Tuesday, August 3, 2010

Harvard Business Review: Apple is Dying! Google is God! BlackBerry is Irrelevant!

HBR writes:

New Nielsen research shows Google's Android smartphone operating system surging in the U.S.

In the past two quarters, Android phones' share of the U.S. smartphone market jumped from four percent to 13 percent. Even more impressively, in the last six months Android grabbed 27 percent of all new smartphone subscribers — more than the iPhone (23%) and closing in on flagging leader BlackBerry (33%), both of which saw new subscriptions fall.

Those numbers being startling, and this being a blog entry, we must now immediately declare What This Means: Apple is dying! Google is God! BlackBerry is irrelevant!

Not really, of course. The numbers tell a far more complex story than that...
 Read the rest here.


  1. I don't have the numbers, but I'm curious what Apple's profit margin is compared to Blackberry or Google. To me, that would be the more important story than who has market share, as market share and profits don't always go hand in hand.

  2. No, in the smartphone market, market share is king. The thing is, that, after an initial warm up where the people get used to their device, smartphones are sold because of the software, not the hardware.

    Initially most customers select their device because of the look and feel, marketing, the press or something else. After a while they get used to the user interface and specific software. They develop use cases that require special features and the like.

    In short, they invest time, effort and money. This is all lost after switching the os. There has to be a huge advantage for a customer to do so.

    Such an advantage can only be provided by software. The hardware in itself is seldom useful. So, to provide customers with an incentive to switch operating systems, the producer has to attract software developers. But software developers, at least those who have or want to earn money, choose the biggest market, that is the operating system with the biggest user base, if there are no other strong reasons against such behaviour.

    In the case of apple vs google, google has a lower entry fee to the app store, access to its web services, which the customers know from home, developers can use any system (windows, mac os, unix) they like and every android cellphone can be used while apple's entry fee is 10 times higher, the developer has to use mac os, the web services are worse and have a smaller user base and the iphone is more restrictive when it comes to hardware access.

    Oh, and the iphone is much more expensive than android devices.

    So, there are big advantages for the developer and the customer of android phones, while the iphone is hit by huge problems. That is the reason for the growth of google's market share.

    If the growth continues, google will not only have the better incentives for developers but also a much bigger app store.

    Remember 'ol Steve Balmer shouting "Developers, developers, developers !"

    So, as software is the key, market share is the key.

  3. From the article:

    "Apple's closed approach has worked remarkably well so far — though recently some scratches have shown up on Apple's shiny touchscreen image. And the last time Apple fought an open-versus-closed OS battle, it got demolished by Windows. Few people ever claimed Windows was superior technology, but its strategy was superior, and market share reflected that. The startling rise in Android adoption could well reflect the same consumer desire for an open platform. For choice. For competition."

    I have been saying this for more than a year now. Apple is making the same mistake it did with MS. Even if Apple makes better products, its not going to win this war because of its closed strategy.