Apple: Repeating the Mistakes of the Past or Trailblazing a New Future?

Morry Marshall:  Repeating the Mistakes of the Past!

Here we go again, right back where we’ve always been.  In the 1980s the Apple Mac OS was the best operating system on the planet, and Apple was heading toward a dominant share in the personal computer market.  Microsoft MS-DOS had a text interface with arcane commands rather than an easy to use graphical interface.  The IBM PC was just getting off the ground.

But, a funny thing happened on the way to market dominance.  Apple decided to keep the MAC OS and the MAC architecture proprietary.  For some inexplicable reason IBM, historically a company that kept everything to itself, decided to make MS-DOS and the PC architecture open systems.  A series of clone manufacturers emerged; and, as the Microsoft operating system evolved, it became overwhelmingly more popular with developers.  Easy to see why!  Their potential market was much bigger.

Today, Apple has a dominant share in the smartphone market.  Apple has also created the tablet PC market and dominates it.  The Apple iOS (born as the iPhone OS) is the best smart phone operating system on the planet.  It has been ported to the iPad, and it is the interface with the Apple App store for both the iPod and iPad.  The App store has far more apps available than any other site.  The iPod, the iPad, iOS and the App store are all proprietary.

Can’t anyone see this train wreck coming?  For now, the Apple App store is the most popular smartphone app site and iOS is by far the most profitable platform for developers.  But Android is winning the battle of smartphone market share.  There's every indication that far more Android phones than iPhones will be sold as time progresses.

For now, app developers are frustrated, because they have to develop code for a wide variety of smartphones that use Android.  But, we’ve been here before.  Eventually, cell phone manufacturers will coalesce around a standard; and the market for apps written for that standard will be much, much bigger than Apple’s iPhone/iOS market.  A similar situation exists for tablet PCs.

Steve Jobs is a marketing genius, no argument.  He has created at least four major markets: easy to use personal computers, MP3 players, downloadable music and smartphones with display-based interfaces.  He’s working on a fifth, tablet PCs.  But, there’s a blind spot.  Unless the iPhone, the iPad and iOS are opened up, they’re going to be doomed to minor market shares.  Then Apple is going to have to invent the next big thing – all over again.

Michell Prunty: Trailblazing a New Future!

I’ve used both the iOS and the Android OS, and I have to say, I disagree that Apple is repeating mistakes, and here is why.

The current and past software market for the Mac and PC is very different compared to the app market for smart phones.  There were very few options for software for the original Mac, and Apple made it difficult to port over games, one of the reasons why the PC became to so popular.  The smart phone market however, as a centralized market where anyone can write and upload software to a hub.  Unlike with the computing market, there are no limits to the types of tools that can be found on the Apple app store.  Currently there are over 350k different apps available, and all of them have undergone QA testing, something other open source app stores are lacking.  Its hard to argue developers aren’t willing / can’t develop for the iOS when the numbers are this high.

Speaking of the QA for the app marketplace:  The Android app market is suffering because of its open source nature; anyone can develop on it, leading to a wide variety of bad software available for download.

The open source nature of the Android is also the source of its lag issues.  Apple has gotten around lag because they control the entire manufacturing process, and has even bought out some of their suppliers.  As they control the system from the ground up, there is no bloating in the software.  Android is the exact opposite; their OS becomes bloated in order to run on a variety of different hardware configurations.  Google acknowledges their open source problem, and has made Honeycomb, aka Android 3.0 closed source.

Now its true Apple has lost some market share due to its closed nature, but I would suggest that its lost more market share due to AT&T’s inability to create a stable infrastructure, the main complaint of iPhone customers.  Many deliberately waited for Verizon to take up some of the load.

Additionally, the target market for smart phones is vastly different than the target market for the early computers.  Old, young, tech savvy or not, there is a huge market for those who just want a plug and play system with no lag, and don’t care if they can develop for it or not.

When the iPad first came out, I had a few problems with it.  For example, it doesn’t support Flash, something Android does support.  Apple has addressed this issue by successfully arguing for the implementation of HTML5, a popular, and some would argue better, alternative.  As more sites port over to HTML5, and it becomes a standard, Flash will be a relic.

In terms of market share, the OS that will dominate the market is the OS that is licensed to the majority of products, so like Windows, Android will take on a great market share over time.  But this doesn’t mean Apple will slip down to <10% of the market, it just means there is still room for competition.  And if you don’t think it can compete 10 years into the future, remember the iPod came out 10 years ago, and its still in the number one position for PMP / MP3 market share for the US.

I am making the assumption that Apple will not rest on its laurels.  If Apple fails to continue to lead the market, then its possible 10 years in the future they will fall by the wayside, but they’ve made no indication they’re ready to give up the game.