Daniel Eran Dilger
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Will the iPhone Meet its Match from a Modern Day DOS?

Daniel Eran Dilger
The smartphone industry is preparing for explosive growth in the sales of sophisticated mobiles. Every other phone on the market is currently being compared to Apple’s iPhone, setting up a close parallel with the PC market in the 80s and 90s. Will Apple again lose its to early technical lead to a generic platform like DOS?

Will the iPhone Meet its Match from a Modern Day DOS?
Will Windows Mobile Play DOS to Apple’s iPhone?
Will Google’s Android Play DOS to Apple’s iPhone?
Will Symbian Play DOS to Apple’s iPhone?
DOS in the Early PC Market.
Apple was founded at the birth of the personal computer in 1976, and it rapidly gained prominence and household name recognition by selling easy to use computers. In the early 80s, Apple invested its early profits into developing a new graphical computing platform, and ended up well ahead of other PC companies in delivering sophisticated software to unlock the usability of its hardware.

Having a head start didn’t keep it ahead however. When the much larger IBM entered the market in 1981 with its DOS PC, Apple’s fledgling efforts to leverage its software and hardware sophistication were trampled by IBM’s market power and a blossom of other PC clones also running DOS. That pushed Apple from a position of selling around a sixth of the world’s personal computers in 1980 (15.8% according to Gartner) into a specialized niche of around 11% of the overall PC market by 1990. Apple’s unit sales of new computers had kept increasing, but it was outpaced by even faster growth in the overall DOS PC market.

Ten years later, while IBM had fallen out of the picture, the market power behind the DOS PC again returned for a second assault, this time led by DOS vendor Microsoft, which had tacked a graphical environment on top of DOS and was selling it as Windows.

Windows had the same appeal to generic PC makers as DOS had the decade earlier; it allowed them to compete against Apple’s integrated model without investing the resources into building their own software. Apple’s share of the market rapidly shrunk down to 2% even as the company continued to build more Macs because the overall Windows PC market rapidly grew around it throughout the 90s.

Office Wars 1 – Claris and the Origins of Apple iWork
How Apple Keyboards Lost a Logo and Windows PCs Gained One
1990-1995: The Rise of Windows NT & Fall of OS/2


SCO, Linux, and Microsoft in the History of OS: 1970s
SCO, Linux, and Microsoft in the History of OS: 1980s
SCO, Linux, and Microsoft in the History of OS: 1990s
SCO, Linux, and Microsoft in the History of OS: 2000s

The Tables Turn.
Apple’s infusion of new technology and leadership from NeXT enabled the company to turn things around over the following decade, however. Apple built its own retail stores, developed its own professional and consumer software titles, and delivered rapid technological advances in its operating system software that has enabled the company to reach and sustain 35 to 40% annual growth within the PC industry, which itself has slowed down to a mature crawl of around 4% overall.

Apple’s market share has begun ratcheting back up from less than 2% to its current standing of around 3.5% of all the PCs and servers sold worldwide. Every percentage of increase is significant because it represents an additional proportional share of an increasingly larger pie. One percent share of the PC market in the early 90s equated to around 400,000 units; today it amounts to 2.5 million. The company’s growth in specific, highly profitable markets is even more impressive, as it has 8% of the US market, and among retail PCs over $1000, Apple has over 66% market share.

At the same time, Apple also invested in consumer products with the iPod, and rapidly developed its MP3 player brand to consume the vast majority of that market. Despite DOS-like attempts by Microsoft to deliver a reference platform of MP3 and video playing hardware and software under the Portable Media Center and PlaysForSure brands, Apple not only held onto more than a 70% share of the market, but also developed the music player market out into a more sophisticated ecosystem that involved billions of dollars of music and media sales, a multi-million dollar accessories business, and most recently a WiFi web and mobile software platform.

Observers who had witnessed Apple fall twice in as many decades to “the DOS attack” of a generic platform have been predicting a hat trick ever since the iPod appeared. They confidently assured users that Apple’s leadership with the iPod was doomed to fall to a more generic successor, initially assumed to be Microsoft. But when PlaysForSure and Windows Media failed miserably, a random assortment of devices from Creative, Samsung, SanDisk, Sony, and others (including Microsoft itself with the Zune) were handed “iPod Killer” armor by media pundits and sent into the front lines of retail stores. None returned to claim victory.

Market Share vs Installed Base: iPod vs Zune, Mac vs PC
Microsoft’s Zune, Vista, and Windows Mobile 7 Strategy vs the iPhone

iPod 2: The Smartphone.
The next hopeful for unseating the iPod dynasty was identified to be the MP3-playing smartphone. However, by the iPod’s fifth anniversary there were still no standout smartphone vendors or platforms that could realistically claim to rival the iPod as a music player. Most smartphone users continued to use an iPod in addition to their phone, a fact reflected in strong iPod sales and the overwhelming popularity of iTunes among online music buyers.

When Apple announced plans to release its own smartphone, the mobile industry largely scoffed. Microsoft CEO Steve Ballmer insisted, “There’s no chance that the iPhone is going to get any significant market share. No chance. […] I’d prefer to have our software in 60% or 70% or 80% of them, than I would to have 2% or 3%, which is what Apple might get.” In reality though, Microsoft had seen its own share of the smartphone market tumble from 23% in 2004 down to 12% in 2006.

In the smartphone business, Microsoft had been continuously losing share even while increasing its unit shipments, just as Apple had within the PC market in 1981 and again 1991. Shipments of Windows Mobile phones have grown rapidly, but not nearly as fast as the industry in general. Nokia uses its own Symbian OS to power its smartphones, while RIM has similarly experienced its own rapid growth in enterprise markets using its own custom smartphone OS. In its first year, Apple added 6.1 million iPhones running OS X into the market, more than a third as many as all of Microsoft’s worldwide partners combined had sold in the same period.

Apple’s iPhone Vs. Other Mobile Hardware Makers: 5 Revenue Engines
Apple’s iPhone vs Smartphone Software Makers

Can There Be Only One?
The smartphone industry isn’t congealing behind a generic operating system as the PC market did in 1981 and 1991. Instead, additional competitors are entering the fray. Google’s Android and a number of other Linux-based platforms advanced by ACCESS, MontaVista, and others have all struggled to find attention in the market.

