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Google and Apple as mobile co-belligerents

The relationship between Google and Apple is an interesting one. It’s enticing to declare them “at war” with one another, but that type of relationship does not account for the collaboration and partnerships they enjoy. To wit:

  • Google pays Apple for default Search placement on Safari. This means that Google treats Apple as a distributor.
  • We can presume that there is a deal between the two over Gmail and Maps on the iPhone as well.
  • AdMob is available on iOS without hindrance.

The business relationships between the two companies are self-evident. However, I would suggest that there are more important strategic reasons why Google and Apple are in fact implicitly collaborating against a common goal.

The concept of “co-belligerence” may describe the relationship: The state of fighting against a common adversary without a formal alliance and without a guarantee of non-agression against each other.

The common adversary is the telecom industry. It’s an industry being undermined by the technological change of mobile computing and its profits are up for grabs. Apple and Google have different approaches in implementing this change but in the end they dismantle and absorb profits from the same target.

They are also benefiting each other. Apple benefits Google by creating user experience innovations which Google can rapidly copy. Google benefits Apple by increasing smartphone consumption–educating markets to the value of mobile computing and crippling the profitability (and thus the ability to innovate) of Apple’s direct competitors.

If I may belabor the point, it’s like the concept of fast food. One company invents the fast food franchise process, another popularizes it and creates demand. Finally, the innovator comes in with a premium brand to split the market.

Apple innovates in product innovation with Google as a fast follower. Google then innovates on distribution and penetration enabling Apple to follow with a skimming strategy.

The end result is a more rapid and thorough profit evaporation from incumbents with corresponding condensation around the entrants.

To visualize it further, consider what the market would look like if one or the other of the co-belligerents was not participating. Could Google have developed their software without the iPhone as a reference design? At the same time, as Android eliminates the opportunity for alternative software investments by competitors[1] could Apple have remained the only integrated vendor with a uniquely high profit margin?

Of course, this is not a guarantee of success. New platforms may still take root and integration by HP may actually pan out. But the point I’m trying to make is that, for the time being, Google and Apple are not so much adversaries as comfortably busy winning against a rather weak common target.

Notes:

  1. Consider how hard it is for OEMs to justify investing in their own OS post-Android. Consider the desperate status of Nokia who abandoned a broad ecosystem and the paucity of alternatives.
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  • Evan

    in the longer term, I expect facebook, google and Apple to become the primary platform companies. Amazon will be the dark horse. Microsoft will play catch up. But despite all that, microsoft will still be making huge piles of cash.

    • FalKirk

      "… microsoft will still be making huge piles of cash."

      Will they Evan? When IT administrators try to co-ordinate their employees' phones, tablets, notebooks and desktops, will they see a need to stay with an operating system that only works on two of those four devices? When IT administrators realize that, to run word processing, spreadsheets and presentation programs on their tablets they are going to have to buy new software, will they choose to maintain both the new software packages and the Office Suite, or will they choose to buy programs that can run across all the form factors that they administrate?

      • Evan

        not sure about consumers affinity for windows OS, an OS is not a solution for the consumers, it is just a foundation/base like iOS(I doubt many apple consumers know about iOS) but microsoft consumers do love office/exchange combo by and large, they can move to the cloud and make it browser based and still retain most of the consumers. They already have office365 and hosted exchange. Where microsoft is weak is they cannot compete on price with google apps which has taken to 100 percent web based multi-tenant architecture with browser as the distribution channel, although google apps is weaker on feature comparison with office/exchange combo

      • Steko

        Fallkirk seems to be under the mistaken impression that IT admin's make all the decisions. In fact, many CEO/CFO/COO rely heavily on Excel and Powerpoint and love those products. So when MS gets around to optimizing office for touch/mobile/cloud you can bet IT admins are going to be purchasing it (because they are told to).

      • http://twitter.com/davidchu @davidchu

        Many CEOs are learning how to use Keynote and Pages right now on their iPads.

      • Evan

        CEO's :) are a very small number of consumers. Hasn't Apple thought us to attract the general consumers first. Microsoft office/exchange will remain dominant, and google apps will be a distant number 2.

      • http://twitter.com/davidchu @davidchu

        It was a reply to Steko who thinks that CEO/CFO/COOs won't migrate to Pages or Keynote.

      • Evan

        ok, I guess your answer is correct, iWork will do well.

  • lenrek

    There is a saying, there is no forever friendship or adversary in business. Hence we should not view such collaboration as unique. Neither should we believe Apple would never work with alternative solution (plan B):
    http://www.independent.co.uk/life-style/gadgets-a

  • Rob Scott

    This fancy Apple fans dream. The truth is that the majority of Apple fans are also Google fans. It has been very painful for most seeing their beloved companies fighting so publicly. So fans like Horace writes whishfull takes on what they would like the reality to be like. The truth though is that these companies are at war with each other. The fact that Google copies Apple is not lost at Apple and they hate it. If Apple had a choice they wouldn’t have Google search or maps on their devices. Also, it would be much better for Apple if there was no Android. It is false that Android popularized smartphones, Blackberry and Nokia did that. The fact that Android might benefit Apple is a result of Google’s poor strategy not some grand design. I do not know how networks are an enemy here. Networks/carrier are the biggest Apple customers. Apple sells the iPhone to the networks. It is their interest that networks continue to make money, hence you have to have a Data plan for the iPhone, the iPad and the Macbook. Apple has not made it easy to share data between the devices and that is due to the need to make sure that networks make money.

