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Apple vs Google: it’s all about who pays

Daniel Eran Dilger

Pundits think there’s a war between Apple and Google over smartphone (and perhaps netbook) platform technology. They’re wrong, here’s why it’s really all about who pays.

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After witnessing Microsoft lose round after round in contention with Apple (the ISO’s selection of QuickTime vs Windows Media’s AAF as the container for MPEG 4 in 1998, the iPod vs Windows Media Player vaporware in 2001, the iTunes Store vs PlaysForSure by 2004, Mac OS X Tiger vs Vista in 2006, the iPhone vs Windows Mobile in 2007), it hasn’t been much fun to pit Microsoft against Apple. It’s almost as if the big bad monopolist that held back technology for fifteen years is now some underdog that must be coddled, rather than the invincible pit bull that pundits loved to bet on.

It also gets tedious to try to string along a pretense of excitement about such duds as Surface and the vaporware dreams of a year or two out: Project Natal, Windows 7 SP1, and Windows “we’re getting serious now” Mobile 7, while still maintaining a straight face. So the pundits are now pouncing on Google to save them from Apple.

After all, who doesn’t like Gmail? It’s free! And Google’s new aggregator and online Docs apps and YouTube and of course web search. Google gives everything away for free. Now its getting into smartphones with Android and netbooks with next year’s Chrome OS. If you like free stuff, this gets even better with the new buzzphrase “less than free.” Essentially, Google is expected to be paying hardware OEMs to use its software via ad revenue sharing.

Microsoft’s Plot to Kill QuickTime
Scratching the Surface of Microsoft’s New Table PC
Ars’ Jon Stokes hails Chrome OS as the second coming of the PC

Why Google is so much better than Microsoft

If Apple had a tough time keeping up with the onslaught of PlaysForSure media players from Samsung and Motorola and Creative and Toshiba, or the Windows Mobile phones from LG and Sony Ericsson and HTC, imagine how difficult it will be now that Microsoft’s role has been replaced by Google, with the community doing all the heavy lifting and ads supporting everything financially.

Surely the ecosystem around iTunes and the advantages of Apple’s retail stores and global brand will simply evaporate once people realize that the company they use for web search is now making a distribution of Linux for smartphones and other devices.

All that spectacular hardware designed to work with Windows Mobile now runs Android, and possibly even the latest version of Android. And best of all, these old devices running new software will be slightly cheaper for Samsung and Motorola (and so on) to license, perhaps even with embedded software that is cheaper than free!

Inside Google’s Android and Apple’s iPhone OS as software markets

Pay no attention to the man behind the curtain.

Never mind that Samsung and Motorola (and so on) all have more experience in developing software platforms than Google, and could do “even better than free” by using their own distro of Linux and leveraging their own adware and spyware to keep 100% of the revenue generated, rather than settling for a cut of Google’s ad income.

That’s exactly what Motorola was doing in between its Windows Mobile and Android strategies: Motorola’s own MOTOMAGX Linux distro. And that’s also why Samsung is now floating its own Bada Linux platform. Oh no, dissension in the ranks already. The official story is that everyone is supporting Android, when in reality it’s currently only HTC (the company that realized it would otherwise be left with nothing as Windows Mobile tanked) and Motorola (a complete failure of a company) and Sony Ericsson (Motorola’s ugly twin sister).

Forgive me for being skeptical, but how exactly does replacing Windows with Linux result in an awesome product? According to punditry, Google solves all the problems with Linux (usability issues, too many options leading to fragmentation) by providing a unified distro with a strong leader and money to make things happen. The problem is that Google is allowing Android to fragment into different versions and providing weak leadership in areas like security and hardware feature standardization.

Google isn’t doing Android out of open community altruism; it’s just using existing technologies and leveraging community efforts to advance its own adware platform.

