Apple Death Knell #54: iPhone Doomed to Niche Status

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Hey kids, guess what time it is!? It’s time for another entry to our Apple Death Knell Counter! Death Knell #54 comes to us courtesy of Fabrice Grinda, the CEO of OLX, who tells us in a piece for BusinessInsider that Apple’s iPhone is doomed to a niche status because the company is stupidly following its Whole Widget obsession, repeating the same mistake it made with the Mac back in the 1980s.

Citing a number of charts and statistics that show Google’s Android growing faster than Apple’s iPhone, Mr. Grinda says that Google is going to pull a Microsoft on Apple in the smartphone market, relegating the iPhone to irrelevancy.

Never mind that the Mac itself has been outgrowing the the PC platform for the last several years, and that Apple dominates the high-end profitable portion of the computer market. Never mind that Apple’s iPod, which also used the company’s Whole Widget model, dominated (and still dominates) the digital devices market.

Oh yeah, and Apple’s iTunes — part and parcel of the Whole Widget vertical integration of Apple’s ecosystem — dominates online music sales.

Yes, it’s obvious that we should ignore all of the other factors that brought Apple and its Mac platform to its knees in the 90s, and blame all of the company’s problems two decades ago on only one thing, using a proprietary OS on proprietary hardware, and conclude that the same approach for smartphone will inevitably lead to niche irrelevancy.

Wrote Mr. Grinda:

In 1984, when Apple introduced the Mac in 1984, it was revolutionary. It was elegant, simple to use, had the first mass market mouse and graphical interface and became a huge success. Apple seemed destined for greatness. However, Steve Jobs’ vertical integration driven by his desire to only have beautiful machines and software limited both innovation and the availability of software. On the DOS, then Windows side, the constant competition between PC makers, processor makers, and software developers, while less elegant and functional at the beginning, given enough time led to a plethora of offerings and innovation that not only copied many of the Mac’s best features but extended them. The competition also drove prices much below Mac prices. The combination of faster PCs with more software at lower prices eventually completely marginalized the Macintosh.

Again, never mind that in today’s world Macs are growing in popularity, even while PCs get cheaper and cheaper and cheaper, making today’s pricing disparity even more marked than in the early and mid 1990s when the Mac truly was marginalized (though it was also still a functional platform). For instance, in the retail space today Apple sells a staggering 91% of computers priced more than $1,000 [Corrected for clarity, as noted in the comments below - Editor].

In addition, despite the fact that almost 30 years of experience with Microsoft’s open licensing model has led to sea of mediocrity in hardware and software that leaves the Mac standing head, shoulders, and most of an upper torso above the Windows world, we must conclude that Google’s open licensing model for Android will overcome Apple’s early lead in the user experience for the iPhone.

Today, few people will argue that Windows and PC hardware has caught up to the experience of the Mac (our own John Martellaro shows us that Microsoft has narrowed the gap, but the gap still exists), but Mr. Grinda offers the notion that Android’s diversity will naturally (and even easily) result in that platform surpassing the user experience of the iPhone.

To me there is a massive disconnect in looking to the Windows world and finding proof that Android will even come close to the iPhone in terms of the user experience. It just doesn’t bear even the shallowest efforts at scrutiny.

Be that as it may, Mr. Grinda wrote:

Android, with its relative openness, seems to be playing the role Windows played for the Mac. We are already seeing a plethora of Android phones which cover all segments of the market – from the very low end to the very high end. There are phones with keyboards or without, Amoled screens, huge screens, small screens… There is already seems to be an Android phone for every taste and the choice is only going to get larger.

Even when it comes to apps, an area Apple has a massive lead in, Mr. Grinda says that it is obvious that Android will eventually have more apps, this despite the fact that the vast majority of money in the app world, a vastly disproportionate amount of money, is flowing to the iPhone market.

Argued Mr. Grinda:

If it’s the diversity of apps that matters, the relative openness of Android will mean that there will eventually be many more apps for Android phones than for Apple given its desire to only have “pretty” and “elegant” apps. This will only get worse as Android’s market share will increasingly exceed Apple’s and many developers will first build for Android and the guarantee of appearing in the Android App Store versus taking a risk with Apple’s fickle App Store approval process. More developers are already developing for Android than the iPhone and the number of Android apps is rapidly approaching the number of iPhone apps.