However, this wild proliferation of platforms also occurred in the PC market prior to the mass market adoption of DOS and Windows; before IBM got behind DOS in 1981, there were a variety of PC makers using CP/M, as well as unique platforms being advanced by Acorn, Apple, Commodore, Tandy and others. And prior to Windows taking the lead in 1991, the Macintosh had been joined by the Acorn Archimedes, Amiga, Atari ST, NeXT, and other graphical computing systems.

At both events, the diversity of platforms caused problems for users. There simply wasn’t enough critical mass behind any of the more superior technologies to advance them, and so the PC world ended up twice falling in line behind a third rate platform that eventually gained the traction of the QWERTY keyboard at which time it couldn’t be replaced.

Is the current vibrant competition in the smartphone industry about to collapse behind a single, pedestrian DOS-like vendor as the PC world did in 1981 an 1991? Or will Apple continue its current growth with the iPhone and expand at the expense of existing and new smartphone rivals, as it did to Archos, Creative, Cowon, Diamond Rio, iRiver, M-Pio, Microsoft, Pioneer, Samsung, Sony, and others with the iPod? The next article will take a look, but you can register your own ideas in advance, in the comments below.

Rise of the iTunes Killers Myth
Secret iPhone Details Lost in a Sea of Hype and Hate

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  • simon

    I think that the MobileMe web apps are the key here – I don’t think that there will ever be another Windows or DOS that will dominate as much as these two platforms did.

    Therefore as you say, it’s going to be expensive creating apps the old fashioned OS API way because as above, there will never be one clear winner.

    Also there will never be a standard hardware platform in the way the PC was/is i.e. it has a HDD, it has a monitor, it has a keyboard/mouse etc.

    It will more be the case of does it have enough storage? Does it have keys or a soft keyboard? Does it have GPS? Wi-Fi? How do we preserve battery power?

    So the new lines of battle are really web apps, flash and MS’s flash (Silverlight).

    As to why Apple are pushing their own API – well they’re attempting their own way to lock developers in and of course use the platform to it’s best advantages (You can’t do SuperMonkeyBall as a web app!).

    But for most standard desktop text based apps, they surely must know that as they’ve done with MobileME that web apps are the main contender for the API of choice in software development.

  • http://johnsessays.blogspot.com John Muir

    Simon’s right to bring web apps into this from the start.

    My expectation is that the iPhone will expand at a terrifying rate for the first few years it’s on the market, gaining a dominant position at the top end. There simply is nothing in the way of that now, with even RIM scrambling … thanks to iPhone 2.0.

    But I don’t think the iPhone will become the iPod of phones. Nokia are the chief difference.

    The iPod was able to sweep the floor even at the bottom end of its market because those players reeked and their software was even worse. iTunes made the iPod Shuffle feasible, just as it has enabled the iPhone. What a platform that program is!

    Mobile phones though, at the base of the market, are just cheap handhelds which take a pre-paid card and make calls. It’s hard to see what Apple could do to revolutionise that and make the hordes of no-frills handsets suddenly irrelevant. Because that’s precisely what they did with subsequent generations of the iPod. Dominance only comes when you can pull that off.

    Here’s where web apps come in. Any platform hoping to compete beyond the (likely sizeable) base of the market, must provide a solid web browser. Once that’s done, and the essential UI of the phone is good (a big hurdle not to be overlooked!) then you have a viable platform. Web apps would suddenly even most of the experience right up.

    I don’t think there will be a DOS this time. But if Google and (sigh) their consortium can keep at it, there could be a successful Linux which could move into the middle of the market where users demand the web but niggle over price.

    The cheap end meanwhile, well that still belongs to Nokia and any subsequent Dell’s to come out of China! Fortunately, their phones will be precisely that: phones. No need for a Microsoft sponsored common platform, and therefore no potential for a repeat of DOS.

    Okay. That’s my guessing done.

  • http://murrquan.livejournal.com Murrquan

    As a Free / Open-Source Software fan, I’d like to see Google’s Android or Ubuntu Mobile take precedence … and I’m pleased that they opened up Symbian, too. The reality we’re dealing with, though, is that of the cellphone companies, who want to restrict users from doing just about anything with their phones. I spoke with someone just yesterday, who had no idea what OS his smartphone was using (probably Symbian) but was telling me that he couldn’t do anything with it because they wouldn’t let him.

    When the cell companies are all basing their platforms around restricting and controlling people, and nickel-and-diming them to death, the tables are turned for once. It’s not the ubiquitous, Free / Open-Source Software that’s going to bring freedom; it’s Apple’s monolithic, closed platform, and their ability to strongarm the cell carriers into letting it work as it’s advertised.

    Here’s hoping the iPhone gains even more traction! Competition is good for everyone, as Apple has shown by disrupting the Windows PC market earlier.

  • seamus_waldron

    The irony of the images you chose for the top graphic. The palmtop computer used for the 1991 column is an IBM PC110.

    This great palmtop, available officially from Japan only, had great features, one that I used on occasion is that is has a built in analogue telephone.

    Okay, so not a smartphone by todays standards, but it had all the PIM functionality you could need, ran off MS-DOS and had other great functions that if listed, would look good even today when talking about phones.

    For a trip down memory lane: http://www.apj.co.uk/pc110/pt_main.htm

  • Scott

    Is the current vibrant competition in the smartphone industry about to collapse behind a single, pedestrian DOS-like vendor as the PC world did in 1981 an 1991? No.

    Will Apple continue its current growth with the iPhone and expand at the expense of existing and new smartphone rivals, as it did to Archos, Creative, Cowon, Diamond Rio, iRiver, M-Pio, Microsoft, Pioneer, Samsung, Sony, and others with the iPod?
    OS X iPhone (iPhone plus iPod Touch) yes, iPhone on its own, no.

    The Key Differentiator in smartphones is going to be software (client and web apps).

