Linked by Thom Holwerda on Mon 10th May 2010 14:55 UTC
PDAs, Cellphones, Wireless When Apple sued HTC, and targeted Android specifically (news which came out of the blue), many people, including myself, were convinced this was Apple letting the world know they were afraid of Android's rising popularity. This notion was laughed away by many an Apple fan, but it turns out that this is most likely far closer to reality than many dare to admit: in the first quarter of 2010, Android conquered the number two market share spot from the iPhone in the US - and by a wide margin too. Update: Added a graph which better shows the trend.
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RE: The os Mac vs PC war...
by elsewhere on Mon 10th May 2010 21:19 UTC in reply to "The os Mac vs PC war..."
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Doesn't this reminds your of the MAC vs PC war of the past? Where the PC market share was higher because of the clones...

That's precisely where the market is heading, and if things keep going this way, it will be deja vu all over again for Apple.

I remember the PC/Apple ][ "wars", where you were clearly on one side or the other (many unresolved arguments to this day with my old childhood friends). The Mac changed things, it was a breakthrough product that many lusted after. Everyone wanted one, but it was pricey and that kept it inaccessible to many.

There's probably numerous reasons, many open to debate, about why Microsoft was able to succeed so well with Windows, which back then was a pale imitation of what Mac offered. Ultimately it boils down to market choice; everyone, whether consumer or business user, has a different set of requirements and emphasizes different features over others, when determining what they want or need to purchase. Things like price, usability, software availability, vendor support, third-party support etc. all form a complex equation that differs for everyone. Some people will emphasize price above all else, others will pay a premium for features that they feel they absolutely require.

Apple had a first-to-market advantage with the Mac, but simply weren't able to scale it across the market as fast as Microsoft was able to with Windows. While Windows may not have been anything more than a clumsy attempt at implementing a Mac-like GUI environment, it did have the advantage of running on various different hardware platforms. It was able to tap the existing userbase of DOS-applications. The smart ISVs leveraged their DOS-base as they migrated to Windows, others such as Adobe and Microsoft themselves started focusing their core applications on Windows. Macs were ultimately relegated to a niche player in a market they had effectively launched.

First-to-market doesn't guarantee long term product viability and success, which is a mistake many companies make. Assuming that initial success will expand past your initial market and into a wider one can be a fatal. There are many reasons why a "breakthrough" product can achieve rapid initial success, or even fail to despite perceived superiority. Did that initial market share come from a niche market segment with needs and requirements that differ significantly from the market at large? Did it address a perceived need that could be applied to the market at large? Did it appeal only to a market willing to accept any inherent disadvantages in the personal cost/benefit decision? Will that scale across a larger market in general?

First-to-market gives a company an advantage that is theirs to lose. You can use the time (and profit) it buys you to invest in refining and further developing your product to target a wider market, or you can pour it into marketing to target a wider market and assume that initial success will follow. Sometimes it works, sometimes it doesn't.

Now we have the iPhone, which was ground-breaking in terms of making Smart Phones appealing to a wider market. As with the Mac, they didn't really offer anything in terms of functionality that hadn't existed to that point. Web browsing, email, app downloads, multimedia, gaming etc. on handsets existed long before the iPhone. What they did do is what they do best; take existing concepts and features, and wrap them in a tightly integrated package and interface to create an overall superior user experience.

They've had a good three year run with their first-to-market advantage, but now the competition seems to be accelerating faster than Apple is. The potential problem for Apple is that they appear to be investing in an ecosphere around the iPhone OS geared more towards locking in users and developers, rather than scaling their product to appeal to a wider market. Deja Vu.

Setting aside arguments of developer frameworks, App Store control etc., the fact is that in a large and complex market, there are going to be customers emphasizing requirements that Apple will not be able to fulfill. Some users will only settle for a physical keyboard. Some users will want a high-quality camera for photos and video above all else. Some will want large storage for carrying personal files and media around. Some can't or won't sign up with AT&T/insert-carrier-here. Some will sacrifice frills for lower price. And some will certainly want to play their favorite flash games on the go. Unless Apple suddenly breaks precedent and starts offering a wide range of products with varying features, there is a portion of the market they will never be able to reach.

Yet Android and other competitors will.

The only question is how large the potential market is.

Apple is gambling that the App Store and their userbase/mindshare will continue to solidify their market and pull in developers and content providers. That's the part that just reeks of Mac vs PC. Jobs is really gambling a lot considering that, despite their success, their market hold is not as firmly entrenched as they appear to be acting.

I find market share numbers to be dubious at best, utterly unsubstantative at worst. The number that is more important is how their userbase is growing. How many of those handsets represent actual users, versus upgrades? My wife and I both have 3G phones sitting in a drawer, because our provider let us upgrade to the 3GS last summer despite having purchased our 3G models less than a year previous. And I suspect that when the next model comes out, they'll be enticing us to upgrade again with similar new user upgrade pricing. Somehow Apple has worked out a deal with our provider that will allow us to keep purchasing a new iPhone for $200 each year (signing a renewal, of course). That's a killer method for generating hardware sales and the market share numbers that accompany them, but are they expanding their user base?

And it's not just me, I know there are 3 people I work with that also took those early upgrades, and wound up doing nothing with their original 3G models.

Certainly I can't qualify that empirically across Apple's entire market, but I wouldn't discount it entirely either. Just as I know people that upgrade their Macbooks every year when the new models come out, I'm sure there is a substantially loyal base of iPhone users that upgrade their phone on a regular basis. That's good revenue, but not an increased market.

This is where I think Android's potential is (and Nokia's, if they can make any progress with Symbian and Meego). Expand the reach to simply include customers that Apple has, by choice, excluded themselves from. Android is a less refined platform than iPhone OS, but it brims with potential, and if Google can address some of the immediate concerns (particularly with regards to fragmentation), it could succeed simply enough as a "good enough" platform that runs on hardware with the features users want.

It's Apple's game to lose right now, but it's only a matter of time before they hit a wall with their existing approach that they can't grow beyond.

Anyways, just my 2c.

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