There has been a massive shift in the balance of power in the technology industry. In a space that was dominated by the likes of Microsoft, Dell and HP, the emergence of mobile as a computing platform has allowed Apple, Google, Samsung and Facebook to challenge the incumbents’ leadership position. While Apple has claimed the top spot for now, Google has been gaining ground, and there are some key reasons why I feel Google wins in the marketplace and will soon challenge Apple for the title of most valuable tech company.
Taking a long-term view
Google’s primary advantage over its competitors is that it takes a long-term view to its product strategy. It focuses on building a platform that others can build on top of to create a compelling ecosystem. The problem with this approach is that a lack of control over all of the players in the ecosystem means that it can take longer to achieve a better product and/or service. However, once achieved, the ecosystem has many players invested in it who have an incentive to continue to make the ecosystem better, which accelerates innovation faster than its competitors can keep up.
On the other hand, the closed ecosystem approach is a short-term market domination strategy, and one which Apple has perfected. Their ability and desire to control the entire ecosystem means that they can create the best product/service in a new category that didn’t exist before. It also helps speed adoption because Apple can quickly appeal to a broad user base by producing something early in the product life cycle that works seamlessly. Apple did this with the original Mac, followed it with the iPod, and has done it with the iPhone, iPad and iOS. Unfortunately, Apple’s dominance is waning now that the Android ecosystem has matured and achieved critical mass.
Apple’s ability to keep up with recent innovations in the mobile space, which has included larger screen phones and low-end budget phones, is limiting the market potential of the iPhone. As Apple stretches to meet these demands, which it will have to, it risks alienating its loyal users by trying to cater to diverse market types. On the other hand, the Android market has many players in it. They have segmented the market so they can lead their niche, whether it’s the low-end budget market, the phablet market, or the durable phone market. In all of these case and more, Google wins because it is supplying the platform, or hub, around which the rest of the ecosystem is being built.
Lock-in as a choice
Google preaches the benefits of open source. It says it doesn’t lock users in by providing and promoting data portability. I would content that Google locks users in just as much as Apple and others, with one key exception – Google lets users lock themselves in by choice rather than being locked in by force.
A case in point is the Apple iPod and iTunes. Somehow, I resisted the siren call to jump into the Apple ecosystem. It was certainly compelling as the iPod and iTunes system worked and made purchasing music simple, but I feared lock in. I worried about what would happen if something better came along – how would I access my music? Sure, I bounced around across a couple of difference music players and services through the years, but it has allowed me to build a collection of music that is completely portable and DRM free (all done legally by the way through Amazon, Microsoft, Yahoo! and Google).
Likewise, on the mobile side, I’ve stuck with Android since the early days. Those early releases were tough. The hardware and software didn’t have near the polish that Apple had, but I stuck it out and have been rewarded. Having worked with both platforms over the years, Android is at the same level as iOS today, and in many areas has surpassed it. The hardware is just as good as the iPhone and offers way more diversity and options to choose from. It’s easy to move from a Samsung to an HTC, Motorola, LG or Sony device without any problems. It’s enabled me to try a bunch of different phone types and sizes, and to pass phones through the family as loaners or hand-me-downs for my children.
Sure, it was a long, and sometimes painful process, but it has paid off for Google and its users. There is enough momentum and contributors to the Android ecosystem that Apple is going to have a very tough time keeping up with the pace of improvements.
Google’s lock-in by choice is a mutually beneficial relationship between it and its users. As you would expect, Google’s supplied tools work better than others on Android. However, you don’t have to use them if you don’t want to. Google allows other developers to create competing apps and doesn’t shut them out of the platform if their tools are threatened. In fact, it forces Google to make sure their tools are competitive with alternatives.
Likewise, Google’s data portability stance allows users to pack their stuff up and leave if they’re not happy with the Google supplied tools. The benefit for Google of this approach is that it allows them to sunset and/or shutdown services which have become neglected, seldom used, or folded into other projects. Basically, Google doesn’t have to keep supporting dogs that aren’t pulling their own weight. While these decisions can inflict short-term pain on users, like it did me with their Google Reader decision, I was able to export my data and migrate to a new service, Feedly, with minimal disruption. In fact, I’ve gotten to the point where I’ve overcome my Reader addiction and replaced it a Feedly addiction.
A winning strategy
Google’s open platform strategy is one that they are taking to another emerging market. The next ecosystem they are looking to build is in wearables with their Android Wear initiative. I suspect it will have a rocky beginning and likely fall behind more integrated competitors out of the gate. Over the long run, I see it having the best chance for success once its ecosystem reaches a state of critical mass.
So while Apple’s dominance has led many established technology and startup companies to pursue the fully integrated strategy, it is a short-term view. More companies need to take the long-term view of building a healthy ecosystem that is open with many players. It’s one reason why I like the fitness application RunKeeper. They recognize that their value is building a platform around data that can be shared among many different fitness hardware applicances and applications. I expect that RunKeeper will have success over the long run with this strategy, as will other companies take a long-term view of building healthy ecosystems for their markets rather trying to dominate and strangle it, causing it to die a slow, painful death.