    • http://twitter.com/davidchu @davidchu

      I think both Apple and Google would like to see the networks turned into 'dumb pipes'. Why? Because it limits the speed that both companies can innovate and limits their control. Both companies prefer to control their own destinies. Apple was forced to hold back on tethering because of AT&T. Google is probably upset by how Verizon has screwed with the Android phones on their network. They want and should want direct access to their customer base.

    • http://twitter.com/Accent_Sweden @Accent_Sweden

      Your are in error on the data plan aspect. None is needed or Ipads and Macbooks. Nor is one even possible on Macbooks (so far).

      On what do you base the claim that Apple would prefer not to have Google for search or maps? As this been stated by anyone at Apple or Google? Or does your take simply fit into your preferred interpretation of events (wishful thinking)?

      Networks are the enemies in the sense that they didn't want Apple's business model and did everything they could to stop it (this applies primarily to the North American markets). ATT was in a position of weakness in relation to Verizon and felt forced to try Apple since nothing else was working for them. Carriers need Apple's model now to compete but they are always looking to return to the closed systems where they controlled all financial flows in and out. So Apple/Google need each other but carriers don't like it and would abandon Apple's model (and Android) if they could – just as Apple could abandon carriers if they could provide nation-wide coverage and become their own operator if the business case could be made. And the carriers know this.

      Dumb pipes will ultimately mean silent carriers who don't interfere with Apple earning money, just the way the carriers used to treat (and still do) their suppliers of dumb mobile phones. Nokia tried to fight the old way of doing business in North America and lost. No carrier bothered with them. Apple got a foot in through ATT and was able to change the entire business model for the North American telecom market.

    • timnash

      "Networks/carrier are the biggest Apple customers. Apple sells the iPhone to the networks."

      Networks and carriers are iPhone distributors and retailers. Apple's customers are the iPhone users. If users didn't like the iPhone so much, carriers wouldn't make it available because they know that Apple holds all the power going forward. Carriers can play Android manufacturers against each other. 28% of Motorola's sales are through Verizon and so Verizon holds all the power.

      For iPhone users, carriers are already effectively dumb pipes.

      • Evan

        maybe in US yes, but in other parts of the world, carriers don't wield so much power, US is a messed up place as far as carriers go. Motorola is not really doing as well as HTC or Samsung, these two have emerged as the biggest android OEMs. Motorola looks messed up to me, they are unable to transition smoothly to a post smartphone world.

    • Hamranhansenhansen

      The phone industry has changed so much, you forget how anti-carrier Apple is. The fact that iPhone is sold and updated and controlled by Apple is revolutionary. It is not sold through carriers like other phones, it just looks like that sometimes. Apple has already taken a lot of power away from carriers that they did not want to give up, but were forced to by iPhone's popularity.

      The biggest thing holding iPhone sales back is carrier fees. iPad has 3G data and VoIP, especially with FaceTime it will be a smartphone with a $25 per month bill. So why do I have to pay $80 per month for my iPhone bill? Because carriers want to charge voice minutes and texts and long distance and even long distance texts. An iPod touch with 3G and FaceTime would be a low-end iPhone for $229 and $25 per month, no contract, no commitment. But would carriers go along? The rumor is that Apple will become a virtual carrier so they can do what they want. I think they will do that because it is better customer service. Carriers have already protested the idea, because it means they will have to compete for Apple's business maybe on a call by call basis.

      So yes, Apple is very disruptive to carriers.

      The way Android benefits Apple is Android has offered further disruption to carriers and handset makers. Especially handset makers make no money with Android.

      • Evan

        "The fact that iPhone is sold and updated and controlled by Apple is revolutionary. It is not sold through carriers like other phones, it just looks like that sometimes." if I go to AT&T website, I can buy IPhone 4 or Iphone 3gs.

      • ______

        I think you completely missed the point by trying to hunt for the one sentence where you could "prove yourself right"

      • Evan

        that is called "trying to get clarification of what the commenter actually means"

  • TedJCranmore

    Would Apple also not fear American anti-trust and heavy-handed European regulators far more if they couldn't point to big bad Google as a major competitive threat?

    • http://twitter.com/davidchu @davidchu

      Strategically, I think it's too early to worry about anti-trust and regulations right now. You've got to focus on building competitive edges, whether it's economies of scale or ecosystem lock-in. A number two will usually rise up naturally since no one vendor can cater to everyone's needs.

    • FalKirk

      I think you make a very good point, TedJCranmore. Apple recently announced their digital subscription plan. Despite the fact that much of the press has already declared Android the inevitable winner in the phone, tablet and App Store wars; despite the fact that Google announced a competing plan within 24 hours, Apple's plan has been much criticized because, they say, Apple is using its "monopoly position" to impose "anti-competitive" rules on publishers. Go figure.

      Just imagine how the press and the regulators would be viewing Apple if it weren't for Google/Android's counterweight.

      • Evan

        Apple did clarify that subscription plan was only for publishers and not for SaaS providers, seems like a mild climbing down by Apple.

  • http://twitter.com/trojankitten @trojankitten

    Do you think Apple enjoy the competition from the sea of Android phones? No.