    Surely though profits are more important than market share? If yes, why the obsession with market share? The last time I checked firms were in business to make profit not to dominate competitors.
    As far as I’m concerned (hopefully Apple too) if iPhone ends up with 10% of the smart-phone market (world wide) while delivering healthy profit margins (hopefully better than its competitors) I will be more than happy!

  • tli

    The history probably won’t repeat itself in the cellphone era. The single most important aspects of a cell phone design is the usability, and this can only be achieved by the tight integration of hardware and software, and of course the excellent design.

    Apple excels in all of the above.

    Does Apple have a chance to do the unthinkable – control the cellphone industry the same way as the mp3 market? Yes, this time around.

  • http://www.adviespraktijk.info Berend Schotanus

    Is it really desirable to dominate the world? Will Steve Jobs be yet another Napoleon facing yet another Waterloo?

    Saying that the iPhone platform can dominate the smartphone market in MS-DOS style is a far reaching statement. Worldwide domination on both hardware and software for a kind of device that probably will be ubiquitous in ten years or so? That would be as close to world domination as you can get.

    The problem with world domination is that it significantly changes the playing field. You won’t be the good guy anymore. You won’t be able to prove yourself against competitors but it will be lawsuits and government regulation that you have to defend yourself against (look at Microsoft).

    I.M.H.O. it would be a much more desirable to get a Mercedes-Benz style of market leadership: the best, the most innovative but not the only one. It would be in Apples self interest to let others share a part of the cake.
    This is wat could be a lesson from the DOS age. Why, in 1978, did Apple want to keep Apple II a closed platform? Why didn’t they licence is? Basically that is what Microsoft did: provide a sharing model so that much more players could participate in a booming market.

  • http://johnsessays.blogspot.com John Muir

    @ Berend Schotanus

    Daniel’s asking whether a DOS style generic *competitor* to the iPhone will come along. Not whether the iPhone itself will be DOS! Clearly the iPhone is the new Mac. So what we’re getting to see is a rematch of the original personal computer tale.

    The Mac would never have dominated PC’s, so long as it remained an Apple only platform. But without IBM’s evil offspring DOS bringing down the standard of everything for a decade (and then Windows after that), the Mac could have flourished instead of become a marginalised and expensive platform as it did under Sculley.

    If the Mac had never been up against the bulldozer that was IBM and later Microsoft’s PC platform, everything Steve Jobs and co. did at NeXT could well have happened inside Apple instead. In essence: we could have had NeXTStep / OS X by 1990.

  • u2mr2os2

    The difference this time is web standards. Just as data standards like JPEG made it easier to use Macs in a Windows world, Web standards are what any smartphone strives to support. Sure, Microsoft is trying to leverage the developers by making Windows Mobile be a familiar API and have lots of well supported development tools, but it doesn’t seem to be working after years.

    The typical killer for new challengers to the old guard is the lock-in of the incumbent – in this case, it’s Exchange. By making the iPhone work with Exchange, they conquer this, and it seems IBM is taking care of Lotus Notes as well.

    Other smartphone competitors will be trying to support these same data and Web standards, but that’s not an operating system that one vendor controls that would lock someone out. As this competition increases, the iPhone doesn’t get marginalized, it gets strengthened. It’s Windows that grows weaker in this scenario.

    The other “old” effect that would tilt things toward a platform was the “killer app” or just several critical apps that would spell doom for any platform that didn’t have them. Other than the immediate legacy of Exchange, most of these killer apps anymore are simply a capable browser accessing something. Sure, this means that eventually a “generic” smartphone OS could play quite well, but as I said, it doesn’t mean that the iPhone can’t play. We’ll finally be where we should have been: competing on usability and quality of the implementations rather than feature lock-in.

  • John E

    great question and setup analysis from Dan.

    well, if the analogy to the 80’s holds, then Symbian would be the counterpart of DOS now, widely distributed by the global market leader Nokia, as the counterpart to IBM. and like DOS, it may be inherently too primitive to serve as a mini-computer OS into the next decade, despite Nokia’s attempt to morph it via open source into a neo-Windows per the analogy.

    and all the other smartphone OS’s are like the various kinds of OS’s in the 80’s.

    but the analogy might not hold overall. there won’t be a neo-Windows, because unlike the 90’s there is no overriding practical need for direct OS interoperability among smartphones. they can all communicate with each other anyway in all ways that matter to consumers and access almost all the same kinds of services via the web. that’s also true for PC’s now, but in the 90’s it was technologically impossible and so inevitably one OS became a monopoly instead.

    (i think the iPod’s success is a different kettle of fish. it’s really about iTunes, which is a platform, not an OS. iTunes’ market dominance in this decade is analogous instead to MS Internet Explorer in the 90’s – another platform – when it overwhelmed all the early competition like Netscape, just like iTunes has done. the right thing in the right place at the right time. this decade’s version of that scenario is apparently turning out to be Google and its web services platform, although the “cloud” is still in its formative stages. but IE is still the #1 browser today, tho in gradual decline, and i bet iTunes stays the #1 media platform likewise in the next decade.)

    so, no, i don’t think there will ever be a neo-Windows-dominant smartphone OS appearing per the analogy. each kind of OS will evolve and hold some significant market share into the next decade. Apple could wind up with a significant chunk of the first-world market, like 20+%, a market share it may also achieve with PC’s in the next decade.

    that would make sense, because smartphones are really going to be the mini-portable-PC’s of the future. that was the iPhone’s breakthrough, being the first of that kind.

  • John E

    ah, thinking of MS’s “pocket PC” concept from early in this decade, i should have said, the iPhone is first of its kind … that really delivers on the promise of that idea.

  • The Mad Hatter

    @John E

    iTunes’ market dominance in this decade is analogous instead to MS Internet Explorer in the 90’s – another platform – when it overwhelmed all the early competition like Netscape, just like iTunes has done. the right thing in the right place at the right time.

    The only reason that IE overwhelmed Netscape was that it was installed on every computer from the OEM for free, and therefore no one needed to use anything else. ITunes is different, in that using it to get new music costs, and people still choose to use it.