Google fans fail to contemplate why Android is free

The Android trap

People are supposed to throng to Linux for rainbows and unicorn farts, not because of filthy money. Yet Google’s whole plan is to use a specialized version of Linux to create platforms that are more locked down than Microsoft Windows. Chrome OS is designed to verify its kernel the same way Bill Gates’ Palladium fantasy did. And what happens after Google amasses control over the desktop with open software?

Well Google isn’t Microsoft, so it’s not doing it to force everyone to buy its software. Google sells ads. it wants everyone to have a single choice in ads and search and publishing, because the less competition, the less you have to pay your content producers hosting your ads, and the more you can demand from advertisers trying to get their message out. Once everyone uses Google for search and communication and operating system software, we’ll all be happily locked up behind an iron curtain made of wonderfully sweet candy.

Unless of course anyone wants to publish content that Google doesn’t want seen. Or sell online services that Google wants to provide itself. Those outliers will be thrown out of the paradise for daring to upset the authority of the Ad Search God.

Everyone in pundit land seems to be terrified that Apple will take over the world with its iPod and iPhone and Mac, but Apple’s products are easy to replace with alternatives. Nobody is locked into the iPod or iPhone or Mac. If they find a more competitive product, they can choose it instead. Plenty of pundits have been crowing about their public decisions to do just that.

Google isn’t selling a competitive product, it’s selling a new monoculture. Sure, the company hasn’t yet proven that it can take over Windows, but the core problem with the gushing accolades surrounding Android is that if Google is even moderately successful, we’ll end up with an awful lot of phones that only run Android. At some point, you’ll have the Windows monoculture problem: if you don’t like Android, you won’t have other options because every other vendor is also selling Android. You’ll be stuck with one platform, just like the PC over the last two decades.

If you don’t like Windows, you can’t just ditch it like the iPhone where you can pick one of several iPhone-killers. In the PC world, you have to deal with the fact that there really aren’t any alternatives to Windows. Of course, this worst case scenario might never occur because Android doesn’t seem to be holding together with just two or three major players involved (HTC and Motorola currently) and just a year of updates (1.6 vs 2.0 is already brewing, what happens in another year: another XP/Vista situation?).

In contrast, Chrome OS isn’t nearly as scary of a monoculture prospect; it simply makes HTML5 the platform, allowing “software” to run anywhere a modern browser will run: Windows PCs, Macs, iPhones, Android phones, the Palm Pre (presumably) and so on. That’s a legitimately open platform, although Google is still leveraging its dissemination to provide bonus kickbacks on ads to hardware partners who agree to push Google’s own proprietary adware along with it.

Why Apple is betting on HTML 5: a web history

Adware vs iWare

And so the real issue isn’t iPhone vs Android or Mac vs. Chrome OS, as so many pundits have been and will be giddy to try to assert. The real showdown between Apple and Google will be (if it must be dramatized) the “war” between those who want cookie-registered ads to subsidize their software, and those who want to pay for content. Free vs. paid. Not so much a war as a choice. And it’s the kind of choices that need to coexist, not boil down to an all-or-nothing, mutually exclusive option.

Pundits seem to love the appearance of free. They flocked around rental music and castigated Apple for only giving users the option to pay per-download for songs. They love Hulu and other ad-supported video sites, and think iTunes is awful for only selling or renting videos on demand. Nobody seemed to think the Zune’s adware games were much of a match for the iPod touch App Store, but there are lots of pundits who think Android’s shareware community will whip together free alternatives to the iTunes App Store catalog.

There are some areas where freeware/adware are great. Google Maps has become essential on the desktop and on my mobile. I use Gmail, although I also pay for MobileMe. And I like to browse Google News for headlines. The problem is, ad support doesn’t support much. And what it does support isn’t usually that great. Unless you’re Google and have lots of money and lots of otherwise idle engineering talent and desperately need a place to stick your extra ads, you probably don’t have much valuable content worth supporting by ads.