Since when is having 70,000 Android apps compared to more than 250,000 iPhone apps “rapidly approaching” the number of iPhone apps? I’ll personally argue that what the data shows is that Apple’s App Store and the willingness of Apple’s iPhone users to actually pay for things that give them value will mean that even if Android grows to be four times the size of Apple’s iPhone platform that there will still be more iOS apps because that’s where the money will be. iTunes App Store > Android Marketplace FTW.

For sure, Mr. Grinda acknowledges that Apple’s iPhone will remain a profitable niche, a concession that might have disqualified him from inclusion in the ADKC were it not for the way he concludes that said niche status means that Apple will somehow have lost:

None of this will matter in the short run. Globally increasing smart phone sales and extending sales to new carriers will buoy growth for some time to come, especially since Apple still has a better phone and better apps. However, this growth will belie the fact that Apple is losing market share rapidly to Android. Fast forward 5 to 10 years and it’s not hard to imagine seeing Apple with a small (but probably very profitable) share of the smartphone market. It will be a niche player in the market it revolutionized and could have dominated. History seems bound to repeat itself!

[…]Steve Jobs seems to be repeating the same mistake all over again. The elegant integration between the iPhone, iTunes and the App Store is definitely a current source of comparative advantage. It is easier to offer a better user experience at the beginning when you limit the form factor and completely control the hardware and software. The iPhone 4 is clearly the best smartphone on the market. The apps in the Apple App Store are clearly the best apps on the market.

However, Apple’s insistence on having a single form factor, on being a premium player at a premium price point (to carriers at least), and its arbitrary decisions with regards to what apps make it in the App Store will eventually make Apple a niche player. Even if Apple keeps innovating and has the best phone on the market, it won’t matter. [Orignal emphasis]

He falls into the trap that so many people seem to fall in (or at least used to fall in), and that’s the notion that you must be the biggest player in an industry to have won. That trap comes from misinterpreting more than 30 years of personal computing history, most of which saw Microsoft as the the mighty dragon that raked in most of the industry’s profits with its insatiable claws.

Today, however, even the stock market sees the value in Apple’s Whole Widget approach, and that’s why Apple is second only to Exxon Mobil in market cap, ahead of #3 Microsoft; and this quarter I think we’ll see Apple surpass Microsoft in sales (though probably not in profits).

Apple is a tiny (but growing) player in computers, but they’re making far more money on sales of Macs than companies that pump out gagillions of cheap PCs. Apple is a tiny player in cell phones, but is making a huge portion of the profits in cell phones, and they don’t even make a cell phone, they make a device that competes in a niche of the overall cell phone market, a smartphone.

There are more Blackberrys and Nokia smartphones in use around the planet, and very soon there will no doubt be more Android models in use than iPhones, but Apple has more apps, and it will still be Apple raking in the profits, and it will still be Apple that controls the direction of the industry. From that standpoint, Apple will continue to dominate the smartphone market no matter its marketshare.

To be clear, I am not saying that Android won’t outgrow Apple. I’ve already said that it’s only a matter of time before it does. I am saying, however, that it doesn’t matter. Android can get as big as it wants to and it’s still never going to be much more than “kind of like an iPhone.” Apple’s Whole Widget approach will allow the iPhone to stay out in front of the competition for as long as smartphones matter as a category.

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Comments

vpndev

Shades of “Proof by repeated assertion”

Intruder

I think Bosco actually wrote the article. Either that or Grinda has been reading Bosco’s posts.

tundraboy

Yes, I am so tired of this simplistic Windows-won-because-it-was-open b.s.  The reason Windows won was because IBM chose DOS for the PC. Everything flows from there.  If IBM had exclusive rights over DOS, Windows would still have won but it would be just as closed as Apple was/is.  And we would not be talking about open vs closed OSes.

