Putting Apple In Perspective

One would be living under a technological rock if the rise of a certain tech firm from Cuppertino is not noticed. In the recent years led by their hugely popular music players, Apple has been rapidly gaining market share in the consumer electronics market especially when it rolled out its iPhone based on the same operating system as the iPod Touch. It is always nice to have an underdog rise up to challenge a technological mammoth but many do not understand that this is not an Apple vs. Microsoft fight. It is far from it.

The iPods, iPhones and iPads are not in competition with 95% of what Redmond delivers. The iPods competed against brands like Creative, iRiver, SanDisk and the likes. The iPhones against Nokia, Sony Ericsson, Samsung amongst others and the iPads against virtually no competition unless you count the much maligned JooJoo as one. But you could say that ‘hey there are Microsoft products in these arenas too!’. Definitely, but let’s put this into perspective. Microsoft has always been a small player in the above markets. Microsoft’s music player which is in its infant stages and has only 2 revisions – the Zune and the Zune HD still falls behind the market share of other brands including Apple and they are not making any push for it. For mobile phones, the Windows CE or Windows Mobile OS has always been a laughing stock falling behind Nokia’s aged Symbian OS and RIM’s popular Blackberry devices. This was before the iPod Touch was even conceived. Tablets? There has never been a good one before the iPad. The point I’m making here is that Apple is stomping on new ground but has not directly challenged Microsoft.

I am not defending Microsoft. Personally, they are a company that is struggling under the helm of Steve Balmer who seemingly has no vision or direction for the company. But that’s for another story. I’m just pointing out that the chatter on the street is for from informed or accurate to say the least.

Before I continue, it is important to differentiate the market and not mix up everything that has buttons and a screen under a category called ‘computers’. Mobile phones, music players and tablet computers are NOT pure computing devices. Computing devices as I see it are highly functional and versatile devices that can be use in a multitude of ways in both content creation and high end content consumption. These machines, recently termed ‘dinosaurs’ by Steven Jobs are capable of doing hundreds times more in terms of magnitude than the iPhone OS or Android can ever imagine. In this market you have the PCs vs. the Macs.

Then we move on to consumer devices, simple and easy to use  gadgets for the mainstream crowd. These are very restricted in functionality but are aimed at simplicity. These are devices for the non tech savvy who just want to get day to day tasks done like checking their emails or surfing the net. These devices can never dream of playing high end games or create rich multimedia content, run Photoshop, etc but they are sufficient for a non tech savvy consumer as a side device, not the main tool. This is where Apple is huge and its competitors are as those mentioned in paragraph 2.

Computing

This is the arena I’m most familiar with and sadly Cuppertino stands not much of a chance against Redmond. Apple has stopped focusing on OS X of which its market share dipped after the launch of Windows 7. It has also stopped its ‘I’m a Mac’ commercials as this is a market it cannot perform well at. Fundamentally, the Mac OS is a well developed platform that suffered from inadequate developer exposure at its early stage which saw 90% of the applications in the market favouring the Windows OS. No prizes for guessing who the giant here is.

Consumer Electronics

The fight here is Apple vs Google for time to come. Microsoft may be launching its Windows 7 Phone Series but I have no expectations of it being able to carve a portion of a market for itself which is heavily dominated by Apple and Google. After all, Windows Mobile 6.5 and before have been so poor even Steve Balmer admitted Microsoft screwed that up. Apple is in the clear lead in this area but how the future develops is still very much unknown. While Mac fans may call it a rise of the half bitten fruit, I think differently.

On the Closed Platform

The iPhone OS, a closed platform completely controlled by Apple for the main reason of ensuring top notch consumer experience currently works. Under its closed OS the chance of installing malware is low but loopholes in these devices are not small in number. Mobile Safari has been hacked into very easily and it remains the main backdoor into the iPhone devices. Adding to that data encryption is not currently available and that 4 digit password lock can be easily broken if you do a simple search online. It is just a matter of time when attacks would occur if the iPhone OS reach a significant enough international user base. My take on the above is simple. Apple will remain a giant in the mobile market for the next 3-5 years. However, if it fails to innovate on its iPhone OS which currently is already lagging behind Android in terms of functionality, its time in the limelight would be short lived. Google and Andriod lack the charming touch that allures consumers the way Steve Jobs is able to deliver its products. If and when Google manages to push out a polished user interface on its Android it would technically be a much superior platform than the iPhone OS in all aspects. The features that Apple has showcased for its OS4 are dated technologies that not just Android but Blackberry and the like already have it for years.

Apple is in a unique position where it is a closed system but has the majority of applications in the mobile space under them. This is a lesson they learnt from Microsoft and that is to woo as many developers as possible and dangle carrots in terms of app profits before them. Going forward, the gap between apps on the iPhone and apps on the Android has been and will continue to diminish. Developers find the Android an easier and more powerful platform to develop for which also gives them more freedom. On the other hand, Apple offers a much larger market audience.

So we basically have 2 things in mind here. Market audience of which Google is quickly catching up with and OS technology which Google has been ahead for quite a while and Apple seems to be sitting on.

One would hope that Jobs will not sit on his lead and suffer the same consequences as he did in the computing market. To the uninitiated, Apple produced the first PCs (yes before IBM and Microsoft) back in the day but failed to extend its lead due to its business model which can arguably be said to be similar in its current strategies for its mobile division.

An Economic Standpoint

An economist will always tell you that open and free is better and this argument will obviously side with Android and Google. While Apple has shown that some hand holding and wall gardening is also needed, what most economic arguments end with is – a balanced approach. Apple must find a way to hold the hands of its less tech savvy consumers while leaving itself open enough to continually attract innovation and better iterations of its iPhone OS that would lead to better applications. On the other hand, Google with its huge lead in OS technology needs to find ways to woo the mainstream crowd that prefer form over function. The first company to find that balanced approach will become a mobile giant for years to come. We watch in glee as this unfolds.

One (Three) Last Thing(s)

Those, including Steve, who believe that PCs are in trouble must remember 3 things:

  1. The corporate sector. No one is using iPads to do day to day work and the PC market is largely driven by the corporate sector.
  2. The future. Kids right up to the young adults are incredibly tech savvy and are very efficient at handling computers. Jobs might want to think twice before concluding that everyone will continue, in the time to come, to prefer hand holding.
  3. We would also demand a lot more from our apps in future. Simple apps that run on low powered devices like the iPhone iPod etc will no longer suffice. Steve is looking at a market that will mature very quickly and will demand more intensive applications to satisfy consumer’s never ending desire for higher quality content.