    They definitely compete in important markets, but not in all: Apple don't do search for ex. So they use them where Google have a needed, good, recognizable product that doesn't compete with Apple.

    But ever since Android gained prominence, Apple have taken steps to ensure independence if Google try something bad with their search integration: they added Yahoo search on iOS. Before it was simpler: Google or nothing.

    I'll quote Jobs himself on how he sees the Google-Apple partnership: "We definitely compete, but this doesn't mean we have to be rude."

    • John

      I could be wrong, but I'm reasonably certain Yahoo search was available in Mobile Safari on day one. I recall that Yahoo mail was also part of the original iPhone release.

    • Hamranhansenhansen

      I'm pretty sure you could always choose Yahoo search on iPhone.

    • FalKirk

      Like most things in life, the default choice is the choice almost always selected. The fact that Google and not Yahoo is the default choice means that Google and not Yahoo are the default winners. See Nudge: Improving Decisions About Health, Wealth, and Happiness and Dan Ariely of Predictably Irrational fame. Start at the 5:20 mark if you're in a hurry: http://www.youtube.com/watch?v=JhjUJTw2i1M

  • http://twitter.com/davidchu @davidchu

    Although Apple doesn't appreciate Google fast following them, their priorities should be on converting the non-consumption market. Same with Google. There will be plenty of time to duke it out later.

  • http://twitter.com/Carniphage @Carniphage

    Like heavyweight boxers, Apple and Google exchange mighty blows.

    But most of them seem to land on Microsoft's glass jaw.

    C.

    • Evan

      Microsoft remains both Apple and Google's primary competitor as of now.

  • Catalin

    This kind of analysis based solely on markets may not be quite accurate. See Oracle vs. Google. In market terms they are not quite competing each other (consumer vs. enterprise market) but they are fighting in court for commercial reasons.

    • Evan

      They are competing google apps collaboration platform v/s beehive collaboration platform. Of course both companies don't make much money off them as yet.

    • http://twitter.com/davidchu @davidchu

      Other than the $$$, Oracle is invested in keeping the Java Platform as consistent as possible. I'm sure some people will argue that Android isn't Java, but it's similar enough to cause problem.

  • what?

    How is Apple taking all the inovation and Google taking the copying role here? Except for smartphones, they aren't even competing hardware wise. The only competition is platform. On that subject, you can sure give Apple credit for basically creating consumer smartphones and the platform that goes with it, the app store etc.

    But to give Google the role of the copying machine that distributes Apple's ideas is just wrong. Apple gave a business model that works, but Google created all the useful tools to connect the web to people. From basic search engines that works(or used to..) to maps, to mail, to cloud tools (google docs, maps etc), i fail to see how it's from Apple.

    • David

      Well, considering the following:
      The original Android looked like a Blackberry until the iPhone came out
      Google TV followed Apple TV
      Google App market followed the App store(Google redesigned their look to almost exact Apple clone)
      Google subscriptions followed Apple subscriptions(1 day later)
      Google tablet OS followed Apple tablet OS
      Google announced music service following iTunes

      Let's face it. Apple is the R&D arm of the PC and mobile computer/phone industry

      • Evan

        hmm He did say that google copied appstore, the consumer focussed smartphone strategy from Apple. But Google did not copy the search engine, gmail(aah I love that), maps, google docs, google voice etc from Apple.

      • newtonrj

        Interesting you point to these as Google innovations Did you happen to note that aside from email (me.com) Apple is not in any of these? Also, did you note that:
        Search – Google didn't invent it but Yahoo! did. Google just did it faster and added simpler ads
        Gmail – This was a repsonse to Yahoo! Mail being so large
        Maps – Google did a great job here, if by great job you mean copying MapQuest
        Googledocs – Come on, you think Microsoft/Oracle didn't think this is a total ripoff from their online future
        GoogleVoice – VoIP services were rolling 10 years before GoogleVoice happened in '09.

        Lets simply agree that Google and Apple are very talented companies able to monitize product offerings. -RJ

      • Steko

        The bottom line is every phone coming out now and for the last 3 years is a knock off of the iphone and every tablet coming out now is a knock off of the ipad.

        You know how <company X> developed their new tablet? They bought ipads and told their engineers "make this with some extra mhz and tack on some features, we're shipping in 12 months". That's what Horace means. If you want to pick at nits, find a hairier monkey.

      • Evan

        yes Google did modify the look and feel of android devices and copied the appstore concept, in fact they have pushed the appstore concept to enterprise too via google apps marketplace. They haven't said no. Wasn't Steve Jobs the one who said, good artists copy, but great artists steal ? nevermind, Apple itself licensed the original mac GUI from Xerox corporation, so does this mean they copied Xerox R&D ? no, it means they understood the potential of the UI and licensed it. Similarly among all of Apple's competitors , Google was the first to realize the potential of iPhone and its ecosystem and changed tracks quickly, this indicates a similar far sightedness and nimbleness in operations(as Apple) and in responding to Apple, that Microsoft lacks, Nokia still does not have a high-end competitor to IPhone, RIM also does not have one. Apple IPhone was not really doing as well in 2009 or 2008 when the world was in the grip of recession, IPhone's breakout year was 2010, android's breakout year was 2010, none of Apple's rivals thought Iphone would do so well, only Google did. Maybe it was the lack of legacy I guess that helped for Google.