amorgan82

Ok.  First off, I don’t consider myself a proficient mac user although I do appreciate the exquisite beauty of the hardware.  That being said, as a technician supporting users with server OS’s (Haven’t seen the Mac competition on that..), I must say that this article was very poorly written.  The quotes in text sound honest, sincere, informational (maybe a little misleading as pointed out).  But the sheer “I like Mac and I’m better than you.” attitude I see so many times with Mac users as their only defense for having a smaller market share or having purchased a device at a higher price than competing albeit inferior devices, totally negates any of the almost intelligent observations that were made.  If I’m a a PC and your a Mac, I’d like to keep it that way.  This is a totally one-sided article and I don’t even know how it made it to the channels of news that I subscribe to.  I had to register to post this comment and when I didn’t get the email right away I thought “huh, maybe this hit my spam folder” in gmail, which a lot of android users use I hear (I own an Android phone myself).  That would seem fitting as after having spent the 5 minutes to read this article, I now have to spend 10 minutes to write this comment, find the original article that was quoted as it seems more impartial and interesting to read, and then go about my day.  Thank you!

Bryan Chaffin

I think you’re projecting, amorgan.

amorgan82

That must be it.  I just read the original article.  Very good impartial informative stuff, thanks for getting me there.

Ref Librarian

That’s a joke, right?

amorgan82

I try to give the most democratic microsoft-like answers to things.  What else do you say to “D00d, your projecting!” ????

Bosco (Brad Hutchings)

Bosco would say that apps don’t matter much, although Bosco is in the know on an interesting development in the Android development world.

Bosco would say that voice and search will define the mobile experience going forward, and that Google is poised once again with its free Google Voice calls to US/Canada numbers to own that technology space with no clear way for anyone else to catch up on their own. Android phones will do even more amazing things for you. Apple will continue down its NIH path, shipping beautiful phones that are relative bricks.

Nemo would then say that Apple will purchase some company that has this voice stuff and Bosco will think Nemo is blowing smoke out of his blow hole.

Bosco (Brad Hutchings)

BTW, Brian, where did this figure come from?

Today, Apple sells a staggering 91% of computers priced more than $1,000.

I’d believe $2,000, but that doesn’t pass the smell test. Sony’s Vaio alone sells at least 1/10 the units of the MacBooks.

amorgan82

Here’s my favorite part of this article:

“Apple sells a staggering 91% of computers priced more than $1,000”

What’s that like 100 computers vs 1000’s but yet 91% of apple computers cost more than 1k big whoop lol.

Mark Hernandez

So many tech people think they understand the complex mobile and computer marketplace, apparently simply because they work in the tech industry and “logical devices” is their business.

But when you read Daniel Eran Dilger of RoughlyDrafted.com and the astute commenters there, or Om Malik of GigaOm or that guy at asymco.com, you realize that these guys DO understand the incredible complexity of what is going on, while most other tech writers don’t even come close to knowing what the h*ll they’re talking about, e.g. Grinda. 

The situation is very complex with lots of interacting variables and with each industry player balancing a complex set of tradeoffs that work for them in their own unique way (and world view) in order to compete.

If you’ve been watching JON STEWART the past couple of days, right now I’m imagining Jon turning to his two senior analysts, one with a t-shirt that says “Team Stupid” and the other with a t-shirt that says “Team Clickbaiter.”

It’s often hard to figure out which camp so many of these tech bloggers fit in, but either way they have great difficulty understanding the intricate complexities of the mobile marketplace. And even if they did, they’d THEN be hard-pressed to have the communications skills to talk about that complexity in a fair and illuminating fashion.  Commenters are often amazingly astute, but so many are not and it ends up becoming one of those recursive infinite loops.

The first thing *I* notice CONSISTENTLY is, although the subject is computers and complexity and deterministic things, these subjects don’t mix well with HUMAN BEINGS (psychological creatures) who react and demonstrate our difficulty with complexity.  Oil and water. 

Predictably, first there’s oversimplification, and that results in mischaracterization, and then there’s reaction to that error and what ensues is the never-ending cycle of wasted human effort.

You may now ignore what I’ve just said and return to the not-so-smart people squabbling endlessly, with the smart people (who can handle complexity) banging their heads against the wall.  grin

Mark Hernandez
The Information Workshop

(Who is going to be the first to tell me the situation is actually quite simple? grin

Nookster

This is the iPhone marginalisation counter #X.