Apple has clearly avoided adware, choosing instead to sell its software bundled with hardware (Mac OS X and Server), or as low cost suites (iLife, iWork) or as professional titles (Final Cut Studio, Logic) or as cheap App Store downloads, or as pay per use web services (MobileMe). Nowhere are there ads supporting any of these things. In iTunes, Apple resells third party content: music, TV, movies, and mobile software, all at prices those third parties would like to raise, if only they had the leverage to do so. iTunes provides access to free content (podcasts and Internet radio), but only as a convenience. Their availability in iTunes is not monetized by ads, even if podcasters and Internet radio podcasters are themselves.

Apple is all about micropayments, voting with your dollars, while Google is all about finding a sponsor to subsidize your services. This results in premium-oriented buyers flocking to Apple (explaining why the company sells the vast majority of all PCs over $1000) and why the freetards can’t stop defending Google, even when its really doing something bad. Sides have been picked, the war is on, and it really all has nothing to do with Apple’s products or Google’s offerings. It’s the division of freetards and those who want to drop cash on things that they deem worth it.

If you look at content in terms of quality, the best work comes via direct payment. American ad-sponsored TV is pretty much terrible. Even the Discovery Channel now makes you sit through a half an hour of ad interruptions to enjoy what amounts to five minutes of actual content. When content is “free,” producers work to get the most value out of it. On TV, that means stretching out productions into a game where the object is to keep you sitting thorough ad after ad.

On the web, it’s all about making you click through page after page of very little actual content surrounded by an increasing large amount of advertising. Or interstitial spots. Google is striving to find new ways to monetize content with relevant ads, which sometimes works very well (Maps) and sometimes just gets tedious and excessive (YouTube Flash ad overlays). The less value content has, the more likely it will be delivered as ad-supported, and the more ads there’ll be to support it.

Podcasts are pretty low in quality and broadcast TV is stretched awfully thin; pay per view content has far more value. Some of the best content is only available on premium channels like HBO. Or paid through socialist TV licensing taxes, like the BBC. There’s a reason why we have a maxim about getting what you pay for; ads simply don’t get you very much.

If this was all I had to say about it wouldn’t be that interesting

There’s more to the adware/iWare war between free content and paid content. Google is taking its free army into the territory of things once paid for with Android and Chrome OS. The press can’t get enough of this, but it’s really nothing new. This is just a big commercial backer stepping in behind Linux to give ad support to an otherwise bankrupt business model. It will be great if Google can deliver a free platform that serves needs (like netbooks) that are currently saddled with poor quality paid software (I’m looking at you, Microsoft).

But nobody seems to be catching the fact that Apple has fought against the populist tide of “common sense” to push direct payments in software and content. This is much bigger than anything Google is doing to advance free and open source software. That’s because swapping out a lowest common denominator, boring operating system that has a monopoly licensing business model (Windows) with a lowest common denominator, boring operating system that has an adware licensing business model is not really exciting stuff that changes the world.

What will change the world is giving the web a business model, one where content isn’t just strung across pages and crowded by Google ads, and where news isn’t aggregated together with sensationalism and astroturf to create a free bunch of worthless fluff standing in for journalism. Apple is embarking on a third major wing of content in the iTunes mansion, and it will change how everyone accesses information, whether Apple itself is successful or not. And there’s not much reason for thinking Apple won’t be successful.

The next article will outline what exactly Apple is doing to bring a new form of paid content to a marketplace and how this will counter the monoculture of free that has dumbed down the web, run real journalists out of business, and kicked off a culture of stupid that is spreading far faster than H1N1 and is far more destructive to the fabric of society.

47 comments

1 bchristian { 12.17.09 at 12:13 pm }

Wow, Google just sent you to the hospital and you are right back at them!

