Uncommon Wisdom

Jul 18 2011   12:03PM GMT

Google’s Android sweep and its implications for Apple

Tom Nolle Tom Nolle Profile: Tom Nolle

Google reported its numbers, and by any measure it had a stellar quarter. Revenues were up 32%, and they beat Street estimates across the board. While the dark side of success will likely be greater anti-trust scrutiny for Google, it’s better than turning in bad numbers and seeing shares fall. But for me, two non-financial factoids dominated the earnings call: One is that Google+ seems to be taking off; the other is the Android sweep, and that’s the one I want to focus on.

First, Android is still going strong; last month it had 10% more device activations than the month before. The Android store had more than 6 billion downloads, and there are more than 400 devices licensed to run Android. For those like me who remember the early PC-versus-Apple wars, the similarities seem obvious. Even in those early days, Apple wanted complete ecosystem control, and IBM promoted an open platform. The result is history; IBM PCs swept the market.

But Apple is still in the PC business, and IBM isn’t. That raises what I think is the key question for Apple. Is the best way to succeed in the long run to develop a new market, hunker down on a niche segment of it, and then milk that segment until another market comes along? Or is it to develop a concept that sweeps the market, share in its success, and move on?

I think that everyone realizes by now, at least reluctantly and subliminally, that Apple is going to lose dominance in the tablet space and the smartphone space, and that Google will gain it. Apple may be the BMW brand of both these device markets, but they’ll never lead them again. But BMW makes some nice change, and that’s not necessarily a bad thing. The badness might come in elsewhere though.

Ultimately, tablets and smartphones are our agents in the cyber-world. What we do, what we get, what we want, where we are, and how we spend and even think are getting wrapped around the gadgets. You win with those agents, and you win in that much larger behavioral space. Apple “lost” the appliance race. Did it also lose the agent race? Maybe not.

Steve Jobs’ big mistake isn’t that he wants a closed ecosystem, but that he wants everything to be in that ecosystem. Making it impossible for others to clone Macs became an obsession with Steve, and that meant surrendering the option to run Apple software on other systems. What Apple needs to do to counter Android is to license iOS. Or maybe to establish the concept of the personal agent as residing in the network, the cloud.

“Hal” was disembodied, after all. In modern terms, we don’t necessarily see a difference between a locally hosted intelligence and a local agent of a distributed intelligence. The iCloud might become Apple’s Camel’s Nose under the Android tent. Make it strong. Make it accessible to every mobile device user.  ut Android off from the larger, more enduring, food chain. That’s Apple’s choice. Accept another second-tier positioning, license iOS, or make iCloud the focus. Think on it, Steve.

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