    • AC88

      You make an important distinction regarding business model innovation v. product innovation; however the problem is that Google's business model innovation doesn't actually do much in the way of business–as far as revenue and profits are concerned. Consider that well over 95% of their revenue comes from the original search business, whereas with Apple more than half its revenue comes from products that didn't exist 4 years ago. There's not a lot of business model innovation at Google, if they're not actually making money from it. When (if) Google makes money from Android, your point may valid. As it stands, Google uses "search" to find other folks' ideas, whether that's Apple's, YouTube's, or patents.

      • Evan

        wrong, google gets only 66 percent of their revenues from google.com. The remaining comes from other areas. What you are alluding to is the profit, yes 90 percent plus of their profits come from search.
        Search is a fundamental to human beings, search will never go out of fashion or become uncool or whatever, it is a part of our mental makeup, we always search for things.

      • http://twitter.com/davidchu @davidchu

        What AC88 probably meant was that 95% of Google's PROFITS come from search. Which is true. Many of Google's other revenue sources, such as YouTube and AdSense, are run at break even or a loss to create barrier of entry for potential competitors to the online marketing space. This also includes Android and supports Horace's point that other mobile OS entrants are stuck between a rock and a hard place trying to compete with Apple at the high end and Google at the low end.

        I agree with your assessment that Search is fundamental to human beings.

      • Evan

        yes I agree and I did say search generates 90 percent plus of its profits, youtube is interesting, basically scale of youtube is hard to implement for smaller rivals, but microsoft and apple have more money than google and microsoft is not averse to throwing money at things, just witness that microsoft paid a billion dollars to nokia to court it. I think what youtube has is the 'community' advantage, and google is consciously trying to build a 'community' around android as well. The 'community' advantage transcends brand and a lot of other 'conventional' advantages. It is similar to what wikipedia has. Wikipedia will never go out of fashion because of its massive sense of 'community'. Adsense is similar to 70/30 rule for apple appstore policies.

      • asymco

        I would argue that Android is a business model innovation and that's a fairly recent innovation. The idea that what used to be valued as a license (Windows Mobile, PalmSource, Symbian) is now considered value free. Through Android (and Chrome) Google is monetizing system software through advertising. That's asymmetric and not something other software companies are able or willing to do.

  • CndnRschr

    Google and Apple are working hard to refine their differences and to make these clear to consumers. Apple provides a protective, proprietary, walled-garden with ease of use, high quality, polished interface, paid-for-use apps, etc. Google provides an open, all-options viable, wild west, advertising-based, rough around the edges but no barriers ecosystem. Each have their place, each makes money and each is competitive and innovative. Consumers have clear choices and each approach has its appeal to people.

    What is less clear is whether these two behemoths are truly sucking up the oxygen of their competitors. RIM is still doing well, HP is nascent but promising and Microsoft has oodles of money to throw at WP7 (although from the botched minor update it seems money does not buy happiness). Consumers are both loyal and fickle. The stickiness of the existing ecosystems of Apple and Google will shape how dominant they remain because each will surely make occasional mistakes. How well these are tolerated by their users will depend on how vested the consumer is in their ecosystems. That's the challenge for the newcomers. Apple seems supremely confident in their stickiness (witness the 30% take on In App Subscriptions) so either they have good data on what it would take to lose an iPhone customer or they are being arrogant (likely the latter, given that their sense for success has done well for them to date). Typically, companies building ecosystems bend over backwards to attract new customers, developers and content. Apple seems to be preferring to protect its profitability over expanding its content.

    • WaltFrench

      “RIM is still doing well, HP is nascent but promising and Microsoft has oodles of money to throw at WP7…”

      I don't understand how any of these claims support the notion that the firms will be profitable in the smartmobile space. None of the three has shown products that compete at the Iphonedroid level in either handsets or tablets. Not in the integrated product delivery, not in the ecosystems. And even, not on the individual device level!

      You see from Asus how (relatively!) easy it is to slap together the hardware for a tablet, and how little it means in terms of a product that will entice consumers. HP, RIM and Moto are all seemingly stuck on how to create a competitive ecosystem, all hung up on the idea that Flash 10.2 will be the critical trick, while yesterday, Adobe's CTO created an extended post, seemingly could've been subtitled, “high-performance Flash on mobiles: don't get your hopes up.”

      • CndnRschr

        I didn't comment on profitability. We all know who has the lions share of that (although RIM is doing a lot better than the Android makers). It's early days for WP7 and Microsoft has patience, time and money. Ditto for HP (which is more promising than WP7 at this point).

        Yes, their supposed differentiator is a "full web experience"…. for half the time. I see little evidence of people with iOS devices bemoaning the lack of Flash content on the iOS ecosystem partly because the market has responded with alternative technologies. The only reason Microsoft, Google, HP and RIM are embracing Flash is because it’s a possible differentiator to Apple. But that's like saying our phones are better than the iPhone because they have a rotating dial mechanism. It's ironic that the Xoom will not be able to view its own Flash-based web site at launch tomorrow.

      • WaltFrench

        I agree with your points but was highlighting that, in my view, (long-term!) profitability IS the oxygen in the room, and without a clear path towards it, no firm will hold on.

