Apple vs Android Business Models
Steve Jobs turned up at Monday’s Apple earnings call to take some shots at his competitors.
His heaviest guns pointed at Android, where he contrasted “the real difference between our two [Apple v. Google] approaches”: “Android is very fragmented. Many Android OEMS . . . install proprietary user interfaces to differentiate themselves from the commodity Android experience. The users will have to figure it all out.” So will developers: “Twitter Deck . . . reported that they had to contend with more than 100 different versions of Android software on 244 different handsets. . . . Compare this with iPhone, where there are two versions.”
Nor are Android apps cross-compatible. “In addition to Google’s own app marketplace, Amazon, Verizon, and Vodaphone have all announced that they are creating their own app stores for Android. So there will be at least four . . .which consumers must search among . . . and developers will need to work with to distribute their apps and get paid. This is going to be a mess.”
“[T]he open versus closed argument is just a smokescreen to try to hide the real issue, which is, what’s best for the customer, fragmented versus integrated. . . . We see tremendous value in having Apple rather than our users by the the systems integrator. . . . When selling to users who want their devices to just work, we believe integrated will trump fragmented every time. And we also think our developers can be more innovative if they can target a singular platform rather than a hundred variants.”
Aside from talking his book, Job’s is making an important point, which is that different approaches exist and that none is a priori right or wrong. At the moment, the two models are in a rough tie, with Apple and the Android menagerie each shipping 200,000 to 300,000 thousand per day. How the numbers will go over time is an interesting question. Obviously, customers will have different tastes in the extent to which they want to be their own integrators, and Apple may well profit greatly if consumers find the Android world just too confusing and flee to the turn-key iPhone.
Jobs mentioned Blackberry, another integrated model, as a competitor, albeit dismissively. But he did not mention the other looming presence, Microsoft, which is offering a hybrid in the form of Windows Mobile 7. Each manufacturer can offer its own hardware, but Microsoft is imposing some uniformity on the user experience and eliminating at least some of the fragmentation. It is uncertain how far this will extend in terms of cross-applicability of apps, but it could be that hardware manufacturers will decide that they would rather be in the phone business than the apps business, especially if Microsoft offers them a good share of the revenue.
One uncertainty (for me – those better qualified technically may have an answer) is how much maintenance these smart phone operating systems need. Obviously, for PCs, both Microsoft and Apple have intense ongoing efforts to identify and counter viruses and other security threats to their OSes. If the same kinds of efforts are needed for smartphones – and it seems logical that they will be, especially as the phones are adapted for mobile payments, then it is simple to see how Apple and Microsoft will address the need, but hard to see how Google does so. In the Linux space – which seems like the nearest available parallel – no Linux distributor will warrant the safety of a system that has been tweaked away from the initial distribution.
So will Google be the maintainer of all Android versions? Does it take the view that every OEM that uses Android is on its own, or, alternatively, that an open source community organized around Android can take care of any problems?
In any case, the differences in the models, and the fog of competitive battle that obscures their future fate, supports one of the main points here at Digital Society – that there is nothing like the free market for discovering what people really want and how they can get it.
Image from tsevis’ photostream.