This week, with much ballyho, Google announced its new superduperphone, the Nexus One. The product reviews are favorable, broadly speaking. This is particularly notable when one considers that it will invariably get compared with the iPhone (“have you friggin heard of it?”).
I’ve used and watched closely the Iphone and its ecosystem for some time and I think this could turn out to be a massive strategic strike by Google against Apple. Surely the smartphone market remains small as a percentage of the total mobile market, and it will grow. Both and others like Palm and Windows Mobile will likely find healthy niches. Still I think there are major elements Google has put into place that make it potentially very advantaged over the medium and long-term against Apple’s Iphone strategy. Here’s what I mean…
To have done so much in a v1 hardware product, purely on a design and functionality perspective, is an audacious achievement for Google. Few would have predicted that v1 would have reviewed as potentially competitive on a design front to the iPhone. For example, just recently, Paul Graham predicted that no one would have a chance to touch Apple in terms of mobile device design, that:
It’s unlikely you could make something better designed. Apple leaves no room there.
I’m not arguing that the Nexus One would win hands-down on a design side-by-side, but it is has enough to likely hold its own on this vector of competition.
So now Apple’s advantages are:
- a clear (though slim) advantage on design
- a strong integration with media (mostly music)
- a strong lead in terms of applications and current application developer mindshare
- tight integration particularly with MacOS computers
- maybe its customer loyalty. obviously many are quite loyal to Apple, but Google also has world-class customer loyalty. I’m not sure I’d give Apple much of a lead on this front.
The relative advantages that Google brings to the table include:
- a strong advantage in business model—this was discussed very well by Benchmark’s Bill Gurley here. Google will pay carriers to carry their phone; Apple gets a fee from AT&T. This is a very significant difference, and it will have an impact.
- an model for handset diversity. this will basically enable handset makers to pick off other segments of the smartphone market.
- a vastly more favorable approach to application developers.
How will this net out? My early prediction is that Google has a chance to do to the IPhone what Microsoft Windows did to the Mac—it’s the Return of the Empire.
Why will it play out this way? Two key reasons will drive this.
First, the business model advantage that Mr. Gurley talks about in his posting is one that has an impact. Apple is strong, for certain, but putting a business model that’s cheaper than free in front of their carrier customers is one that will have a result.
Second, if the business model is the tops-down strategy to win against Apple, the friendliness to application developers is one that works from the bottoms up. Apple’s attitude and approach to developers is a clear opening to Google, and Google’s approach to date is clearly going to exploit this.
So most everyone knows that billions and billions of apps have been downloaded for the Iphone. (3B at latest count.) Apple created an ecosystem with a speed and breadth of distribution that the world has never before seen. It is geek magic. Application developers *love* having the opportunity to develop apps for mobile smartphones like the IPhone. Small teams of really smart developers can build apps for little money. There’s distribution through the Apple ITunes App Store, and they can even make money. It’s a hacker’s paradise, a wet dream, the land of milk and honey…. except when it’s not.
Apple’s approval process is one that is byzantine and lengthy. For serious developers, used to working at web speed where they can do daily, hourly, or by the minute updates to their products, resubmitting to Apple for a lengthy review every time they update their app is ridiculous. It’s boooogus, and everyone knows it. Great developers won’t stand for it for long, *if* Google can get traction.
Despite its 3B applications that have been downloaded, Apple’s approach puts its at strong risk of losing developers’ hearts, minds, and their coding fingers. All these developers figured out how to start building apps—remember, basically no one was building apps for Iphone even 3 years ago—and they realize it just doesn’t cost that much. (Interestingly as a side note, no one seems to care that Apple takes like 30% of the revenue—a king’s ransom. No one really complains about this—what is complained about are all the restrictions in shipping an app on the Apple Iphone.)
Developers want a platform that has no hassles—let’em build and ship code and get customers our latest work. Apple’s choice to impose its will is holding back a community that can and will move quickly to an alternative.
In my view, this is a dangerous approach for Apple at this time. If they maintain the stance and if Google can get any kind of traction in the next 6 months, I look to Google to gain a vast uptick in developer apps, likely at the medium term detriment of Apple. As with the early innings in the PC/Mac wars, Mac showed the way, and the PC built the ecosystem and rode the 90’s to glory. We may see the same thing on a smartphone, 20 years later. The Empire, this time Google, is well positioned to strike back.