    Something Microsoft has never been good at is selling to anyone other than the computer OEMS. Apple is really good at selling to the public, Applas has sold the public on the IPod as a music platform, and on ITunes as a way to manage the IPod.

  • lmasanti

    “ah, thinking of MS’s “pocket PC” concept from early in this decade, i should have said, the iPhone is first of its kind … that really delivers on the promise of that idea.”

    As usual… Microsoft promises, Apple delivers!

  • harrywolf

    The iPhone has a unique combination of elements, some of which are unavailable to any other phone makers.

    Its only just begun its second year of manufacture, but already it is universally acknowledged as the best mobile device on the market.

    Storage will go from 16 to 32 to 64 fairly quickly, I think.
    At 64 gb, it will surely become a storage disk like the classic iPod.
    That will be one more added value that other phones probably wont have.

    If Apple decide to make a smaller phone/ipod combo, (the rumored Nano) that might really cause the other phone makers some grief.

    The iPhone, like the iPod, is a trojan horse that brings OSX and iTunes and the amazingly simple App store to all those Windows users – another bonus.

    It seems that Apple has so many advantages right now, that it will be tough to use history to point the way.

    Something big is happening to the PC/mobile device world, and Apple is the controller.
    I think the Nano Phone is a sure thing, because it allows Apple to ride the slight decline in growth of iPods, and capture mobile non-Smartphone customers at the same time.

    If you have headphones plugged in for music, you might as well have a phone function as well. That takes at least 70% of the teen/20’s market immediately. Another win.

    How can you see anything other than continued growth and domination from Apple over the next 5 years?
    It would take at least that for someone to beat their game, and that assumes Apple do nothing new – which wont happen.

    Now that the new Apple corporate culture under Steve Jobs is well-established, the transition to Apple Inc complete, I cant see any downsides at all.

  • Minicapt

    “ah, thinking of MS’s “pocket PC” concept from early in this decade, i should have said, the iPhone is first of its kind … that really delivers on the promise of that idea.”

    Not really, my Newton 2100 would disagree. The MS Pocket PC was the 2nd or 3d concept to implement an approximation of the Newton OS.

    And a reminder, DOS was not a Computer Operating System; it was a Disk Operating System, like its precedent in Apple DOS. It wasn’t until 1986 or so that MS-DOS became a package of computer utilities, centered on DOS. At that point in time, Windows 2 was current but less popular than Norton Disk Commander and such.


  • David Dennis

    You know, it’s worth noting that there are already enough iPhones out there to support a vibrant third party market, which is just getting bigger.

    The main reason Apple was marginalized was sky high pricing and the iPhone is highly competitive with anything else out there.

    So I don’t think we need to worry about Apple being defeated as it was in the Apple ][ days – we have a strong enough ecosystem to be around until the iPhone is replaced by the next big thing, likely to be another Apple product.


  • Realtosh

    @ John Muir

    Glad to see you finally coming around. I hope that I’m wrong, but there is certainly a chance for an opening for a mobile OS, similar to the opening that DOS exploited back in the 80’s.

    This time however, it won’t come from Microsoft. I agree that Nokia has the gravitas to bring a platform to the fore. Symbian isn’t it. Symbian is Nokia’s play thing du jour. Eventually Nokia will figure out that Symbian doesn’t have the power to take Nokia where it will eventually have to go to keep up with Apple. It will go looking for options.

    There are a number of players out there playing with Linux. Palm is working a a modern mobile Linux. LiMo is also working on a different version of Mobile Linux.

    Finally, Google is working on Android, a Linux-based mobile platform. A purely open-source project will not have what it takes to take on Apple. However, Google has the resources. Combine that with their use of open source software, Google will be able to provide a viable alternative to Apple eventually.

    Apple will certainly have the best solution out there. Many phone manufacturers will want to have their own in-house solution a la Apple’s OS X. They will want to to have their own solution that can differentiate their offerings from everyone else. The best chance most of them have to be able to effectively proveide an alternative to Apple’s iPhone offering would be to work together, by using an off-the-shelf solution, like Google’s Android.

    For a while there will be many solution pulling for their own share of the spotlight. In the short to medium term, the competitive landscape for smart phone will be much like the media player market of earlier this decade. Apple came in with a far superior product and cleaned up.

    Apple will do to smart phones with iPhone what it did to media players with the iPod.

    The only question is will anyone else get any kind of real traction against them going forward. The question is still open. The answer will come in time.

    I still believe that Google has the best chance with Android if they are able to get enough support of manufacturers behind their effort.

    Nokia also has a shot, if they ever give up on Symbian and look to develop a powerful, modern mobile OS that can more close resemble and compete with Apple’s OS X.

    No one has all of the pieces yet to compete effectively with Apple. All I’ve ever said, is that there will likely be an opening for an open-standards platform, unless of course Apple moves quickly to shut the door.

    That paranoid need to shut everyone else out of this lucrative market is likely the reason that has caused Apple to move so quickly on iPhone 2.0, App Store, iPhone 3G, and MobileMe all at once, resulting in a few uncharacteristic stumbles.

    Apple will have the best solution(s). Let’s see if everyone else can work together to put forth an effective alternative. It will not involve Microsoft. It may involve Google. It almost certainly involve Nokia, unless they Motorola themselves to death, dawdling with Symbian.

    Time will tell. My guess is that eventually some number of manufacturers will come running to Google for help in the one critical area where they will have litle chance to compete with Apple: software.

  • http://johnsessays.blogspot.com John Muir


    Well, I do think that Google have the better chance of making Linux a success story, than say Canonical (the Ubuntu people). But it’s a huge task. And one whose politics is truly odious. To bring focus to Linux: you’re going to have to knife a lot of people’s favourite projects.

    But I think you forget the web’s role in this.

    As John E said:

    “unlike the 90’s there is no overriding practical need for direct OS interoperability among smartphones. they can all communicate with each other anyway in all ways that matter to consumers and access almost all the same kinds of services via the web”

    The App Store is where Apple will get the most traction for the iPhone as a *platform* rather than a product. But most killer apps are likely going to be on the web. Right now: that too is in Apple’s interest. Mobile Safari is in a league of its own. But WebKit (which is its core) and other open source browser projects are out there for skilled players to use.