I was waiting for the Apple Death Knell part, but it never happened. We’re still on #53 as far as I’m concerned.

MS

Since when is having 70,000 Android apps compared to more than 250,000 iPhone apps ?rapidly approaching? the number of iPhone apps?

The riposte to that is: how many people have bought 250,000 or even 70,000 apps? If the apps that you intend to buy are on either machine, that is enough.

Tiger

The bigger question is which set of apps is making more money.

Because Apple is in the business of making money using their model and coordinating their hardware and their software. Android is being haphazardly thrown together into a mishmash of hardware and now being hacked left and right. (for proof, just read C/Net weekly!).

Meanwhile, Google is sitting back and actually developing Chrome for themselves and waiting for their time to pounce.

Android is bait and switch. I think even Dell figured that out, or why else would they release a “new” phone with an Old Android OS version?

Rogelio Solis

Microsoft’s and PC’s with Windows have never won. We live in a continuous space-time world.

We are just living the continuation from 1984, having gone through a gap of darkness represented by the Windows-PC era.

The next generations won’t even remember, or if they do, they will refer to the pc-windows era as one of the most mediocre times in the technology field.

The Android and their mostly mediocre clones will go in a similar way, even if they “reign” in the masses for another time gap.

davebarnes

BTW, Brian, where did this figure come from?

Well, one source is http://www.betanews.com/joewilcox/article/Apple-has-91-of-market-for-1000-PCs-says-NPD/1248313624

Another is http://news.cnet.com/8301-13579_3-10293876-37.html

Just Google: 91% of computers priced more than $1,000

Bosco (Brad Hutchings)

One clarification on the 91% number. It’s “sold at retail”. It does not count direct purchases from the likes of Dell.com or even Apple.com. It’s an NPD number from a year ago. It’s unclear what that number does about component systems whose total price exceeds $1000. Think HP box with tower, flat panel, keyboard, mouse, printer (which still typically comes in under $1000 at Staples).

I knew there was something a little screwy with that figure. Oh well, it sounds like the Mac Pride stat of the week…

Bryan Chaffin

One clarification on the 91% number. It?s ?sold at retail?.

Something was tickling the back of my mind about that stat, and I should have listened to said tickle and not just trusted my memory.

In the meanwhile, the (corrected) stat still illustrates my point. Apple owns the high end, and you can define “lose” and “dominate” in many ways. From my perspective, anyone that looks at the Mac vs. PC debate through a modern lens and finds that Apple “lost” that battle is just wrong.

Not that Apple “won,” either. Apple just owns the part of the market that matters, the part that is profitable and pays for technology R&D.

I corrected the article, and I appreciate you noting my mistake, Brad. I also added a link to our coverage of those numbers (thanks for adding your links in the comments, DaveBarnes!).

Bryan Chaffin

Since when is having 70,000 Android apps compared to more than 250,000 iPhone apps ?rapidly approaching? the number of iPhone apps?

The riposte to that is: how many people have bought 250,000 or even 70,000 apps? If the apps that you intend to buy are on either machine, that is enough.

I was quibbling with Mr. Grinda’s semantics. Your argument, MS, is a very valid argument to make, and one worthy of consideration and debate. Saying that the number of Android apps is rapidly approaching iPhone’s is, IMNHO, stupid.

Bryan Chaffin

This is the iPhone marginalisation counter #X.

I was waiting for the Apple Death Knell part, but it never happened. We?re still on #53 as far as I?m concerned.

I addressed that in the article, Nookster, but let me explain further here.

The ADKC is a chronicle of those who have said that Apple is about to die, about to fail. It also contains numerous examples of people who have said that Apple’s business model isn’t sustainable (usually with the followup that Apple will have to adopt an open licensing model that gives up all of the company’s advantage in order to fit into that person’s preconceptions and misconceptions).

You’re right, Nookster, that most of Mr. Grinda’s arguments are making the case for iPhone’s marginalization. As I said in my piece, however, it’s his conclusion that Apple will have “lost” some sort of battle by following its proprietary business model, in other words that only an open licensing model can succeed, that, to me (you know, the creator and keeper of the ADKC smile ) qualified this piece for inclusion.

