Attention Apple Critics: Change Your Expectations!

April 12th, 2011

From time to time, I’ve written commentaries stating my belief that you shouldn’t expect Apple to be number one in every product category. Further, they do not have to be number one to be hugely successful, and there’s loads of evidence for that statement.

My remarks came ahead of a fascinating article appeared in Fortune, entitled “Why Apple investors shouldn’t sweat Android.” The major point is to deliver a reality check to fanciful claims that the industry expects to standardize on a single smartphone platform. This seems to be a replay of the old PC myth, where many suggested that Apple was toast, simply because most of the world had embraced Microsoft Windows.

That, however, didn’t stop Apple Inc. from surviving and prospering for the most part, except for that terrible era in the mid-1990s when the company appeared to lose its way, and appeared about to die. Of course, that’s before Steve Jobs returned.

The argument from Fortune’s commentator echoes what I wrote, which is that, so long as Apple continues to grow ahead of a market, and earn stellar profits, they are successful. It doesn’t matter if Google, largely because there are more manufacturers building more and more Android OS products, appears to be growing faster. That impresses industry analysts (and you know how I feel about some of them) who believe there must be a single winner and a single loser. And don’t forget that those surveys you read about iPhone market share fail to include those other iOS products, such as the iPad and iPod touch. You might even include the new Apple TV in there, since it also incorporates the iOS, even if you can’t access the App Store just yet.

Imagine if you had one choice of motor vehicle. Imagine if Dell built all the PCs on the planet, which would, no doubt, bore everyone to death. Consider going to Best Buy to find a single line of flat panel TVs from, say, Samsung. Is that what you want? So why should an industry analyst tell us that’s the way it has to be for smartphones and PCs?

Also consider how much money Google earns from Android licensing. The answer is, of course, not a penny, at least directly. They give it away to handset makers who agree to their terms, but hope to make a return on their investment from the targeted ads you see in Google’s apps. Of course, buyers of certain products from Verizon Wireless will find that Microsoft’s Bing is the default search engine. So some of the money Google might have expected to receive will be going to Microsoft, to add insult to injury.

Understand that I have nothing against Google making great profits, and providing lucrative employment opportunities for their workers. If the recent executive reorganization makes for a more efficient company, capable of greater feats of innovation, the entire tech industry benefits. The goal posts are raised, and Google’s competitors need to work harder to keep up, or move ahead.

At the same time, having Android OS gear with great features and performance is also a good thing. It will mean that Android handset makers will also be able to prosper and deliver benefits to stockholders and employees. There’s nothing wrong with that. And if Google or their licensees just happen to find genuine ways to innovate that deliver real — rather than meaningless — benefits to customers, they deserve to succeed. It would also raise the bar that Apple has to reach or exceed.

Now when it comes to Apple’s original business, the PC, it appears that few, if any, of the other manufacturers in that business are trying to actually innovate. They seem to be adding a few mostly trivial features that Apple doesn’t have, or some extra connection ports, but they aren’t changing the dynamics.

As to Microsoft, they continue to operate years behind the Mac OS. Just the other day, I read a story that Windows 8 would attempt to provide seamless deployment across mobile devices. This seems to be a recognition of what Apple has done by building the iOS from the core of Mac OS X, and then incorporating some of those concepts in the forthcoming Mac OS X Lion.

Unfortunately, far too many members of the media and the industry analyst community will gorge Microsoft’s PR, and attempt to convince you that the company is being innovative, rather than imitative. That’s a meme that’s played out for years, ever since Microsoft’s Bill Gates licensed portions of the original Mac OS in the 1980s, due to the stupidity of then-CEO John Sculley. That misguided move created a monster, one that has, ever since, dominated the PC industry and, in large part, helped to stifle true innovation. And, yes, I do not believe that Windows would have gone as far as it did if Microsoft had to build it from scratch.

Meantime, I hope that the investors in our audience will not pay heed to columnists and analysts who cannot overcome their poor grasp of the way things are.

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10 Responses to “Attention Apple Critics: Change Your Expectations!”

  1. Randy A says:

    I want to make a comment about one statement that you made.