    I reckon that the single feature which will classify a smartphone in a few years is a full featured desktop class browser. The web is the biggest platform of all.

    When you have that, it doesn’t matter nearly so much whether your handset can run the same code as the next. Back in DOS’s day however, that was the end of the story.

  • Realtosh

    @ John Muir

    One of the biggest reasons that Apple created the App Store was because software does matter.

    The web is important but it’s not enough. Apple did want to get the message out that the web is important as a platform, so much that they didn’t want to allow development outside out the browser.

    As long as there is a common platform between devices that is standards-based and open, then Apple will never be shut out and can continue to do its’ thing, making the best devices out there without regards to what other closed platforms they may get shut out of.

    The problem with the Apps Store and other non-Apple platforms out there is that they may be incompatible.

    Right now, Apple is running away with the best platform and the highest utilization figures for web browser and will soon have the most varied and flourishing software market, if it doesn’t already have it today. The App Store sales figures that Apple has been reporting are quite impressive. I’m not sure that anyone has ever sold some much mobile software so quickly in such a short period of time.

    Now the problem. As long as Apple takes the leadership role of the smart phone business and quickly starts selling more smart phones than anyone else, there’s no problem for Apple.

    The problem comes in, when and if Apple has the best product, but several other manufactures coalesce around some other platform. If the total sales of the competing platform outsell Apple, then there may be a tendency for developers to develop for those platform(s) that have the most eyeballs, which may ot may not be Apple’s platform. Such a competing platform could in theory drain away some developers from Apple’s OS X. This could result in software first on the majority platform, more software, better, more polished software with more features, etc. As long as Apple outsells everyone else, that competitive advantage goes to Apple. If and when a consortium of other manufactures outsells Apple on a single well-designed functional platform, then the advantage, in theory, ought to shift in the other direction.

    That alternative mobile OS platform that can compete with Apple’s OS X does not exist right now. Furthermore the pieces may not come together for a couple of years or more.

    Google will try to make it happen very quickly. They are working on their platform. They plan to give it away to all comers, so that they can get the mobile ad revenue. They have a powerful incentive to make it work, plus their business model is radically different from everyone else, so they will be playing by different rules.

    HTC and other low cost manufacturers from the East want to get into the consumer electronics and computer business, including of course the cell phone business. Right now they have making a killing in the assembly business putting together everyone else’s designs. But that business is a razor thin business with much competition and the slightest of margins.

    They do not have the competence to make their own phones, especially not the elegant software to power them; not like Apple’s anyway. But if they can take Google’s ready-made off-the-shelf platform, they can probably figure out what electronic pieces to put inside. They build phones and other electronic devices every day for everyone else.

    These long-shot manufacturers have more of a shot at success with Google’s software than even some of the Nokias; whose hubris and previous investments in losing technologies like Symbian will keep them from making the best strategic decisions.

    Motorola self-destructed because of not moving to digital technology fast enough. They may never recover as a company. Palm lost nearly a decade after coming out of the starting blocks like a bat out of hell. Nokia seems to be lost chasing down their Symbian investment. RIMM also was resting on their email laurels. There were locked into a narrow email niche with an interface that worked narrowly for email and poorly for anything else. For the longest, they were resisting a change in that horrible interface.

    Apple has created excellence and stirred the pot. Everyone has now been forced to reevaluate their competitive positions. Most if honest have not been happy with their self-evaluations. If they’re smart, they’ll do whatever it takes to create an excellent product to properly compete with Apple.

    If inertia, infighting and hubris get the best of them, then they can always fall back on Plan B, and pick up some Google goodness and do with Android what they will have been unable to do on their own.

    Either way, it will get interesting. I just wonder what goodies Apple’s got in their labs. It will be an unending run on a conveyor belt for all of these competitors trying to keep up with Apple. That will raise the bar for everyone.

  • http://johnsessays.blogspot.com John Muir

    @ Realtosh

    Presumably Google will have a reference hardware platform – just like Microsoft do in the PC industry – which, yes, companies like HTC can manufacture with the absolute minimum of R&D. Just how OEM’s like it.

    Going back to the DOS analogy again: killer, compatible, apps were everything back in those days. You couldn’t even put a Mac floppy in a PC, let alone read the files without 3rd party products the like I never needed to know about at the time … on my PC. Ergo the PC won, because no matter how much more polished the Mac was or how impressive were the Amiga’s tricks: IBM had ensured critical mass so every software company prioritised it.

    With phones: the file compatibility thing has essentially disappeared completely. It has on the desktop too. Why was it so easy for me to switch to a Mac this decade? A standards based internet had moved to the centre stage of daily computing, that’s why. The same is true for the grown up browsers all future smartphones will have to muster. Once you have that, all it takes is a little SproutCore and you have your killer app platform for the masses.


    I can certainly see a market in a few years where Google and other software competitors to Apple have their own distinctive slices of the pie, with the web being the centre of action they all hold in common.

    The trouble for Google’s hardware clients would be to match not just the physical iPhone we know today, but generation 3,4,5…

    Oh and that most intangible thing of all: quality of interface. It’s hard enough for iPod rivals to get that anywhere near right. Competing with the iPhone in a fair fight over look and feel is going to be an awesome feat.

    Nokia, by the way, did buy Trolltech. That seems pretty important. Trolltech are the firm behind the Qt layer which KDE is made from. In other words: Nokia have chosen to invest in just the middle layer which seems to be where Linux is the most lacking compared to OS X. I’m no Nokia fan, but I think it’s an interesting move. Especially as Google have nothing to do with it. Could Google and Nokia turn out to be rivals in the Linux space?

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  • Dorotea

    Dos became a “winner” because it was chosen as the operating system for the IBM Personal Computer in the early 80’s. Back then the name of IBM was magic. IBM was trusted. It was THE name in big computers. Businesses were willing to try a PC because it had IBM behind it. The killer app was the spreadsheet… Accountants had the first PC’s in the company where I worked. Then the clonemakers came and because IBM didn’t buy MS, the clones could license DOS! In many ways MS came in through the back door.

