding success of Apple’s PC business makes it hard to speak of “failure” in any sense that really rings true.
Comparing the Apple and Steve Jobs of these early years with the Apple and Jobs of today, I think we can discern some constants along with some striking differences. Apple, particularly as exemplified by and personified in Steve Jobs, has long been focused on the user experience, industrial design, the technologically next great thing, and creating excellent products in which they can justifiably take pride. Along the way, however, Jobs and company have learned some hard and costly lessons. Foremost among these lessons is probably that beauty and elegance are not enough for most consumers. For many of these consumers, value and utility are equally, if not more, important. The Apple products of today exhibit all four of these qualities, and they are made available via a world-class retail operation. Apple/Jobs also learned the lesson that undue reliance on partners could often lead to disappointment and, in the most extreme cases, to abandonment and betrayal. The Apple of today tends to offer integrated solutions that are fully baked at birth, and only likely to become even more compelling when fitted out with offerings from a vital third-party ecosystem, which Apple has skillfully nurtured and encouraged very much on its own terms.
Today Apple is a juggernaut firing on all cylinders. It creates the tech products that serve as standards against which most others are measured, and it has become the fixation and envy of the tech and financial worlds. Its growth, profitability and pace and quality of innovation are nothing short of remarkable. In short, for Apple the sky does not appear to be falling, nor does it seem likely to do so any time soon.
Kind regards,
Bob
@JLG, thanks for the pointer to the thoughtful “expletive” site. It occurred to me that at the same time Apple is racing to scale production, there is also a fierce race to scale software. Android certainly appeared years before Jobs expected and I have high hopes for a host of usability features in the upcoming releases of both platforms.
I think Apple is better staffed in many ways for OS level innovations (the Honeycomb fiasco being Exhibit A) but I also see Android apps better able to push the envelope and create the Darwinian experimentation that fueled the early PC days.
@ JLG
thanks to you as well for sharing your thoughts with me
@Walt French
Here are your citations:
http://www.intomobile.com/2010/12/03/angry-birds-android-1-million-ad-revenue/
http://www.engadget.com/2011/03/09/profit-shocker-android-brings-home-more-bacon-than-ios-for-pock/
Ad’s actually do make a lot of money and google has built a very good system to generate revenue from them. The numbers speak for themselves.
As far as your “fragmentation of android marketplace” line, you couldn’t be more wrong. More marketplaces are better for developers since they then force app stores to compete with each other. What you’re saying is akin to saying it would be better for Sony, Apple, Toshiba, etc. etc. to only have their products sold only at Best Buy? If history tells us one thing, its that competition is always better for everyone. Plus, explain to me how having more stores would makes things harder for developers? Unless a developer decides to create a different app for the Amazon App Store than the Android App Store, it’s not going to cost a penny more.
Also, as far as the profitability motive for Google, no one knows exactly what their plan is for that or if they even have one. What we do know is the major reason for pushing Android is that Google wants to maintain more avenues for Search and make sure that their search engine doesn’t become as irrelevant in the way that Alta Vista and so many others have.
And as far as controlling releases moving forward, a lot of that has to do with hardware fragmentation. The news we heard is Google taking actions to make developing on Android easier. Whatever decisions they make, one thing is for sure, Google isn’t going to do anything that hurts their platform.
@walt french
just read your comment on Swype and I needed to ask if you’re being serious and really meant what you wrote.
Swype is simply the only way to type on a touchscreen device without wanting to pull your hair out. And to say that iOS doesn’t need it? Really?
There is no difference for the most part between the gingerbread and iOS keyboard or even the windows phone keyboard, but none of those input methods hold a candle to how awesome and easy swype is.
On a scale of 1-10 of touchscreen keyboards, swype is a million, while everything else (especially iOS on that mid range 3.5 inch screen) is zero.
And that’s not an opinion, it’s certifiable FACT!
@Hirsch, is this the same Swype you’re talking about?
“Swype For Android Updated, Annoying Bugs Patched” (MobileCrunch 3/11/2011)
A product that is still in beta, that is primarily available pre-installed thru how many OEMs? This is what has rocked the Android world?
And while we’re at it, what do you make of Rubin’s comments (December, IIRC) acknowledging that the basic Android keyboarding experience was bad.
@ walt french
Have you actually used Swype or are you just blindly defending iOS?
That’s the first time I’ve actually heard of swype having any bugs. I’ve been using it on my samsung captivate since january and haven’t had a single problem.
I didn’t actually hear andy rubin call the android keyboard bad (and haven’t been able to find it), but honestly I don’t care.
As I said earlier, swype doesn’t correct a bad android keyboard, it corrects one of the worst type of key inputs created. Touch keyboards on phones, whatever OS they might be are flawed, stupid, and painful to use.
It’s a shame that Apple, or even Microsoft and HP, haven’t done all they can to get swype on their platforms.
(just noticed this has been awaiting moderation since the 5th….so I thought I would re-post it)
@ JLG
thanks to you as well for sharing your thoughts with me
@Walt French
Here are your citations:
http://www.intomobile.com/2010/12/03/angry-birds-android-1-million-ad-revenue/
http://www.engadget.com/2011/03/09/profit-shocker-android-brings-home-more-bacon-than-ios-for-pock/
Ad’s actually do make a lot of money and google has built a very good system to generate revenue from them. The numbers speak for themselves.