I apologize for not making my reasoning more clear in my column.

Bosco (Brad Hutchings)

Not really your bad, Bryan. When I Googled for it as Dave Barnes suggested, I was surprised how commonly the stat seems to be thrown around without the “retail” context and without citing the NPD number. Repeated enough, the shortened out-of-context version became truth.

I’ve been trying to think about (notebooks excluded), who would drop $1000+ on a computer at retail these days. I have identified two groups:
1. Mac purchasers
2. PC purchasers who are stupid enough to buy from Best Buy, Staples, etc. and have nobody to tell them where they can get better value.

And from that, I’d conclude that Apple does a great job at making its retail valuable and fun, and not cannibalizing its retail to online sales. On the Windows side, consumers seem to have figured out the right way to buy stuff—retail just does not offer them any pre-sales value at the high end. I’m not surprised.

Bryan Chaffin

Brad, you’re completely denying the existence of the value proposition offered by proprietary model.

I’m OK with you disagreeing with said value proposition, but I call BS on you (effectively) denying its existence.

Speaking of which, you owe me an editorial explaining some of the benefits of that model! I can’t wait! smile

Rip Ragged

I was going rip the Grinda post over on my blog, but I can’t now. You covered all my points. Well most of them, anyway.

The one major quibble I have with most punditbots is their ridiculous insistence on comparing iOS to Android. No single entity is responsible for the user experience in Android. There are multiple versions, even on brand new devices. There are Android Apps that aren’t even compatible with all Android devices. There’s no single upgrade path, or process. It’s a dogdamn hodgepodge.

Comparing that to the iPhone/iPad is absurd.

Bosco (Brad Hutchings)

Bryan, I’m not completely denying Apple’s value proposition. It’s just that some of these stats that seem so wonderful are basically tautologies.

In 2009, smart phones were about apps. Today, they are about search. Example… With my iPhone, I used to keep all my favorite local restaurants in my contacts. With my N1 now, I hit voice search and speak “Call Claim Jumper in Mission Viejo”. On both phones, I can crawl through Yelp to find something I like near me. On the N1, I just discovered I can say “Map of Greek restaurants” and get Greek eateries near my current location, or “map of KFC” to get some heart attack in a bucket.

The funny thing is that if Apple didn’t erect walls and start fights, Google would probably have this stuff on iPhone too, just like they tried with Google Voice. So even if Android is indeed a hodge-podge, a kludge, a terrible copy, patent infringing, plain ugly, and responsible for the breakdown of all society, Android’s redeeming quality is that it’s actually really useful for finding stuff.

Michael anton

Apple vs google business models matter. 

A point that has not been made is that google’s entire business model is in free or cheap stuff supported by advertising. The entire ecosystem is built as an advertising delivery system that collects your personal information, in order to show you more ads. Free OS, cheap phones, 2-for-1, etc.
For google, hardware sales are incidental to advertising.

Apples business model in selling high quality products with the best user experience.  Ad revenue is incidental to that.  If apple takes the high(er) road on advertising and personal data collection opt-outs, there will always be a large profitable market for apple from people willing to pay more for a less intrusive quality experience.

The ad supported google model will be bigger, with cheapskates and those that can’t afford Apple.  But the high end will remain with apple if they continue to offer highest quality and less personal intrusion.  I’ll pay for that.

Bosco (Brad Hutchings)

And then there is the App Store approval process, still as opaque as ever. For “brands”, it really doesn’t matter. They have pull no matter where they want to play. But for independent developers who are going to do the next big thing, it is just crazy stupid to try to make anything interesting or different for iOS. The review system reeks of third-world or Louisiana style bureaucratic corruption. Case in point, “Briefs”.

The developer of Briefs went open source after sitting in the review queue for 3 months.

One of his cow-orkers at the day job blogged about how incredibly lame the review process is. Check the comments on that blog. There’s a very interesting one about the jailbreaking landscape.

vasic

We can argue as much as we want that Apple didn’t lose and WIndows didn’t win, and in the same way argue that it won’t matter that Android grows a bigger market share, but the simple point remains that market share is important, and will always be important.