        I don't read balance sheets, but think Moto doesn't have the wherewithal; as I think their filing showed, they need only to have a couple of major misses and they're toast. RIM is going through a painful implosion of its bread-n-butter sales and clearly knows what it needs to do; they're fortunate that they realized this 2 years ahead of Nokia but the Playbook looks more and more isolated from apps, media and even basic corporate workstation functionality (assuming you want more than a browser), with no native development kit.

        And Microsoft. I subscribe to Gassé's Second Envelope theory, that Ballmer does NOT have the luxury of pissing away a small fortune each year for a decade while waiting for a Kinect-type hit. For that matter, I can't even envision a scenario in which Microsoft can make more money from its proprietary mobile OS than it can by selling the OS to Nokia, then linking every mobile OS to Office, desktop PCs and the Microsoft cloud services.

  • berult

    Co-belligerence …on the surface. Just as we all profoundly believe in personal freedom and make common cause against tyranny.

    The arm merchant makes a living and a half on this belief. He has a personal stake in fueling the flame of freedom, just as we all do, and a corporate stake in marketing its pertinence in our daily and long term reach for the absolute.

    Some see overall optimal freedom as an aggregate of individually optimized freedoms; what I call perimeter liberty. Others look upon freedom as an absence of barrier to unhindered network intelligence; what I call inner connectivity.

    Thesis and anti-thesis; matter and anti-matter.

    And the arm merchant, business model "oblige", goes for the kill. He can better inhabit his noble pursuit of freedom in a cost-plus embodiment than in a minimalist environment. He'll aim at a gun for all, all guns for one. Each American, each Earth's inhabitant is worthy of defending its own personal territory with the occasional rumpus of war of territorial aggrandizement. 

    Freedom through peace shrinks through personal and collective wars of territoriality.

    What has it got to do with Google and Apple? Everything. They both work at spreading freedom as a template for jacks of all trade. One is harnessing ego compulsion, the other boundary attrition. The former is biding its time, the latter is niching its rhyme.

    There need be no other common cause than casting a spell on freedom. One spells it from the butt end, the other from the seeding hemispheres. What one sees as co-belligerence is but a formatted inversion of freedom's dual creeds: the former is niching its rhyme, the latter is biding its time… 

  • davel

    I do not agree that the Google/Apple relationship is symbiotic.

    As many have already posted Apple was disruptive.

    Pre-iPhone the telcos held the cards. Apple forced the consumer to recognize that the value of their phone was the manufacturer and not the telco. By forcing a conspicuous presence in the signup and problem resolution of their new device Apple changed the market.

    Apple is the gold standard of the high end space. In fact Apple redefined what a smart phone is.

    Apple needs/wants Google's expertise. Google Maps and search are the best available. Apple wanted to leverage that expertise/platform and create a best in class product. Google pissed them off by copying their platform. If there was no iPhone, Google would have been content – if it did release Android for phones – to copy the market leader RIM. Schmidt by being on the board got a first hand look at the market the rationale and the battle plan for the iPhone.

    Android does support Apple in its attack on the telcos by giving further evidence that the phone manufacturers are the companies the consumer wants to deal with and not the telcos, but Apple would have driven that point home itself. The message would sink in if a bit slower.

    I will agree that Google and Apple are both eating profits from the telcos and the other phone platforms, but both would be happy if the other did not exist.

  • Onutz

    I’d like to see this non-belligerent status being more relevant for the future of the market, but I fail. The same way I could argue that there’s a non-belligerent status between Apple and the operators, as Apple always relies on the operators to subsidies the devices. Also, Google can be seen in the same relation to operators as it somehow “gives away” the OS for the operators to preload with bloatware.

    I think “stealing our customers” fright resides only in operators’ minds, as they have no idea on how to monetize this new web 3.0 trend and socializing tool.

    Google wants numbers, Apple wants quality; to me, this difference seems more relevant than the resemblance in common goals.

    • Evan

      not totally correct google wants quality, apple wants numbers. Google search, maps, mail have the best quality, ipod touch nano is affordable, IPad is competitively priced

      • unhinged

        This is because Apple already has quality. Google think they have the numbers. :)

      • Evan

        hmm well put, but Google has quality in its core services already search, maps,mail, docs and other web services. Android is their first platform, so will take a while that is all to perfect it.

  • poke

    I think you actually give Google too much credit. What they've done is create an OS that's succeeding based on superficial similarities to the iPhone and they've been essentially giving it away. It's Samsung and HTC who are the main distributors. If Samsung had not been having problems developing its own modern mobile OS and Microsoft hadn't fumbled its next generation OS, would either Samsung or HTC have adopted Android? Google's success here is primarily one of good timing. They've had to do very little to actually push Android in the marketplace.

    Moreover, it's obvious that Android's capability as a platform on which to deliver apps and content has played a minor role in its success (look at Android Market revenues, look at the fractured ecosystem, look at the lack of 3rd party developer success) and the main reason it has been successful is that it copies the superficial features of the iPhone (the capacitive touch UI, the web browser). Microsoft and Nokia's biggest mistake may have been in trying to create whole platforms when Android has shown that all they needed for explosive growth was a capacitive touch UI that looks like iOS, a good web browser and wider hardware availability than the iPhone. If they'd managed to do that in a timely fashion, either one could be in Android's position now.

