From time to time, I’ve written commentaries stating my belief that you shouldn’t expect Apple to be number one in every product category. Further, they do not have to be number one to be hugely successful, and there’s loads of evidence for that statement.
My remarks came ahead of a fascinating article appeared in Fortune, entitled “Why Apple investors shouldn’t sweat Android.” [1] The major point is to deliver a reality check to fanciful claims that the industry expects to standardize on a single smartphone platform. This seems to be a replay of the old PC myth, where many suggested that Apple was toast, simply because most of the world had embraced Microsoft Windows.
That, however, didn’t stop Apple Inc. from surviving and prospering for the most part, except for that terrible era in the mid-1990s when the company appeared to lose its way, and appeared about to die. Of course, that’s before Steve Jobs returned.
The argument from Fortune’s commentator echoes what I wrote, which is that, so long as Apple continues to grow ahead of a market, and earn stellar profits, they are successful. It doesn’t matter if Google, largely because there are more manufacturers building more and more Android OS products, appears to be growing faster. That impresses industry analysts (and you know how I feel about some of them) who believe there must be a single winner and a single loser. And don’t forget that those surveys you read about iPhone market share fail to include those other iOS products, such as the iPad and iPod touch. You might even include the new Apple TV in there, since it also incorporates the iOS, even if you can’t access the App Store just yet.
Imagine if you had one choice of motor vehicle. Imagine if Dell built all the PCs on the planet, which would, no doubt, bore everyone to death. Consider going to Best Buy to find a single line of flat panel TVs from, say, Samsung. Is that what you want? So why should an industry analyst tell us that’s the way it has to be for smartphones and PCs?
Also consider how much money Google earns from Android licensing. The answer is, of course, not a penny, at least directly. They give it away to handset makers who agree to their terms, but hope to make a return on their investment from the targeted ads you see in Google’s apps. Of course, buyers of certain products from Verizon Wireless will find that Microsoft’s Bing is the default search engine. So some of the money Google might have expected to receive will be going to Microsoft, to add insult to injury.
Understand that I have nothing against Google making great profits, and providing lucrative employment opportunities for their workers. If the recent executive reorganization makes for a more efficient company, capable of greater feats of innovation, the entire tech industry benefits. The goal posts are raised, and Google’s competitors need to work harder to keep up, or move ahead.
At the same time, having Android OS gear with great features and performance is also a good thing. It will mean that Android handset makers will also be able to prosper and deliver benefits to stockholders and employees. There’s nothing wrong with that. And if Google or their licensees just happen to find genuine ways to innovate that deliver real — rather than meaningless — benefits to customers, they deserve to succeed. It would also raise the bar that Apple has to reach or exceed.
Now when it comes to Apple’s original business, the PC, it appears that few, if any, of the other manufacturers in that business are trying to actually innovate. They seem to be adding a few mostly trivial features that Apple doesn’t have, or some extra connection ports, but they aren’t changing the dynamics.
As to Microsoft, they continue to operate years behind the Mac OS. Just the other day, I read a story that Windows 8 would attempt to provide seamless deployment across mobile devices. This seems to be a recognition of what Apple has done by building the iOS from the core of Mac OS X, and then incorporating some of those concepts in the forthcoming Mac OS X Lion.
Unfortunately, far too many members of the media and the industry analyst community will gorge Microsoft’s PR, and attempt to convince you that the company is being innovative, rather than imitative. That’s a meme that’s played out for years, ever since Microsoft’s Bill Gates licensed portions of the original Mac OS in the 1980s, due to the stupidity of then-CEO John Sculley. That misguided move created a monster, one that has, ever since, dominated the PC industry and, in large part, helped to stifle true innovation. And, yes, I do not believe that Windows would have gone as far as it did if Microsoft had to build it from scratch.
Meantime, I hope that the investors in our audience will not pay heed to columnists and analysts who cannot overcome their poor grasp of the way things are.