    Windows was the heir apparent to DOS. Made by the same company… and it was much more cool than DOS.

    So from my limited vision, I don’t think there is a back-door for anyone to become a “DOS”-like leader in the smart phone area.

    Also, while web-apps are important, the infrastructure to provide all-encompassing connectivity is the most important factor. Right now cell phone companies provide the connectivity. Forward looking communities are providing wi-fi to their citizens. Minneapolis has a city sponsored , city-wide wi-fi solution in place. Other cities/towns have that as well. I don’t want a cell phone so much as I want a small mobile computer with connectivity everywhere.

  • Realtosh

    @ John Muir

    I don’t deny that Apple will have the best kit. I think everyone who is honest acknowledges that they have the best phones and will likely continue to have the best phones for the foreseeable future.

    The only question is whether Apple can pull off some miraculous iPod-like domination of the smart phone space with the iPhone selling more smart phones than all competitors combined. It’s possible, but not guaranteed by any means.

    If Apple does not become the majority platform by itself in smart phones, like they did with the iPod in the media player market, then everything changes.

    Eventually other smart phone will be good enough. The iPhone will likely always be the best. The others will get a good-enough browser, likely based on Webkit if current trends continue, so they’ll be usable. They’ll have email, maps, apps, games, etc.

    If these inferior but good enough smart phones begin to outnumber the iPhone, then the market forces will start to pull development efforts from iPhone to competing smart phone, if they are on a single platform compatible across the range of competitor phones.

    Nokia would not create such a platform where they are one of many. They would make themselves the IBM of the PC clone market. Note that IBM no longer makes PCs.

    However, Google has every reason in the world to create such a common platform so that ALL or at least most manufacturers would use their platform, and provide them with mobile advertising revenue.

    Will Apple have 20-25% of smart phone market, or will they have 60-80%? The market dynamics will be vastly different if the competitors are making 75-80% of smart phones vs 20-40%.

    Right now they have nearly 100% of the functionally useful Internet-capable smart phone. This reality is evidenced by the utilization rates of mobile Safari vs all other mobile web browsers and by the sales of mobile apps on the App Store vs all others.

    In order for the market forces to drain away the development efforts from the iPhone platform, would require many if not most Apple’s smart phone competitors to come together on a single development platform. No single manufacturer can out play Apple at their strengths. The only chance anyone has to beat Apple is through the network effect.

    That’s why your comments about Nokia and Google being natural competitors is so interesting.

    Apple was able to insulate themselves in the media player market with the iPod and its’ iTunes ecosystem. They are trying to come up with a repeat performance with the iPhone and its’ tie-in to the App Store, as part of the iTunes ecosystem.

    Apple wants to get so far ahead that no one can catch up. The folks in Cupertino ran the numbers and did the analysis. That why they changed strategies. They dropped the onerous demands on the carriers, and more importantly dropped the price on the iPhone, because they’ve decided they want to repeat the iPod success with the iPhone. They could have remained a niche player in the iPhone market with the best hardware and some cool software. But eventually, most competing smart phones will get good enough, possibly in a year or two. At the point, if these others have coalesced around a single alternative platform, that’s when Apple would’ve started to lose their early advantage.

    Apple wants to dominate the market; in fact they have to. They’d rather have an iPod-like market in the smart phone market doing it the Apple way. They wouldn’t want to become a Microsoft supporting everyone else’s inferior products or worse an IBM who gets elbowed out of their own market by inferior by lower priced clones.

    This need for Apple to continue to be Apple and do it the Apple way is what is causing all the pressure and rushing products out the door at Apple.

    The smart phone as functional Internet device and useful development platform is a new concept made successful in the market place by Apple.

    Apple is behind RIM in North America and behind Nokia everywhere else in numbers of shipped smart phone. However, this doesn’t tell the full picture. Most BlackBerries and Nokia smartphones are not useful Internet devices nor a good development platform. Nokia’s smartphone aren’t all on the same platform, so Nokia’s phone are competing with each other.

    So, in conclusion, Apple has an opening right now to close the door on a viable common platform that would network effect the iPhone to niche product. It it possible for Apple to do so, but they’ll hve to outsell RIM in North America and outsell Nokia in the rest of the world.

    Apple is currently selling more functional Internet device smart phones with a built-in development platform than anyone else. They have to extend their lead before RIM, Nokia and others have a chance to catch up in product development and sales of useful, functional smart phones.

    If Apple can get far enough ahead it will be difficult for anyone else to catch up, even if they come together under Google’s platform.

    Now that Apple has dropped the price on the iPhone to $199, their strategy becomes more clear. It will likely mean that Apple will be the dominant force in smartphones for years to come. However, I won’t discount the opportunity Google may have to create a mobile platform with Android. I just don’t worry about it as much as I did last year and in the spring, before Apple announced their new iPhone pricing.

    Phone are getting to be amazing devices, now that Apple has gotten into that market. It will always be so much more interesting now.

  • http://johnsessays.blogspot.com John Muir

    @ Realtosh

    The only part where I disagree with you is your implication that third party software makes a smartphone platform.

    The web is ever increasingly becoming the universal platform. Such that web browsers are now our most important pieces of software on the desktop, and yes the iPhone.

    The App Store will sell some awesome stuff for years and years as the iPhone matures as a longterm platform like the Mac. But I doubt there will be platform exclusive killer apps. Not the sort which make and break entire platforms. So much can be done with the web. Not only do you become platform agnostic that way, but whole other business models come into play like advertising.

    The fact that Google of all people are behind Android really highlights the fact that web apps and a first class internet experience for everyone, on the go, increasingly everywhere is what we’re talking about with smartphones. They are the Sci-Fi sounding ubiquitous computer. And the web is the other side of the same coin.

  • http://johnsessays.blogspot.com John Muir

    So long as the web is the common platform where all the truly killer apps live, then there’s space for several major players to compete without a DOS effect.

    The Amiga for instance only got crushed because software companies looked elsewhere. With the PC around, survival for everyone else suddenly became Catch-22 and everything died besides the Mac which clung on in the DTP niche.