    • Evan

      seems to be a long winded way of saying time to market is important. Google realized the potential of Apple iOS ecosystem before Nokia, RIM, Microsoft and others and scrambled fast to counter it.

      • poke

        I'm saying Google didn't counter Apple's ecosystem. Google's ecosystem is anemic. Google's success has been limited to copying the iPhone's user experience and NOT in offering a comparative ecosystem. Yet that was enough to gain substantial market share. That's the part everyone has been missing. I think if Nokia and Microsoft had simply focused on providing the same out of box user experience that the iPhone offered, they could be where Android is now, because that's all that Android has achieved so far. Personally I still think there's still an opening, since Google doesn't appear to know how to capitalise on its market share. We're still not seeing moves into content or a substantially improved app store strategy from them. Until they have that I think anyone can come in and take their customers provided they have a comparable user experience regardless of whether they have anything approaching Apple's ecosystem (i.e., 3rd party apps, music, movies, etc). There's clearly a market for phones that look like iPhones but don't have anything comparable to Apple's ecosystem. That should be the lesson we take away from Google's success here.

      • Evan

        oh yeah google is a novice as far as consumer facing side goes, Google is more of an applied science company(probably to do with Larry Page and Sergey Brins academic backgrounds) and not really a consumer electronics company like Apple or Sony or Nokia. I am sure they will take steps to correct the flaws as much as possible. And in any case if Google does not provide a good experience on the market front, others can like appbrain or Amazon Market for android, that is the beauty and promise of Android.

      • unhinged

        This is because other companies are learning that the first priority should not be market share but profits. If profits come from the greatest share of the market, fine, but the MS PC hegemony is an aberrant case, not the general rule.

  • pk de cville

    What about the inherent anarchy in Android's open development?

    Will the user experience among 1000s (2012) of Android devices be too unpredictable?

    Will savvy Android purchasers need to read CR reviews on which handset/tablet to purchase?

    Will the Android Marketplace and app developer group grow in healthy functional ways?

    Just wonderin'

    • Evan

      the internet is an anarchic platform by design, seems to be doing just fine eh and is the biggest of all the platforms. Android is more on the lines of controlled chaos as some commentor here pointed out. The compatibility test suite that every android device has to pass for the inclusion of Android market seems to be the way Google intends to control the inherent chaotic nature of Android devices.

  • P. K.

    > Google and Apple are in fact implicitly
    > collaborating against a common goal

    Did you mean to say either “collaborating toward a common goal” or “collaborating against a common enemy“?

    • AC88

      Collaborating against a common enemy, I think:

      “We consider neither Apple nor Facebook to be a competitive threat,
      our competitor is Bing” –Eric Schmidt, August 24, 2010

  • HTG

    Horace has focused on Apple's 'core' (yeah, ha ha) of placing the consumer at the centre of its existence. In contrast the telecoms have placed the consumer at the outer rim of their existence, and we all have horror stories about the phone company…

    While Horace's analysis is a good start, I don't think it is yet complete, mainly because Google has ceded so much of the consumer experience to the telco's themselves, as other phone manufacturers have done in the past. This fragmentation of Android could be likened to a similar fragmentation of language over time, where groups of people fall out with one another and start wars because the other guys 'talk funny' or they can no longer understand each other…

    Apple's curated system has clearly put the focus on the consumer and a good chunk of the power in the hands of the consumer when it comes to the telecoms companies, but I'm not sure that Google is doing the same time.

    MSFT with WP7 is closer to Apple's strategy than Google but look at the absolute clusterf**k that has occurred with its first software update! You can't win customers by bricking their phones…

    • Evan

      android is modeled on the open concept of internet, more or less a free place for development as and how the companies see fit, darwininian evolution will see to only the strong business models succeeding.

  • Brian

    I think we both know that Google isn’t just copying what Apple innovates. Android contains many innovations of its own, as do the widely varying hardware platforms upon which it runs. Meanwhile, both IOS and Android have borrowed from Blackberry, Symbian and others.

    • Fake Tim Cook

      They all copied Newton and HyperCard.

  • Fake Tim Cook

    We are frenemies with benefits.

  • WaltFrench

    Horace, wasn't it just a few weeks ago that the popular meme was that smartphones wouldn't be a two-horse race? While you think HP “might” get their program together, the absence of other contenders seems to suggest that numbers 3, 4, … n are all SOL.

    • asymco

      The mobile computing transition is still too early to call the outcome in terms of governance. HTML5 still looms as a future disruption of platforms themselves.

  • Steko

    Honestly everyone's copying Apple, if it wasn't Google in 2nd place it'd be someone else. Apple is probably happy it's Google since:

    (1) Google doesn't know shit about customer service
    (2) Google doesn't know shit about product design
    (3) Google isn't monetizing second place
    (4) Google's software innovations are easily copied (heck Google will probably put it on the app store for free themselves).

    • Evan

      those are good things for Google's competitors eh? Imagine where would Android be if Google was good at all that? 1million activations per day ? As it is Google literally controls the internet.

      • asymco

        An organization, no matter how big, cannot be good at everything. In fact, it can usually be great at one thing.

        I don't think you are using the word "literally" correctly in your comment.

      • Evan

        ok, not the internet, but atleast the advertising on the internet through search advertising, adsense, double click adexchange and youtube advertising. Google pretty much has a monopoly on internet advertising.