    “make a return on their investment from the targeted ads you see in Google’s apps.”

    Except in the case of web search and Places Google doesn’t display ads in their apps. Gmail, Calendar, Contacts, Finance, Voice, Talk, Reader, Listen, Maps and Scoreboard being the apps that I use every day. I have naturally seen ads in web searches and I have seen sponsored business listings in Places, which is a wrapper for search. I rarely use the YouTube app but I’ve read of some sponsored things in search results there as well.

    Now, all kinds of 3rd party apps display ads from every ad network but Apple’s. I buy apps that i want to use when a paid version is available and in all but a few cases I uninstall adware only apps. I keep news and sports apps that can’t be liberated with a few dollars, everything else goes.

    I didn’t read the linked article but I very much agree with the premise that iPhone and Android users and investors in the involved companies have no need to fear or loathe the other side. A rising tide lifts all boats.

    • Randy A says:

      @Gene Steinberg, I can assure you, I am paying attention.

      From where did you log in to your Gmail account? I assumed that this post was limited in scope to discussion of Android and iOS. I have never seen an ad in the standalone Gmail app on Android. I have never seen an ad in the Gmail web app on any of my Android phones or on my iPad or iPod.

      • @Randy A, On my Mac, but Google will place ads wherever they fit. How do you think they make their income?


        • Randy A says:

          @Gene Steinberg, The statement that I commented on was about Android specifically even if I did not quote it all.

          “Also consider how much money Google earns from Android licensing. The answer is, of course, not a penny, at least directly. They give it away to handset makers who agree to their terms, but hope to make a return on their investment from the targeted ads you see in Google’s apps.”

          It’s your blog and I suppose that you can change the scope of statements that you make as you see fit but in the context of what you wrote telling me that I am not paying attention doesn’t fit.

          Of course Google will place ads where they can, but look at the desktop versions of Google apps that don’t display ads and never have. Picasa, Reader, Calendar, Contacts and Docs. Google is only what they are because of ad revenue, but they have proven over time that they don’t feel the need to place ads on every single property that they own.

          • @Randy A, Let’s wrap it up this way: Where did I say that Google puts targeted ads in every app they release? I only said that’s how they make the lion’s share of their profits.

            Are we done now?


            • Randy A says:

              @Gene Steinberg, You’re right, I sidetracked my own comment.

              You made an inaccurate statement about Google Android apps.

              Now we are done.

              • @Randy A, Actually, you need to read what I really wrote and make a better attempt to understand. I said they had targeted ads in their apps. I didn’t say you saw them in all apps, did I? Obviously, the answer is no.

                But they don’t earn their income from the tooth fairy either.

                Have a nice day.


  2. Thibault says:

    I really enjoy reading your analysis, Gene. I wonder if you could comment on the idea that many Android fans and even pro-Android analysts have that Google’s Android is paving the way for “freedom” in the smartphone market. I think a key behind many of the feverish raves that Android is winning is an underlying belief that Google’s supposed open-source approach to Android is providing developers and users both choice and freedom. Now, these ideologues never really explain what they mean by “choice” and “freedom” by they often tout that they have a myriad number of smartphones to choose from (“choice”) and “anyone” can download Android and fiddle around with it in “whatever way” they want and customise it to how they like it (“freedom”). Of course, this ignores the fact that most of us just want to buy tools so we can use them and not tinker with it.

    Anyhow, can you comment on the ideology that Android/Google is providing some notion of freedom?

    As you can tell from my commentary, I snicker at that idea.

    • Well, the key is that it’s free of licensing fees. A handset maker doesn’t have to build their own, or license it from someone else. However, it’s also true that Google’s Android honcho Andy Rubin is now demanding a little accountability on the part of those manufacturers, supposedly to limit the way they can rejigger Android. It’s not quite the free ride.


      • Thibault says:

        @Gene Steinberg,

        Thanks for the reply. I read the narrative of freedom, as I see expressed in many Android-fans and pro-Android analysts to be a large part about “free of licensing fees” but to be about a kind of ideological freedom and some wacky sort of idea about political freedom. But indeed, it is free of licensing fees is another notion of “freedom”.

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