    But when software is abstracted away from the machine and onto the web … suddenly every platform with a great browser is viable.

    Sure, not everyone’s going to make their own OS. Most hardware makers are as unprepared for the task as you or I individually! So there will be big players who do their own development and create reference designs. (WinMo and Android plus more besides.) But there doesn’t have to be ONE which will dominate. When you have the web, you have your software air supply.

    It could just be that we’ve finally found a level playing field!

  • Realtosh

    I agree with you that the web is helpful. The web as uber-platform is an important part of any future useful fully functional Internet device smart phone.

    Note how the Oracles and Bank of Americas are writing web apps and/or native apps for the iPhone. Right now the iPhone is the go to mobile platform. All I’m saying is that another competitive platform can siphon away development efforts. You correctly observe that such a loss could be somewhat counter-balanced by web apps which hopefully ought to be universal.

    Even web apps are not truly universal. I’m still unable to make payments on my EZ-Pass toll tag account with Safari on my Macs, Safari on Windows PCs, and of course any iPhone (Safari-only). The web site only works with Explorer and with Firefox; however with Safari-only iPhone I’n totally out of luck.

    When I sent EZ-Pass an email explaining that I had to wait nearly an hour for my credit card payment to be confirmed before I gave up, I made the mistake to mention that it worked in Firefox.

    Their response was congratulations that I was able to fix my problem. They completely ignored the only point of my note that their web service did not work in Safari and therefore would not work on my iPhone.

    If 80-90% of smart phones are using Google’s Android, or some other common platform, my pleas for support will not be as considered as if the iPhone alone commands 60-70% of the smart phone market –iPod style.

    Most enterprise software has gone to the web. Much of it still doesn’t work with Mac without Parallels AND Windows AND Internet Explorer for Windows. Forget about using Safari or being able to access it with an iPhone.

    For example one industry, real estate, can stand in for virtually any other vertical industry with enterprise software. The MLS systems which are the back bone of information sharing in real estate have gone to the web for nearly a decade. Unfortunately, the major software vendors in this space have been working closely with Microsoft. The Redmond folks have lobbied very hard for this enterprise software to work only with Internet Explorer for Windows. The developers built in lots of ActiveX, and tied he whole mess to Windows clients. Before Intel Macs and Parallels came along, many of my clients had no choice but to deploy Windows for these mission-critical services.

    So yes I accept that the web helps some. The web however isn’t a fix for being on the outside of a common platform, if and when it comes into existence.

    I’m hoping that for at least the next 3-5 years, we will continue to have a number of competing platforms from Apple, Nokia, RIM, Palm, and even Microsoft. For as long as there are several strong players pulling in different directions, Apple will likely stand out from the crowd. If and when most others actually consolidate into one common platform, the dynamics will change.

    I wouldn’t mind Apple getting an iPod style market penetration with the iPhone in the smart phone market. I predict that Apple will do exactly that in the mid-term.

    Currently in the short-term, Apple is being outsold in North America by RIM and internationally by Nokia. My forecast is that iPhone will pass BlackBerry sales first, likely during the next 12 months. Then they will likely also pass Nokia’s sales.

    Apple’s product is excellent and they are developing good distribution channels. So I have no concern about them being able to gain a dominant position in the smart phone market in the mid-term, over the next 1-2 years.

    My concern is whether Apple will be able to sustain their market dominance long-term. The cell phone market is a more mature industry with established players, who have a vested interest in their own survival.

    The iPhone will not have it as easy as the iPod taking over the immature media player market at the time. The media player market had a bunch of small players, no pun intended, or larger players with small media player businesses.

    Will all of these established players in the phone space fight with each other or will they eventually fall into a common development platform? That is the question.

  • Realtosh

    #27 @ John Muir

  • http://johnsessays.blogspot.com John Muir

    @ Realtosh

    ActiveX is indeed evil. But guess what? Google have no interest in preserving it. What you observe about platform-specific web apps above (i.e. IE!) is all the direct effect of Microsoft’s doing. MS rightly felt that the web would be the next big challenger to their Windows platform, and tried to force proprietary hooks: chief among them ActiveX.

    The fact that Internet Explorer exclusive outfits have been moving to support Firefox of late is itself a huge sign. Firefox is still a minority browser. They’re not being forced by a leviathan. And if they want mobile access at all, you bet they’ll be supporting WebKit’s open standards, shared by Firefox and IE7+ (to an extent!).

    Strike number two is that Android is using WebKit for its browser … *the* keystone app. WebKit = Safari’s back end too. What works in Android should work on iPhone, and vice versa.

    The fact is, we’re still in early days with the web. Most of the world doesn’t even have computers, and those which do are still dominated 10:1 or so by Windows …most of those on IE. The iPhone alone will erode this. The Mac is too, and if Android can be the second best smartphone platform: you better bet demographics are on the move.

    Most of humanity do not have computers. But a much larger chunk (maybe even 50% from what I’ve heard) already have cellphones. Over time they’re going to be able to move up to smartphones, accessing the rich web on their countries surprisingly well equipped mobile networks. Think of the possibilities moving forward!

  • Realtosh

    @ John Muir

    Good observations.

    1) I agree none of the players will cede any control to Microsoft in the mobile space. Both Apple and Google will use standards-compliant technologies across their software solutions.

    2) The web space in the Android-OS X space will be much more standards complaint than anything Microsoft would come up with, and mostly cross-compatible.

    3) OS X is not directly compatible with Android, which is Linux-based, at this time. Unless either Apple or Google or both make a determined effort to create compatibility, developing apps for both will require more effort than developing for just one platform. Therefore the marketplace will determine how much effort and funds are spent developing apps for either platform or any other.

    Google made much of the original basic nifty OS X software (maps, you tube, gmail, search, etc). They debuted first on iPhone because that was the only real game in town. When Google has Android up and running, don’t expect them to make their software on iPhone first unless iPhone has many more eyeballs than their own Android. The same would be true of most other developers small and large. Google might even prefer to develop for their own platform first, calling it experimentation and research, to then deploy on iPhone later, even if iPhone is a much larger market.