    • anonymous

      >>Google's software innovations are easily copied

      Then tell me why it is taking so many years for competitors to crush Google search?

      • asymco

        Google's product is not very hard to copy but Google's distribution is very hard to duplicate. Most users think as much about their choice of search engine as they do about their choice of operating systems.

      • Evan

        I respectfully disagree, google search is still better than all the competitors even after 11 years. Gmail is difficult to copy, scale of youtube is difficult to copy even for microsoft. Android is sloppy and geek oriented, but it will change as google concentrates more on android.
        The reason search engine is different from an OS, is because an OS is just a fundamental technological block, the users don't use OS for the sake of using it, they use the services, apps on top of it, no wonder microsoft consumers have more affinity towards office/exchange than towards windows. But search is not just a fundamental technological block, it is an utility tool, research tool, entertainment tool etc it is the ultimate general purpose tool and people like the utility tool to be great and fast and relevant. Google search does that best, competitors have not yet caught on(although bing is good in some aspects like travel search), so consumers do care about search tool, but not an OS. And if people are using bing, it is not because bing is equal to google in most aspects, it is because bing is better than google in some respects. Search is a very hard problem to crack.

      • Evan

        in Short, search engines appear non-sticky, but is actually very very sticky due to the scale of the problem at hand. Search is like searching for a small microscopic relevant needle in a humongously big haystack(internet)

    • davel

      I think Apple would be happy if Google were not competing with it in the platform space and was content to do applications that would work better on iOS than others.

      Google has HTS,Samsung, Motorola who have done a decent job at hardware design.

      Google is absolutely monetizing Android. I have heard $1B is attributable to Android traffic via search/adds/etc.

      • AC88

        But you haven't read that in any GOOG financial document. That number is often cited, but includes to AdMob and other mobile ad revenue. It's not Android revenue.

      • davel

        that is correct. i have not read any google financial documents yet. it makes sense tho. android is free, there is no contract per se. they make money on search and ads. there are many android devices out there and so there is some percentage of those figures that can be attributable to android and not other platforms.

        as horace has stated above, google is funding its operations in a different way. they dont have to get direct revenue from android to profit from it.

      • Evan

        I would trust Google when they say android is profitable , I believe them. I hope they are not lying :)

  • PatrickG

    Horace, while I understand the point of trying to examine the relationships from a simple viewpoint. The reality is far more complex than you have alluded to in this article. Google's purpose in purchasing Android is obvious from their business model and ultimately from how Android is deployed – via free use by handset makers and controls from the carriers. Android is Google's controlled access to mobile ad revenue, and a stop-gap measure until (if?) they are ready to release ChromeOS. Every step of their strategy is purposeful acquisition of personal information to bolster their ad targeting and search strategies. That it put Google in direct competition with Apple's iOS ecosystem was unfortunate but a calculated risk by Mountain View. They needed the solidified access into the mobile space as the desktop space was saturating and flattening out in growth. The gain for Apple was that Android wasn't targeting the high-end segment of the market, but expanding and eating up the feature phone segment by getting Android onto less costly handsets. This allows the regular feature phone users to dabble in the smartphone experience without a heavy commitment. The add for Apple is as Android eats into the other segment it sets up a much more receptive proto-smartphone user to desire the "better" Apple experience. Of course Apple will leverage what Google has to offer in Maps and other targeted products where the user experience is already proven. In the same way Apple works with Microsoft on the features in Office, Exchange/Outlook and other Microsoft products and services. It is almost deceptive to take at face value any comments that reflect direct, single-minded competition between these companies given the complexities of their relationships – they simply don't work that way.

    • PatrickG

      *Sigh* That second sentence was supposed to read "The reality is indeed as complex as you have alluded to in this article"

    • davel

      What is ChromeOS? I am confused. Is it a browser? An OS? Both?

      I do not understand your proposition that Google NEEDED Android to solidify their access to the mobile space. Could they not gain the same access by building and enhancing new applications and making it available to all phones with a good browser?

      I think they purposely targeted Apple. Steve trusted them and they turned on him. At least that seems the way Apple feels. Verizon has successfully used Android/Motorola as a foil to compete with Apple/ATT. This is direct competition.

      I agree that Google is also a partner of Apple, they do not want to cut off all the iOS users from their search and ads; but I don't think it was unfortunate that Android is direct competition for iOS, it was deliberate.

      • asymco

        Regardless of initial motivations, my point is that Apple and Google are now both competing with non-consumption and against that competitor they are better off leveraging each other.

  • anonymous

    >>which Google can rapidly copy

    This is another group thinking in the industry that Google copies everything Apple does.

    I don't know anyone here experienced Google apps on dumb phones. To me they are as good as on the iPhone or Android.

  • bo willis

    Google and Apple are obviously working together.

    I tested this by posting some negative and psotivie info on Twitter about Apple.
    Google realtime was then only displaying the positive information. Not the negative!!
    Seem that the google person who chooses the tweets to display is pro Apple.

  • kkk

    Truth of the matter is both Google and Apple fear Microsoft than they fear each other. but the big war will come!

    Late last year 2010 Apple had a very good chance to switch search engine to Bing and receive money from MS but chooses to stick with Google search for the time being. If apple chooses Bing , Google search could take a big hit but Bing/MS would become too powerful. and MS Money would not offset the lost of Map, Youtube App and Gmail integration for Ios devices.

