It can be said in a very true way that Apple started the current phase of the cell phone revolution. Will it continue? Will it be swept aside by new players and forces?
As far as we are aware, no one doubts that smartphones have been forever changed by the advent of the iPhone. It was revolutionary then, and continues to be so to this day. The Android platform though wonderful in and innovative in many ways, owes much to the previous existence of the iPhone. It seems to us that many of the supporters of the Android platform, tend to belittle the iPhone. we are quite certain that Google takes it very seriously.
To an impartial observer, who did not know anything about either phone, and was simply told that the iPhone came out first, it would be clear that any Android phone would have definitely copied most of the characteristic features by which these kinds of phones are recognized from Apple. The finger gestures were copied by Google from Apple. The lack of a hardware keyboard was copied in the what is considered Google's flagship phone (the Nexus series) from Apple.
But there are significant differences between the two approaches between these giants Google and Apple. We shall address some of them.
Open Source As Compared To Proprietary Systems
Closed proprietary systems have their advantages. In the case of Apple, they allow the company to design the hardware and software to near perfection. This normally provides for the best user experience. Apple has formed a reputation for excellence based on this model. This explains why an iPhone works more predictably than many Android phones. It is the same companies that understands the hardware so well that also designs the software.
Apple is not the only company that uses this model. RIM also has used it. This accounts for RIM's great popularity among users and enterprise customers.
Now there is a great contest between these two worlds and approaches to software. Apple with its marketing genius led by Steve Jobs, has established a dominance of this market. No matter what may be said about the dramatic increases in market share by Google's Android platform, no one will deny that Apple's iPhone and now its iPad are the standard by which all other devices are measured. What is our conclusion in regards to who will dominate the future world of mobile technology? As long as Steve Jobs is an active leader in the direction of Apple, Apple will maintain a lead over Google and any other competitor. After he steps down from an active role of Apple all bets are off.
Phone Sales, Apps, Profit Shares and the KISS Principle
In recent days there have been numerous articles relating to the growing market share of the Android Market. There is no doubt that it has grown dramatically. Some have predicted that it is now larger than the iPhone market. Here are the facts recently via gigaom:
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This might look like Android has surpassed Apple. But the mobile market is far more complex than just the number of sales of phones. If we were to talk that view then we should conclude that RIM is where the future of phones is simply from market share.
The key to success in this battle is not in the number of handsets sold. It is in the number of apps sold. This is why Apple is concentrating so much energy on the app store. The more apps people buy in particular mobile OS, the less likely they will be to switch platforms. The only factors that to us could change this would be if the particular mobile platform was left behind technologically to an obvious extent, or, if there appeared tome killer app or feature in a competing platform that compelled users to switch their platform. We had a developer who develops for both Android and iOS tell us that he does not know anyone who is making money from developing for the Android platform. So as diogenex explains one important factor by which Windows established an unbreakable hold on the PC market was by raising the switching cost of competing platforms.
Another factor is which platform is making the most profits. Right now, without question Apple is. If you wish to see some dramatic proof of this, you can see the following charts produced we share via asymco. These charts were published in January 2011 before the sale of the iPad 2 or the iPhone 4 for Verizon. Still they show the trends. The first chart shows share of the market in terms of sales of phones:
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Now here can be seen the same companies and who is making the largest profits from these phone sales. The difference is rather dramatic.
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These charts are not factoring in the three major events that have occurred since then. The advent of the iPad and the predictions of it in terms of sales. As recently as March 29, 2011, two weeks after the iPad 2 had been released, analyst Charlie Wolf of Needham & Company said this:
...the launch of the iPad 2 so far exceeded our expectations that it was evident our 2011 and 2012 shipments were dramatically low.Wolf now predicts sales of 30 million in 2011 and 40 million in 2012.
Compare this to all the "iPad killers" that have been released. The list is getting longer. First there was the Samsung Galaxy Tab which did NOT use Honeycomb 3.0, an Android OS recommended by Google for use in Tablets. What happened to this tablet? According to fairly reliable reports, the return rate on the Galaxy Tablet was 16%. Compare this to the 2% return rate Verizon reported on the iPad 1. Then came the Motorola Xoom, another "iPad killer." This one did run Honeycomb 3.0. It had a dual processor, sufficient RAM memory, all the specs that were predicted would generate superior sales to the iPad. What has happened so far? Well, let us read some headlines, "Reports Says Sales of Motorola's Xoom and Atrix 4G Slow," "Motorola Xoom Sales Numbers Glag. Bad Sign for Android Tablets?," "Motorola Xoom Sales Disappoint Analysts Say." Need we say more. The reader may peruse those articles and see what has happened. At the moment there is no iPad killer except the next iPad Apple produces.
The second factor not predicted in above charts is the unified nature of the iOS as opposed to the fragmentation and confusion in the Android OS. We think it is safe to assume that the average Android user does not know what version of Android his phone is using. And now Google has decided to split the Android OS into two forms, one for tablets and the other for phones. This further confuses things. Also, Google has recently held back the source code for their Honeycomb 3.0 tablet Android OS. All developers will have to agree to Google's veto power over any changes the developer wishes to make to the OS. Google, it seems has realized the double edged sword that open source software can be. Developers who wish to use BING as the default search engine and map source have met resistance from Google in using Android. We have this interesting quote from Business Week.
There have been enough run-ins to trigger complaints with the Justice Dept., according to a person familiar with the matter. The Google that once welcomed all comers to help get its mobile software off the ground has become far more discriminating—especially for companies that want to include Google services such as search and maps on their hardware. Google also gives chip and device makers that abide by its rules a head start in bringing Android products to market, according to the executives.These events effectively make Android OS open source in name only. A developer may not tweak the app as it sees fit without approval from Google. In the end, Google is about making profits and it will not let anything or anyone stand in the way of that. This is not to condemn Google, it simply underscores the fact that Google is no better than Apple in this corporate approach.
The Apple App store, was predicted to be making $1 billion dollars in sales in 2010. The Android Market in 2020 made less than $100 million. This problem persisted in 2011 when even Google admitted its disappointment over app sales in the Android Marketplace. Again Apple has led the way in how to market apps. Google's Marketplace will be "closely emulating" Apple's approach. When we speak in this way, Apple becomes the innovator, the leader in future trends as opposed to the stodgy corporate evil giant fighting a "don't do evil" Google.
This war is far from over. We are still in the initial stages of it. Google WILL improve both their Marketplace and their Android OS. But Apple will not be a sitting target. Apple is a dynamic, innovative company who like John Paul Jones said in a different context, may not yet have begun to fight.