2 T. Durden { 12.17.09 at 1:09 pm }

Again, spot on in the analysis. I, for one, am getting pretty bored with the ‘journalism’ of today with its complete lack of depth. The sad American sit-coms made me turn off the telly long ago. (I now mostly use it for playing a dvd of a fire place, which is quite cozy in winter). And the rubbish PCs I had were easy to give up for a high quality, virus free, functional and user friendly MacBook.

3 ModplanMan { 12.17.09 at 1:16 pm }

http://www.youtube.com/watch?v=nJ7EG58J5eo

http://en.wikipedia.org/wiki/Disruptive_technology

Watch, read, learn. A large number of major changes start off in the low end. Google starts off with shitty products that serve the low end. Through improvement, they move upmarket and squeeze incumbents out.

ChromeOS is a crappy OS. It relies heavily on web apps and is paid for through advertising that is embedded in those web apps – but for quite a few people, this may well be all they need. As those web apps get better through improvements of HTML specs alongside investment, they start encroaching on locally installed apps that do the same job. As those apps pursue the high end, they get squeezed – but hey, it’s the high end, better profit margins from customers who are only too willing because the web apps still yet don’t do the same job as well. And so on and so on, until the low end, derided option squeezes the sophisticated, high end option practically out of the market, or they become a niche player.

This is not about easy generalisations like freetards or sophisticated (lol) customers that only serve to mar you’re typically excellent articles. This is about low end customers who become over served that creates an opportunity for seemingly crappy products like ChromeOS to breed. As ChromeOS and web apps in general improve, less and less people need to pay the premium to get products that serve their needs perfectly fine.

http://blogs.harvardbusiness.org/anthony/2009/07/chrome_os_a_nuclear_bomb_or_ju.html

[The fact that disruption can start small does not mean that disruptions always start small or that small starts always result in disruption.

Pretty much anything one could say anything about Linux on the desktop can also be said about Android and/or ChromeOS. That's not something to get excited about. Google has lots of unrelated successes that offer no real indication that it can successfully pull off a consumer/mobile/third party platform.

Compare how well Microsoft has done in enterprise sales to how completely terrible it has done with consumers (or consider Apple, in the reverse of those same markets). - Dan]

4 gus2000 { 12.17.09 at 1:16 pm }

Sounds like what we really need is ad-supported healthcare. “Microsoft Bandage”, or “iHurt”. How about “Google Doc”?

In other news: Zune HD now has a Twitter app, to which I can only say “welcome to 2007.”

5 enzos { 12.17.09 at 1:43 pm }

Dan.. and the Macalope (an erudite beast known to use Plato on pundits) http://www.macworld.com/article/145141/2009/12/tablet_macalope.html .. life’s too short for the specious bilge they satirize.

Agree about the Macbook, T. D.; picked up a second-hand one for a project at home, and loving it. Like the Blackbird I had in the late 90s only hella faster.

6 borker { 12.17.09 at 2:39 pm }

More or less agree with most of your points Daniel, but there are two issues I’d raise; first, the quality of journalism was already sinking pretty fast before new aggregators became common. I’d peg journalism’s decay more on the rising shrillness of it’s offerings and the increasingly transparent nature of it’s agenda de jure rather than the effects of no-cost access. When people are searching for information and the traditional mediums are cajoling and bold face lying to them, then they’re going to turn away, especially when the internet can provide alternatives that either fill their desire for knowledge or will at least give a version of events slanted to their world view.

My second quibble is with your use of the term ‘freetards’. Not sure if you’re using it to be derogatory towards those who want things for no perceived cost or those who espouse an appreciation for freedom. I hope its the former and would be a bit saddened if it were the latter, but either way a more specific term might at least help make that clear.

7 qka { 12.17.09 at 2:43 pm }

… we’ll all be happily locked up behind an iron curtain made of wonderfully sweet candy.

That has my vote for today’s piece of purple prose!

8 qka { 12.17.09 at 2:49 pm }

Dan –

I don’t mean to be snarky. I love how you provide a different viewing angle on on the technology world – that’s why I’m an avid follower of your posts. It’s just that with some regularity, your prose is a bit over the top.

