Wednesday 14 October 2009

So Who Are Apple and Google Really Competing Against ?

Let's be honest: there is nothing better than an epic hi-tech battle. If Gog and Magog were the warriors of choice in Biblical days past and future, then their equivalents today are Google, Microsoft and Apple. In particular, with the recent departure of Google CEO Eric Schmidt from the Apple board of directors in early August, all eyes are focused on the alleged structural conflict between these two hi-tech titans. Even if Apple and Google are notionally allied in common struggle against Microsoft, they will find themselves in direct conflict over supremacy in the high tech world. Or so it is claimed.

One view of this struggle was discussed in an August 17, 2009 article written by Peter Burrows for Business Week and entitled "Apple and Google: Another Step Apart". The focus of the article were the recurrent two-way hi tech struggles, first between Microsoft and IBM (control of the PC), then between Microsoft, on the one side, and Netscape and Sun, on the other (control of access to the internet) and, more recently, between Apple and Google (control of the multiplicity of connectivity devices and platforms).

There is something a bit artificial about the typology--where are Intel and HP, for example? Nevertheless, there is merit in considering what the article describes as the "cultural opposites" -- Apple ("closed, customer-oriented, quality-focused") versus Google ("open, cloud-oriented, quality-focused"). As stated in the article:
"Google is the chief advocate for a wide-open world of Web standards, in which programmers should be able to run just about any software on virtually any computing device ... [including] dozens of Android-based handsets [are you listening, Apple iPhone?]."
On the contrary, we have Apple, with an emphasis on
"applications ... designed to work only on Apple devices. The company's ultimate goal is create an alternative, more exclusive universe, where consumers gladly play by Apple's rules as they use its stylish, easy-to-use products."
From the point of view of innovation, which view is better placed to prevail? Per Professor Henry Chesbrough of University of California-Berkeley, if history is any guide, Google has the upper hand. According to the article, Apple lost out to Microsoft (perhaps more exactly, Wintel, being Microsoft Windows plus Intel chips) in the 1980s because Apple sought to maintain a closed hardware-software ecosystem while Microsoft relied on a legion of independent software developers and PC manufacturers.

Find the Closed System

Based on this community development model and using history as a guide, Apple would seem to be poised to suffer another long-term defeat. After all, the Android system is all about encouraging a community of developers and device manufacturers to base their developments around the open connectivity operating system, while cloud farms, be they of Google or others, will allow users to store and retrieve gobs of data off-site in a far-away cloud.

I am not totally convinced about this conclusion (although, to be fair, the article does conclude that "for now, at least, there's plenty of growing room for both"). Underpinning the analysis is the larger phenomenon whereby hi tech companies are seeking to integrate and consolidate, where software and hardware are increasingly being brought under one corporate roof (such as Oracle seeking to buy Sun). With respect to Apple and Google, however, this one-stop shop view does not quite ring true.

Apple may find its iPhone threatened by Android-based devices but, at the end of the day, if Apple is to succeed a decade hence, it will have to develop another world-beating device. It is just as likely that the Android threat will not be relevant to the success or failure by Apple of this new device, whatever it is. Google is still about leveraging "search", while Apple is still about the next great device and the software to support it. The ultimate struggle for both is not the existential threat posed by each of them for the other, but the ability of each to build on its strengths and to innovate successfully for another generation.

Something tells me that, no matter how attractive it might be journalistically speaking, to view the enfolding competitive challenges of Apple and Google as an updated two-way struggle redolent of the IBM-Microsoft (or Microsoft-Apple) struggles 25 years ago, the reality is fundamentally different. Success for Google and/or Apple will not be about vanquishing the other, but continuing to innovate in a way that makes sense for each particular company. History is not prescriptive but, at best, instructive. This observation applies equally to the hi tech world.

Hi Tech Consolidation?

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