This commentary contains the sort of logical progression that I’m sure most of you understand. Unfortunately, some tech and financial pundits don’t, and so you have to repeat it over and over again. Even then, the meaning isn’t grasped.
So the other day, I read yet another article about how the growth of Google’s Android OS exceeds that of the iPhone. I wouldn’t presume to dispute the numbers, since they are probably correct. Indeed, it makes perfect sense when you consider that there are a number of companies making gear featuring Android around the world, and that there are dozens and dozens of models to choose from. So when you visit your local wireless phone center, you’ll see a hefty selection, but only one product line called iPhone. Well, make that two in an AT&T store, because they are still selling the 3GS, circa 2009.
By sheer force of numbers, you can be assured Android will get the lion’s share of sales, particularly when you consider that many of the models are cheaper than an iPhone, although others are in the same price bracket.
I hope I’m not boring you by repeating the obvious.
But Android’s presence is used as evidence that Apple’s iPhone strategy isn’t working, and is destined to fail. Customers aren’t comfortable with Apple’s “walled garden.” They want open even if the app selection isn’t as good, and even if the gadget is more susceptible to malware. What we have here, they say, is a repeat of the long-ago PC versus Mac wars.
Of course, Windows was never open in the sense that you could get a copy free with few restrictions. The difference has always been that Microsoft will license Windows to you if you pay the fee, whether you’re a small PC assembler, a large multinational corporation, or just a single consumer. Buy it, it’s yours, and you can install it on any PC with compatible hardware, up to the number of licenses you purchase. Period. Except for a failed foray into hardware licensing, only Macs are licensed to run the Mac OS (or OS X, as it’s officially known beginning with Lion).
In passing, it’s also true that Apple’s Mac growth continues to beat the industry, as it’s done for several years. Despite stalled PC sales, Apple continues to make lots of money from Macs.
When it comes to the iPhone, don’t forget how, in the last quarter, Apple reported sales of 20.34 million iPhones, some 142 percent better than the year-ago quarter. Not too shabby, particularly when you consider that Apple blew away Wall Street estimates, and hasn’t updated the iPhone since last June. Yes, a Verizon Wireless edition came out in February, but it was essentially the same phone with only the essential changes needed to support the CDMA network architecture. In April, the long-delayed white iPhone arrived, but again it was basically the same model in a new dress.
At the same time, Android OS handset makers are constantly churning out new models. Unless you follow the industry carefully, it’s nearly impossible to tell one from another, except from the spec sheets, or checking which version of the OS happens to be installed.
If Apple can keep the rapid growth curve on track to a reasonable degree, the profits will continue to soar, and it won’t make any difference how many people buy Android OS gear. Or phones featuring Windows Phone 7 or its successors for that matter.
But there is a huge cloud hanging over Android OS land, and that’s all the lawsuits filed against Google and their licensees. Apple won a round against HTC, although HTC’s purchase of the assets of S3, a company that owns graphics-related technology, resulted in a loss for Apple. Maybe there will be a cross-licensing deal that will put the matter to rest. But that won’t help Samsung and other companies facing legal actions over Android.
Worse, some Android OS licensees are already paying a $5 per handset ransom to Microsoft to receive licenses for intellectual property. It’s not that Microsoft’s demands for royalties have been successfully tested in court to my knowledge, but I gather they are not taking chances. But imagine if those companies were also forced to also pay money to Apple to license their technology, assuming Apple doesn’t get a ruling that forces infringing gear off the market. The free OS becomes more and more expensive, and you can bet handset makers will be looking for alternatives without the baggage.
I suppose Microsoft could be the big winner if that happens. HP’s WebOS still needs work to be competitive, and there’s no indication that customers are lining up to buy the new HP tablet.
And none of this addresses the biggest problem with the Android OS, which is that the tablets powered by Google’s OS have failed to demonstrate sales momentum in the marketplace. Although some companies claim to have sold more than a million units (the Motorola Xoom sold far less), those figures are dwarfed by the iPad, which seems to be getting more and more popular. For now, the tablet market is strictly an iPad market. The critics swear that, too, will change some day. Maybe. But if Apple can keep moving more and more iPads into the hands of eager customers each quarter, it won’t matter if rival tablets also succeed.
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