Apple is successfully sustaining Macintosh ecosystem, not BECAUSE of its small market share, but DESPITE of it. The sheer volume of applications for WIndows surpasses that of apps for Mac by a massive margin. While there are several (if not even plenty) of applications on the Mac that don’t exist in the WIndows world (and many WIndows users wished they did), there are significantly more of those others (Windows apps without a Mac version/equivalent). This is the primary consequence of a small market share. If you develop an app, your first instinct is to go to the bigger target.

I have no doubt, unless Apple wins in the patent lawsuit against HTC (and wins it soon), Android will slowly significantly outgrow the iPhone. To be sure, Apple is doing whatever they can to neutralise that growth, by making iOS available on other non-phone devices. This makes it more interesting for developers; they may have fewer phones, but the OS gives you many more potential customers than Android. It is more than likely that the Android tablets will bring more fragmentation, rather than larger unified market share, for the platform. In other words, diverse iOS devices will still allow for unified development, since all is under Apple’s control, while diverse Android devices will require careful planning and multiple app versions to ensure proper compatibility among various devices.

What I am not finding in the original argument is, if Apple is now making a mistake, what does the author think Apple should do to protect its position?

geoduck

It is nice though to see a Death Knell entry like this.
‘The iPhone won’t dominate as much as it has up till now.’
It wasn’t that long ago that Death Knell entries were predictions that Apple would either drop the Mac and start making Windows clones, or go broke altogether, or be bought by Dell or HP.

mrmwebmax

+

IMHO, the fatal flaw in the Windows/Mac = Android/iPhone argument is that Windows won primarily in the IT enterprise space. Smartphones are sold more directly to the consumer space, where consumers, not IT departments vested in preserving their jobs by buying machines that need their support. And Apple dominates the consumer space, period.

b9bot

Something else is similar to Microsoft’s windows. Android has viruses and spyware. Several times the Android OS has been affected and again nothing on the iPhone side because Apple is protecting the public with its OS. I think the consumers are fed up dealing with such crap and that’s why they are moving to the Mac where they can actually be productive instead of fighting viruses and spyware three quarters of the time. Yes the Android will be popular with the Anti-virus and Anti-spyware companies and that’s about it.

b9bot

Another factor which Mr. G has not calculated is when Apple finally pushes the button to have other carriers carry the iPhone as well, like Verizon. It’s only a matter of time, and probably not very far in the future I’m guessing.

Bosco (Brad Hutchings)

“Domination” is a wee bit hyperbolic right now. For example, in Apple’s own backyard (AT&T), Samsung’s Galaxy seems to be offering iPhone a run for its money. Since July 15, they have shipped 1 million units for AT&T and T-mobile, and we know that T-mobile doesn’t count for much. This is an Android 2.1 phone that currently has leaked ROMs for 2.2, so conservatively would be getting the update within the next month.

There is lots of talk about how if iPhone were on Verizon, it would be kicking Android’s ass, but that just doesn’t seem to hold water anymore on AT&T.

And Android has viruses and spyware. Really. Care to share links? With its UNIX base, most apps running in a Java VM, and apps having to be granted specific privileges by end-users, it has less chance of a “virus” than Mac OS does. Please point us to an actual virus. Please. Waiting to see it… On “spyware”, the recent case was nothing more than a developer getting a globally unique ID for the phone, just as I predicted. Google confirmed it. And they also confirmed that voicemail passwords were not explicitly sent, as the security company had alleged in its original paper.

Ross Edwards

If someone gave me $999 and drove me to Fry’s Electronics, I could walk out of that place with an absolute BEAST of a machine (at least, the components for one, which I could then assemble myself).  Allow me to use the KVM I already own and that beast will grow even stronger.  CPU speed, RAM, and HDD figures that make Mac Pros look like a joke.  It won’t even be a contest.

Oh, I’m not interested in the slightest in giving up my iMac… I paid almost double that figure because I wanted a computer that works the way the iMac and OS X work.  I like my computer to become as invisible as possible so that I can generate productive work with the most elegant possible conduit between brain and output.  I am sure many other Mac users feel the same way.  But let’s not fool ourselves: Power users can blow us out of the water on bang-for-buck on high-end PCs, just as surely as the sales of low-end nettops and cheap notebooks make the Macbook sales share look like a fart in a hurricane. 