As far as your “fragmentation of android marketplace” line, you couldn’t be more wrong. More marketplaces are better for developers since they then force app stores to compete with each other. What you’re saying is akin to saying it would be better for Sony, Apple, Toshiba, etc. etc. to only have their products sold only at Best Buy? If history tells us one thing, its that competition is always better for everyone. Plus, explain to me how having more stores would makes things harder for developers? Unless a developer decides to create a different app for the Amazon App Store than the Android App Store, it’s not going to cost a penny more.
Also, as far as the profitability motive for Google, no one knows exactly what their plan is for that or if they even have one. What we do know is the major reason for pushing Android is that Google wants to maintain more avenues for Search and make sure that their search engine doesn’t become as irrelevant in the way that Alta Vista and so many others have.
And as far as controlling releases moving forward, a lot of that has to do with hardware fragmentation. The news we heard is Google taking actions to make developing on Android easier.
@Hirsch asked, “Have you actually used Swype or are you just blindly defending iOS?” apparently in response to my saying, “But experimentation … happens more on Android.
As with the early PC, most of it is junk. (Take Flash. Please!) Or, like Swype, corrects for a lousy keyboarding experience that hardly needs correcting on the iPhone. But in enthusiasm if not in app revenues, it generates an ecosystem with positive feedback.”
.
So at the risk of trashing Mr. Gassée’s excellent site with a devolution where ad hominem attacks are rewarded by responses, I will reiterate my statement that experimentation is a positive for a platform, and that I cited Swype as an example of it.
.
As to “blindness” about Swype, it is true that I have never used it. However, the “annoying bugs” quote was lifted from the Swype web site. I try to be careful in citing authoritative sources. I couldn’t find the specific Rubin quote about keyboarding, but I note that a new keyboard was part of the Gingerbread release, a day or two after this exchange from Dive Into Mobile:
.
So, no, I don’t recognize any blindness, because I was citing Android and/or Swype sources both times.
.
I don’t want to get too involved into today’s revenue models for apps, but I’ll note that you cited ONE developer’s experience for revenues, plus some gratuitous editorial suggestions that apps stand out better in the Android Marketplace. Then the Rovio quote (your cite) said that they “preferred” the longer tail of the ad-based model. Explicitly, your link did NOT say that Rovio made more money.
.
We must indeed be in the smartphone wars, because truth seems to have bit the dust. People desperately want to read facts into statements that are very carefully crafted to suggest those facts, without actually (incorrectly) saying them. Caveat Lector!
@Walt French: “We must indeed be in the smartphone wars, because truth seems to have bit the dust. People desperately want to read facts into statements that are very carefully crafted to suggest those facts, without actually (incorrectly) saying them. Caveat Lector!”
.
Nicely put.
.
I think a lot of these are either paid for PR posted in the form of “news”, or purposeful provocations meant to lure page views. Either way, truthiness wins.
@ Walt French
“As to “blindness” about Swype, it is true that I have never used it”
That’s all I needed to hear. You can’t simply lift quotes or vague sources without the context of fully understanding it. with all due respect, you’re like a little kid that won’t try new foods.
As far as the keyboard goes, whether it be stock android, wp7, palm, and the ios, that type of input is a lousy experince. Once again, the iOS keyboard IS A LOUSY EXPERIENCE. (I’ve used it when I had a 3GS)
Btw, have you used Flash on android? (probably not) It’s really not as bad as you say it is. At least it allows us to watch and view content that iOS can’t. On newer phones, its generally on par with HTML5 video.
“Then the Rovio quote (your cite) said that they “preferred” the longer tail of the ad-based model. Explicitly, your link did NOT say that Rovio made more money.”
It doesn’t take a genius to realize that when Rovio makes a million per month on android, it’s obvious that (if not right now, then very very soon) they make more than the one time paid model on iOS. I don’t think iOS users are constantly re-buying angry birds every month….at least I don’t think so, are you?
@sscutchen and @Walt French: This thread is an “interesting” experience. I meant it when I wrote of my first encounter with Apple Is Doomed 30 years ago. But I didn’t imagine how vivid the sentiment is. Accent on _sentiment_. I wonder how the people who argue Apple will inevitably lose because it’s “closed” spend a minute thinking (if that is what they are doing) about the factors that propelled Apple to its current (soon to be lost, that’s a given) #1 place in market cap and revenue and profit among high-tech companies. OK, only #2 smartphone maker behind Nokia, for how long?
I use and admire Android, look at what they’ve accomplished while Nokia, RIM, Microsoft and Palm stumbled. Surely, the sum total of Android-based sets of all stripes will be huge and larger than the sum of iOS devices.
Where the comparison with Windows PCs is correct is that Android clones will race to the bottom, like PC and iOS devices will race to the bank, like the Mac — wwithout the Mac’s early problems.
And then, we have the iPad, inexpensive and dominant. Another race, different from smartphones where Apple has and and always have a mall share.
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I would love to read more about this topic.Don’t stop blogging! It’s nice to read a sane commentary for once.Excellent read, I just passed this onto a colleague who was doing a little research on that.
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