Thanks for all you do and keep up the good work!

9 uberVU - social comments { 12.17.09 at 5:40 pm }

Social comments and analytics for this post…

This post was mentioned on Twitter by DanielEran: New: Apple vs Google: it’s all about who pays – http://tinyurl.com/yz5e74y

10 gus2000 { 12.17.09 at 7:20 pm }

@borker, let me Google that for you:

http://lmgtfy.com/?q=freetard&l=1

The term “freetard” (like “wintard” and “mactard”) is credited to Fake Steve (Dan Lyons) and has been in use for years to poke fun at the most rabid of technology enthusiasts.

11 Berend Schotanus { 12.18.09 at 3:31 am }

Daniel, congratulations, as far as I can judge from the quality of your writing you are completely back in top condition once again!

“Pundits seem to love the appearance of free.”

Great observation! I spent years of my life trying to understand why railway operation in my country didn’t work the way it was supposed to and reached conclusions like: “it’s about who pays the bill” and “free doesn’t work” That’s a difficult conclusion when you are surrounded with socialist ideology who think paying is only about greed.
I turned my attention to ICT and to America as I was curious how it would work elsewhere. I think a lot of the success in this field really has to do with free markets. And then, amazingly, and as you just explained, I have to see that ICT and America are not free of socialist ideology either.

Digging deeper into this the controversy appears to be older and deeper and (as I am seeing it now) dates back to the “magic” invention of Adam Smith that supported, if not enabled, the industrial revolution. The power of his principle has been phenomenal and, amazingly, controversial over and over again. It’s not just communism against capitalism, it’s not just USSR against USA, it’s a basic dilemma, a basic controversy that repeats again and again and again…

Anyway, I strongly support your effort to explain the value of payment.

12 Berend Schotanus { 12.18.09 at 3:36 am }

BTW, Daniel, did you really drop ads from your site?

13 borker { 12.18.09 at 7:21 am }

@gus2000 I’m aware of its origins and common use, I’m just wondering if it’s the common usage that Daniel is employing or one related to money as his blog entry is heavily focused on the economics of perceived as free, ad supported services such as googles vs paid for services such as iTunes. Also, I wouldn’t say the term (or any of it’s X-tard variants) is used to poke fun, it’s meant as a put down that suppresses any discussion on a matter the employer of the term is otherwise engaged in debate on by making out the opponent to be a discredited extremist of some sort. Given Daniel’s recurrent attacks on the political right of America for employing such tactics it seems a bit of a shame for him to then turn around and employ them himself.

14 dallasmay { 12.18.09 at 8:01 am }

Dan, why don’t you charge a fee to access your site as well? If Paid is always greater that free, how come I can always get your excellent analysis without it costing me anything?

PS. Just so we are clear, the internet never would have come to pass if it wasn’t released into the public domain by CERN for free. I don’t think of those people as “Freetards”. I think of them as heros who have changed the face of human civilization and communication.

15 ulicar { 12.18.09 at 3:53 pm }

And there is Daniel missing again. Samsung and Motorola DO NOT HAVE MORE EXPERIENCE in developing software platforms. The whole Google runs on their proprietary operating system. Their web servers, which are running their applications are again Google built web servers, their email servers, that are running their email applications are Google built servers and so on, and so forth. Google hired all available big guns in the world of UNIX long ago, and now we are seeing the results. The fact that you were able to see Samsung and Motorola does not in any way, shape or form make them better in developing software platforms. What does that mean anyway, software platform? The whole freaking Google is running on ONE framework, built buy, you guessed it, Google. Android is running Google built version of JAVA (not certified if I remember correctly), and most of people think it is better than the real thing. Even if you are writing against Google, google for the information, or Bing it :).