Of course, those power users will lose some of that power and speed to the bloat of Windows 7, the best Windows OS yet but still a resource hog.  That is, unless they plan to run XP or Linux and spend all their productive time begging, wheedling, and cajoling their software and hardware to cooperate long enough to get anything done.  But if we’re comparing e-peen numbers, the world of Apple ain’t nearly as sexy as it otherwise tends to be.

Intruder

Shipped or sold 1M Galaxies?

Big difference. For the iPhone they were the same number because they were backordered for quite a while. Most stores can’t keep a supply for a day.

Bosco (Brad Hutchings)

@Intruder. Actually, it’s 2 million, I discovered today. 1 million in Europe, announced on the Engadget Show Friday. Then 1 million in the USA announced by press release today. Let’s call it shipped, not purchased. Do you honestly think retailers are holding onto a million of these things or even a couple hundred thousand? And if so, that Sprint and Verizon are still anticipating and starting to promote the launches of their versions of the phone?

You guys all say that Android is fragmented, that no phone can match the number of the iPhone, etc. Well, there you go… Samsung, the number 1 cell phone maker in America several years running, is coming hard.

I think ultimately, the reason that even AT&T (or Verizon if they get the iPhone) will strive to keep iPhone in a sub 25% smartphone marketshare niche is that even if the networks don’t have the control they once had, they don’t want a manufacturer to have it either. There is a lot of letting go that Android handset manufacturers have to do to get Android Market and the other Google apps. With Gingerbread, there will probably be even more, such as dropping the deep embedding of skins.

vpndev

Cue: Clash of the Titans - network operators against phone manufacturers

It’s a control issue. The battle isn’t over but the network operators are dealing with a hull breach. And not all of them have been baling (n.b. != bailing)

Right now in the U.S. the operators have an advantage with the (fake) subsidies. Once iPhone is available more widely this will start to crack. If you don’t believe it, look at Apple’s iPhone page for Canada. Unlocked phones that work on any carrier and deals if you sign a contract.

The network carriers don’t want to be dumb pipes but that’s where they’re headed. They avoided this with wired broadband (at least for now but we can still hope) but wireless is not the same. Thank goodness.

Intruder

Who says “no phone can match the number of the iPhone?” I think TMO has been pretty clear that it is not if but when Android will surpass iPhone. And that’s okay. 25% is still a bunch of iPhones. It certainly exceeds their original goals.

Why do you think that iPhone has to fail for Andriod to succeed (and vice versa)? There is plenty of room for both.

Bosco (Brad Hutchings)

In the comments and on the finance boards (in spades!!), there are many who think that Android is doomed because there are so many phones from different manufacturers, instead of this year’s and last year’s iPhone model. But what we see with the Galaxy S variants, which are tuned to the different networks, is that one phone actually is shooting toward iPhone numbers, with over 2 million “shipped” since mid-July, and just 2 of the 4 major US networks (T-Mo and ATT) covered at this date.

Can they live together? A year ago when I bought my 3GS and one for my Mom, I didn’t much care. But I see the way Apple participates in the mobile space now as quite troubling. Censoring content, starting big fights, lying about development methodologies, etc. So I hope that I’m witnessing an ongoing car wreck and will have the opportunity to gawk.

Of late, I’ve been more focussed on the positives of Android 2.2. Voice search, gesture search, Flash when I need it, Google Voice integration at the core, etc. These truly make me think of my 3GS (and my Mom’s upgraded to iOS 4 3GS, which I got to play with last week when my folks were in town) as the equivalent of Fisher Price toys. Apps are yesterday’s news. Search is today’s. Android detractors focus, I’ll even add “rightfully” on the negatives. Those 2+ million Samsung devices are 2.1 waiting on a 2.2 upgrade which has just started to leak what might be official builds from the company. Samsung has its own skin, like Moto’s Blur and HTC’s Sense, that might add some eye candy but overall detracts from usefulness of the Android OS. So let me give that Android has some pretty big negatives associated with it.

