In a previous post, How smartphones will disrupt PCs, I explained how and why I think small, ultra-portable, general-purpose computers that we’ll think of and use as “smartphones” are going to displace the PC. I promised then to explain why the software of these devices will be open source.
Go read Androids Will Challenge the iPad. It isn’t about smartphones, but the logic that will break the iPhone business model is clearly set out in it for anyone who’s paying attention. What we’re about to see in the smartphone and tablet markets is a repeat of the way the IBM PC shouldered aside the Apple II after 1980. Google’s deliberately slow-balled launch of Android via the G1 was just prelude; it’s with the Motorola Droid, the unlocked Nexus One and the generic Android tablets that the game begins in earnest.
After 1981, IBM seized the lead in the personal computer market by exploiting two advantages over Apple. The first was marketing and sheer size: IBM’s brand had a lot of power, and IBM’s run rate allowed it to fund product development and reap economies of manufacturing scale on a scale Apple couldn’t match. Twenty-nine years later Google has at least as cool a brand as Apple, more financial mass, and more engineers. And that’s all I need or want to say about the biz-journalism end of things.
IBM’s second advantage was openness. The PC was designed to be kit-bashed; it became the hardware platform that launched a thousand hardware startups and, effectively, the entire PC industry as we know it. The manuals included a BIOS listing, the bus specification was public; anyone could plug in, and did. IBM’s own attempt to close the platform a few years later, the PS/2, was a failure that sank almost without trace.
Fast forward three decades. The commoditization of hardware that the PC pioneered has succeeded so completely that all smartphones are built by anonymous OEMs on the Pacific Rim and the real competition has shifted from hardware to software. Forget details like smartphone vs. tablet form factors and which handset manufacturer is the belle du jour: the real competition is the OS X ecology vs. the Linux/Android ecology.
And isn’t it entertaining, boys and girls, how thoroughly Unix won? Both OS X and Android are Unix underneath. Windows Mobile is hemhorraging market share and even the most notoriously Microsoft-gullible elements in the technology press can see it’s a no-hoper.
On its way down, Windows Mobile gives us an object lesson that allows us to predict how the OS X/Android war will end. It’s the same lesson that the Apple II vs. PC war taught, and it’s heightened by the way that Microsoft has (just barely) managed to hang onto a dominant position in desktops — by allowing lots of third-party developers to make money from that dominance. (Update: I wrote “just barely” because Microsoft has had to give away most of its profit margin to maintain share.)
IBM won its battle for ubiquity over the Apple II because it was willing to give up control, to let third parties (including Microsoft and the peripheral-card industry) make most of the money and content itself with a tiny sliver of a rapidly expanding pie. Microsoft kept Windows viable on the PC desktop by yelling “developers, developers, developers!” and conceding third parties a huge share of that pie.
And now? Google is willing to let handset makers, telecoms providers, and third-party developers capture most of the overt value of the Android market. Google can give all that prompt revenue away because everything it’s doing in this space is actually funded the same way its search-engine business is; by the volume of consumer attention Android devices will bring to its advertising. Apple, on the other hand, acts as a very controlling gatekeeper of its products — requiring (and insisting) that it’s going to capture most of the profit margin for itself.
Apple’s problem now is the same as the Apple II’s problem in 1981: in markets reliant on a vigorous ecology of allies to add value to a product, greed kills. Gatekeepers lock out potential allies; walls limit the garden’s growth. Ask any strategic planner at a telecoms provider or handset maker why Windows Mobile failed and you’ll hear the same thing: they saw what happened to IBM and swore they’d never let Microsoft talk them into being its butt monkeys. Windows lost out to Linux in the medium and high-server market, because third-party developers are much less important there; customers tend to be writing their own bespoke software, so server Windows isn’t pinned in place by a huge collection of allies. There’s a harsh tradeoff between control and ubiquity; the original IBM PC and desktop Windows got on the right side of it, but Windows mobile got on the wrong one.
The competitive dynamic between Linux/Android and OS X can be understood in the same way. OS X is playing a control game and Android a ubiquity one. We can expect the outcome to be the same: when the bazaar meets the walled garden, the walls will eventually come down, crushing the life out of the garden.
This is why Symbian is now open-source in spite of having no inheritance from Unix-land; its backers have figured out that a control strategy collects short-term gains over a ubiquity strategy but simply cannot compete in the longer term against open-source Android and open-source Maemo. Apple will learn this, to its cost, too. Because Steve Ballmer may be an evil maniac, but when he yelled “developers, developers, developers!”, he was right. In the war for market-share, allies are better for your long-term prospects than walls, and ubiquity will always eventually triumph over control.
UPDATE: I wish I had read Where Android beats the iPhone before I wrote this. It bolsters the argument pretty effectively.
UPDATE: And here’s Gylnn Moody dispelling some anti-Android FUD.