With the rest I sort of agree. The fact that Apple is so freaking controlling in the world of iPhone is in my opinion a GOOD thing. I also have a huge store of salt for every pinch that I am using when somebody is selling me Google as a good company. I do not think they are good, quite the opposite. The fact that I have certain reservations does not mean I should say things that will represent Google in the wrong light, which are completely rubbish. You should think about where is this one going.

16 daveynb { 12.18.09 at 4:08 pm }

Ignore the voices saying “too many words” and remember Mozart’s critics saying “too many notes! too many notes! this music’s impossible! there’s too many notes!”
I appreciate every one!

17 Per { 12.19.09 at 4:09 am }

“People are supposed to throng to Linux for rainbows and unicorn farts, not because of filthy money”

Priceless!

18 Rickard. { 12.19.09 at 5:21 am }

The one thing I missed in your article is the thin line between personal life and Googles data gathering. I’ll probably be the first one to agree that the services Google are offering are pretty spot on. I don’t even mind the ads. Sure they make a lot of money off of them, but as a user I hardly notice them and thus don’t really care. What I really fear however, is how much data they’re storing and, not to mention, their User Agreements. Imagine when Wave goes live and actual companies start using it as a platform for all their projects. Google will actually own their projects, if the user agreements for that is anything like Google docs or Google mail. I’m currently looking for an alternative to gmail; and when I find it I’ll not use my Google acc ever again. Not because I have something to hide, but because I just don’t like the idea of what Google has become.

As for Apple, though… well, if Google is evil, Apple is greedy. There’s no denying that.

I’ve never liked their operating systems. I can see how people do, though. Runs out of the box, little to no maintenance needed, and from what I’ve heard it rocks for editing multi-media of all sorts. If I want to do anything else than edit multi-media, though? And what about customization? Scalability?

No thanks, give me Ubuntu or, heck – even Windows 7, any day of the week. I may not consider myself a freetard, but I like Linux for its customization. As long as you don’t mind tinkering with stuff, it’s great. Though I realise it’ll take a while before it becomes a choice for the common user… that is, if it ever does.

The only problem for me is choosing my next smartphone. I’m currently running with a HTC touch diamond with WM 6.1. I actually like it as a phone, but it’s getting old and there must be something better. The choice would be between the HTC Hero or any newer gen Android phone and iPhone as there really isn’t anything else. The question for me is, which is the lesser evil?

19 maa { 12.19.09 at 6:47 am }

the monoculture of free that has dumbed down the web, run real journalists out of business, and kicked off a culture of stupid that is spreading far faster than H1N1 and is far more destructive to the fabric of society

You got a blind eye, boy.
Long before the culture of free in the web, there was the culture of free broadcasting, first with radio, then with tv. That also run real journalists out of jobs, spread faster than diseases and drove whole countries (the USA at the front) into stupidity … actually, still is doing that.

20 The Mad Hatter { 12.19.09 at 9:33 am }

If you don’t like Windows, you can’t just ditch it like the iPhone where you can pick one of several iPhone-killers. In the PC world, you have to deal with the fact that there really aren’t any alternatives to Windows.

Bull. There are a whole bunch of fantastic alternatives to Windows out there, besides OSX. On Distro Watch you can find links to BSD, Solaris, and Linux based operating systems, most of which are far superior to Windows, and many of which are superior to OSX Snow Leopard. Moon OS is a prime example of a solid operating system, that can do just about anything you want. It’s only weakness is that it doesn’t directly support Windows gaming (you need to install WINE for that).

Let’s face it. Out of all the operating systems available, Windows is the worst for security and reliability. Using Windows is an invitation to ulcers.

21 The Mad Hatter { 12.19.09 at 9:35 am }

Enjoy.

22 The Mad Hatter { 12.19.09 at 9:37 am }
23 The Mad Hatter { 12.19.09 at 9:38 am }

Argh! One, last, time:

Bing!.