    Non-internet native OS specific development will not be compatible between platforms. Developers will be drawn to the larger pool, with the hopes of selling more software to more people. More developers will reinforce the larger market. It would be a classic network effect.

    The most variety of software and the first to markets will for the most part go to the winner of the platform wars, even if 2 or more platforms exist.

    Apple can hope that for several years, the players in the smart phone space will compete with each other and resist platform consolidation. In that case, it will give Apple more time to achieve market dominance in the smart phone space with their iPhone offering. It will take years for the others to match Apple’s phones, let alone any thought of besting them.

    My concern is that a Android-like platform can give smaller less able competitors the chance to approximate Apple’s phones in function if not design or interface elegance.

    Some even argue that the clean design is fairly easy to copy by going to frog design or other design houses. Most smart phone since the debut of the iPhone are increasingly looking more and more like the iPhone.

    Apple’s current rush to market is likely due to their desire to create and consolidate their market dominance before the others have a chance to catch up.

    Apple might just pull off another iPod-like business dominating iPhone business in the smart phone space. But they have to act quick to make the network effect forces work in benefit of the iPhone instead of working against it. More iPhone sells more App Store apps. The availability of more App Store apps sells more iPhones.

    For now this network effect will work for the iPhone. My whole point is that this network effect could in the future work against the iPhone, but only if enough sales of smart phones 1) outnumber those of the iPhones, 2) they are on the same common or compatible platform(s) and 3) they are real smart phone with full Internet access, plus a development environment for software development across the range of smart phone that make up the total.

    Time will tell which way it goes.

  • http://johnsessays.blogspot.com John Muir

    @ Realtosh

    The part Google brought to those iPhone apps was all on the server. They’re built using the general purpose Google web services API from what I’ve heard. In other words: Google’s general purpose backend (which any platform can use) was given a good interface by Apple using their own code.

    Google just haven’t made any Microsoft style proprietary move in all of this.

    Android seems to be their way of ensuring the following:
    1. Smartphones with rich web browsers really take off
    2. That Microsoft aren’t the ones who do it
    3. So that open standards win and ActiveX etc. don’t dominate the next age of the internet

    Apple are already doing a lot of that for them with the iPhone. But Google don’t want to bet their whole future on Apple, and as we all know Apple won’t licence the iPhone out to cloners so there would always still be space for other platforms. Other platforms like say Windows!

    So Google are doing this themselves. To keep the web open, so that they can prosper from it, instead of winding up as more roadkill in the trail of Microsoft.

    As for native software in general: I really do think you’re overestimating it’s power now. Your argument hinges on native apps being the Number One deal-breaker which the mass of consumers will ultimately decide trumps all else.

    I don’t discount the significance of the App Store. Apple are being smart and making sure that the iPhone has the lead on native software too … plus raking in a pretty penny. But if the games and apps available for the iPhone right now were all on Blackberry instead, for instance, would the iPhone 3G be struck dead cold?


    Native apps are a factor in the equation. But one whole hell of a lot smaller than they were back in the DOS days. Internet, internet, internet!

  • SunnyGuy

    The big difference between now and then is that SJ
    has grown up. Can you imagine being kicked out of
    the company you founded and dreamed about?

    But SJ just kept developing his vision, and now it is
    bearing fruit big time. The Revenge of Nextstep.

    Sure there’s serious competition this time again,
    but the difference is it’s no longer in the same
    league as the OSX. SJ’s got his Ferrari firing on
    all cylinders. The Model T’s had better watch out.

    I think Gates retired so he could quit while MS was
    “still ahead”. There’s a steamroller bearing down
    on them, and it’s called Apple. Just keep watching.

  • rdamiani

    If PCs only worked when they were connected to and controlled by a network owned by another company that billed you monthly for each program you used, there never would have been a DOS effect. PCs can share software. Phones can’t. PCs can be useful without a network or monthly recurring charges. Phones aren’t. If PCs today worked like cell phones do, we’d still have dozens of vendors selling incompatable hardware running incompatable software.

    For there to be a DOS effect for phones, there has to be an ecosystem of phones that are as free and flexible as PCs are. As long as the carriers call the shots, that’s not going to happen.

  • Realtosh

    @ John Muir

    You make great points.

    Android is much better then Active X and proprietary Microsoft technology.

    Apple will try to make OS X the platform of choice. It is used throughout all of their lineups in one form or another.

    But if perchance, Android would take off and become the de facto standard of software development, Apple could add Android to OS X, so that iPhone could have both OS X and Android. This would be similar to how Macs have Mac OS X and Windows compatibility in one machine.

    I can see Apple, if necessary, using and supporting an open software project (like Android), especially if no one company controls it outright. In contrast, Steve Jobs would rather turn over in his grave than license Microsoft technology to give Microsoft control of an industry (like music, phones, mobile, media, set-top box, etc.) with proprietary technologies.

    But I’m sure Apple would rather OS X have more of a leadership role, as OS X is a core part of Apple’s value proposition throughout their product lines.

    Apple seems to be in a great position, especially now that they are aggressively growing their iPhone position in the smart phone space. Doing so will insure a key place for OS X in that space. It would be strategically important to Apple to keep OS X relevant.

    Frankly, as I’ve said in a previous entry, I’m less concerned about the iPhone platform as I was before.
    1) Apple has gotten the App Store up and running. It will get critical mass before anyone else gets a chance to challenge it.
    2) Apple has signaled that they will aggressively try grow the iPhone base. Dropping the price to $199 shows that they are serious about growing their iPhone business.
    But I won’t close my eyes to the challenges that can come from competing platforms, if and when anyone else gets their act together to challenge Apple.

  • http://johnsessays.blogspot.com John Muir

    @ Realtosh

    Apple licensed Exchange from Microsoft. It’s the epitome of closed MS technology!

    Again: I don’t think native software is going to be the deal maker and deal breaker you think it must still is. The future will bear out which is the more important. If there are viable platforms with no one Windows sized behemoth: the web wins. If we’re partying like it’s 1989, then it’s native apps.

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