    Google knows all this. Google took advantage of apple fight with Flash by siding with Adobe and later side stepping H.264 standard with WebM. making sure that apple is dependent on Google services and apps. Google also launch various attack, FUD Campaign and various initiative to sidestep Apple.

    Apple de-brand Google from IOs by changing Google Maps to just Map and Google search to just search, introduce Bing as third option and delay/block many other Google services reaching the Apple app store. apple also has a map app and various cloud services waiting to be launch at the right moment. and maybe Apple is betting on its large app environment to offset Youtube loss or maybe allow Flash on a dual core system.

    but as this moment Microsoft is still deem the most fear among the three. Ms at full force is very troublesome for Apple. Apple has very little chance(5%) against fighting an unlicensed/pirate version of windows with full development access. If the Pirated version of winphone7 with full development support is in full force instead of android like today Iphone would suffer even more. The Mac for years had struggle in area of business and enterprise.

    Google fears more from Bing than facebook. The latest spat between Google and Bing show the uneasiness of Google position. Just like when jobs said Android has porn. Android was initially design as MS windows Mobile killer. But when the Iphone murder win Mobile then with Eric help they back stab Apple in the back and Morph Android to Iphone clone.

    But Google position in Search is not safe. Microsoft can easily kill Google search in the desktop.maybe starting with windows 8??? Google introduce Chrome and late chrome Os for the Wintel Market. Now they are preparing Android with Desktop UI for tablet maybe so it can scale to a full desktop if chrome Os fails.

    The Android desktop UI known as honeycomb will be an ultimate failure. It should have use the basic Android Phone UI and scale its app and try to copy the Ipad as much as possible. Now not only will it fail against Ipad but it will also fail against cheap Win Netbook. But that is a different story. anyway this show how Google fear MS more than even IPad and wager itself with a desktop UI on their tablet and later PC.

    • WaltFrench

      Ihave to say, @kkk (your English skills suggest you might not recognize what an unfortunate name you've chosen), that I read each of your points and cannot find a single piece of substantiating evidence behind them.

      Maybe pick just one that deals with Apple/Google driving out others and see if you can form a straightforward syllogism?

  • davel

    I think Google pushing WebM is just their attempt to control video standards. They can always pay off whatever lawsuits come their way. If they are successful they also get to put a major bump in the road for iOS.

    I do not put as much stock in Microsoft as you. Microsoft cannot leverage its desktop monopoly position in the mobile space. Phones dont need the desktop. There are no compatibility issues with contact lists and browsers.

    Apple's primary competitor in this space is Google. Google's primary antagonist is Facebook.

  • briancgillespie

    It seems with that Google is both co-billergerant with Apple against telecom industry and telecom industry against Apple.

    Or am I misinterpreting the facts?

    • asymco

      Android may enable some sustainability of operators but that is only temporary. I believe Google is still sapping the industry of value. The more operators embrace client software (even while crippling it) the more their value proposition declines.

  • kkk

    Microsoft desktop dominance is something to fear about.

    With that kind of monopoly, they can sponsor and bleed for more than 7 year with the Xbox and suffer huge losses before Xbox is what it is today. And they did it by buying off developer one by one. so WinPhone is not out of the picture yet and the developer will come. Balmer said it is a long game.

    MS can nuke Google Search just like they did to Netscape at the desktop space. And even the DOJ might not back Google this time as android becomes bigger. This year Google wants to make android even bigger and much more profitable. There is no guarantee that window 8 would fully support Google by default. The Monopoly thing looks to expire by 2012. Even with the horrible Internet explorer Ms maintain 55% market share for browser with the help of windows. Bing with the true help of windows , Google search and business in the desktop looks very shaky.

    Apple as of now has become as big as Microsoft. But that was not the case in 2007 when the iphone was about to launch. And it wasn't the case in early 2010 before the Ipad launch. Apple would be hesitant to help MS dominate search. WinPhone has the potential to be threat in Mobile Business and Mobile game in the future. Ms is dominate enough to create their own set of developer. Apple would preferably let Google and MS duke it out between them.

    Ms is also gunning on apple too but Jobs is smart and play the secrecy game really good. MS tactic seam less to work as Apple goes for full integration, full control and Full independence thus not allowing any room for any component to be disrupted. Jobs avoid any direct competition like on the Mac iWork vs MS Office. Apple just provide difference niches on the desktop . but with IOS things can change. Apple is projected to at least may even sell 150 Million Ios device this year alone. Maybe up to 180 Million Ios devices plus 18 Million Mac .

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  • Brenden

    Without Android and the AT&T exclusivity, Apple would have probably done to the smartphone market the same thing they did to the music player market–there would have been competitors of course, but none with enough polish and marketing muscle to present a serious threat. But Android is actually pretty good (and a lot of people–like my parents–can't tell the difference at first glance), and a lot of companies joined forces to market Android phones (Google, Verizon Wireless, Motorola, HTC, T-Mobile, etc.) Lots of people also didn't want to switch to AT&T's poor network coverage.

    Google provides some nice services on iPhones, like the maps and YouTube, but I'm sure Apple doesn't like anyone giving away free software that copies quite successfully the core UI features that initially set iPhones apart from all of the competitors.