And yet, in Apple’s back yard (AT&T), with pricing and contracts a toss up vs. iPhone 4, there is one Android phone that kina came from nowehere and is within a stone’s throw of parity. What that should tell you is that iPhone has amassed a few negatives of its own and that its positives aren’t much to write home about any longer. You’re not going to write this all off on Antenna-gate, are you? Doing so assumes that Apple was too stupid to manage a “non-problem” and that the buying public was too stupid to understand their simple explanation. At any rate, the Apple camp isn’t all roses or this would not have happened on AT&T. As Apple customers and fans, you ought to take note and provide feedback to Apple about where they are screwing up.

iPete

Good analysis, Bryan. My less qualified opinion is that Google and Android, already having trouble with China, will be hit with much worse security issues. Hackers will take advantage of the open Android and plague it like they have Microsoft. When Droid lovers have to install expensive anti-viruses on their phones they will wish they had an iPhone.

wab95

Been out of i-contact for a few days, and I realise that I am late to this party, but no matter, I’m posting anyway. 

Regarding Mr Grinda’s argument that Apple is repeating a strategic error from the 1980s by using a closed, proprietary model for its iOS devices; a model that cost it market share in the PC space and will, inexorably, have the same outcome in the ultra-portable space; Apple can only hope that its competitors hold to Mr Grinda’s theory. If so, then Apple has a clear path to unobstructed success.

A good theory explains what we know and have seen, and anticipates what we yet do not know nor have seen. How does Grinda’s proprietary, closed theory hold up? Not well. If he were correct, then Apple should not have succeeded in dominating the MP3 space for the past several years, as that was done using a proprietary closed model. If proprietary closed models spelt marginalisation, then this should not be. But it is. Res Ipsa Loquitor (the thing speaks for itself). No need to even discuss Apple’s other success indicators using a proprietary model. If Grinda were writing for a peer-reviewed journal, his article would never have been published.

What did he miss? He, as have many pundits, has conflated Apple’s model with an outcome that, while related to Apple, was not causally related to what happened to its PC market share in the 1990s. But this still misses the bigger picture. 

In martial arts, the person who wins the contest is generally the one who controls the centre of the mat. He does so by dictating the terms and pace of the fight. This was true even with ‘rope - a - dope’; Ali simply redefined the centre of the mat, Foreman followed and the rest is history.

Microsoft recently put out the adverts touting Windows 7’s  superior user friendliness over that of the Mac. While some have decried their assertions, I see this as a good thing; as a sign that Apple has successfully redefined the centre of the mat, positioning it directly over the consumer, and MS has followed. MS arguing that consumer-oriented features are the standard by which to judge an OS plays to Apple’s tactical advantages. While Apple does not need a KO to win this game, its competitors are now fighting on its terms, and are unlikely to beat it at its own game.

What is that game? While I don’t pretend to know Apple’s longterm strategy, I offer the following observations.

Apples is redefining the centre of the mat to where its strengths lie. Those who think that the centre lies over tech specs will consistently be misdirected and will remain flummoxed over Apple’s success. I propose two success indicators:

1) A critical mass of consumers who value the technology, tend to be early adopters and are willing to pay for those services. We already see differences in demographics between Apple’s idevice consumers, who are willing to pay for apps, vs Android’s, who are largely not. These do not represent the same population; I argue that the former are more valuable to any company. 

2) Profitablity. Apple competes effectively in several markets. All it has to do is to be more profitable in those markets than its competition. That success will continue to attract early adopters willing to pay for those innovations. 

As for Mr Grinda, even if we accept that a proprietary closed model was a bad thing in 1984 (and I do not), it clearly is not in 2010, which has witnessed Apple become the trend setter and gravitational centre of the computer/tech world. Proprietary the path to perdition? Hardly.

Nookster

I addressed that in the article, Nookster, but let me explain further here.

Well thanks for that, only got an email notification today though, possibly because all the earlier comments are gone, odd.

Bryan Chaffin

Well thanks for that, only got an email notification today though, possibly because all the earlier comments are gone, odd.

Hey Nookster, not sure why the e-mail just went through today, but I can explain the disappearing posts: The URL sent out seems to be dividing the posts up into multiple pages without offering navigation to the other posts.

Our coding team has been alerted, thanks to your note.

In the meanwhile, you can read all those posts at the original URL.

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