24 Dorotea { 12.19.09 at 9:40 am }

@dallasmay

Just a note about the world wide web and its beginnings at CERN. I think the primary reason that WWW came into being was to allow researchers (scientists) the ability to exchange information easily and quickly. There was no thought of money, but the need to quickly and easily exchange information.

The first browser that I used was Lynx… it was strictly text and worked well over a 2400 baud modem.

As for the word freetard, my own definition is that it refers to people who EXPECT monetarily free products.

Google products are not free, they are paid for by means other than direct consumer payments to google. Ad supported products are often intrusive and require a payment of time.

25 Per { 12.19.09 at 1:29 pm }

@The Mad Hatter
I think Dan is referring to alternatives to Windows that actually come preloaded on PCs.

26 airmanchairman { 12.19.09 at 3:20 pm }

There’s no reason why these two contrasting approaches to monetizing the mobile Web can’t co-exist, except that certain sections of the Press (ergo certain vested interests that employ them) see some capital in setting one against the other.

Both parties are leveraging Open Source technologies (WebKit, Darwin, Linux, Java etc) in some form and to some extent to achieve their aims and believe that open web standards (HTML5, WebDAV etc) are the way forward, and let’s face it – both depend on micro-payments (direct or indirect) for their revenue streams.

It’s pretty much like the argument for native apps vis-a-vis Web apps, which some journalists are already trying to portray as mutually exclusive – each has its strengths and weaknesses, so it’s a case of “horses for courses”…

27 enzos { 12.19.09 at 3:42 pm }

@Daveynb
While long and adjectivally overloaded writing is deprecated for serious reporting, it works just fine for lampooning the shills and halfwits of the tech media (where Dan’s outrageous tautologies add splendidly to the effect).


I am sorry to write you such a long letter.
I don’t have time to write a short one.
- Letter to a friend. Oscar Wilde

28 The Mad Hatter { 12.19.09 at 6:59 pm }

Per

@The Mad Hatter
I think Dan is referring to alternatives to Windows that actually come preloaded on PCs.

I suspect that’s what he meant, but it’s not what he said, which leaves it open for everyone to interpret Dan’s words anyway they want. And that’s how you get some of the ridiculous articles you find on sites like ZDNet, because the original wording that they are reporting on, wasn’t clear, and, well, they got inventive to explain it.

29 raycote { 12.21.09 at 4:55 am }

Googles, man in the middle, ad revenue strategy will be commoditized!

Too clever by half! Google is flying high right now. It was the most clever of all the first movers at arbitraging the resale value of their search gateway captive eyeballs to advertisers by leveraging the value of their very excellent search service to web surfers. Google gives nothing to users for free. They are paid at windfall profit levels by the advertisers. Like all other high margin middle man arbitraging operations, it is just a matter of time before the forces at each end point of the arbitrage value chain start looking at ways to commoditize and eliminate the high margins extracted by that monopoly middle man. The web offers so many possible partnering pathways by which to accomplish this dethroning. The most obvious is a direct payment from advertisers directly to those every eye balls that are willing to put up with the ads in order to receive something for free. That something for free, could be content/services like books, magazines, newspapers, music, movies, search, maps, online apps from Google, Microsoft or others. That something for free, could also be extended to even more appealing things like free wireless data plans or subsidized/free mobile devices paid directly to those, end user eye balls, by the advertisers for tolerating ads embedded into all manner of services/webpages in exchange for said freebies. Now if device sellers like Apple, Dell, HP, Nokia, Motorola and other could guaranty the delivery of those ads via hardware lockdown methods that eliminate ad blockers…you get the picture. What if customers don’t want those annoying ads? It is the customers choice! Just pay a lump sum to the device middle man, this lump sum then replaces the embedded ad revenue that perviously supported your free content/services/hardware and the ads are then striped out by the lockdown-hardware. The lump sum payments from end users can then be divvied up to the content/service/hardware providers as a replacement for the lost ad revenue, with the pay outs to the content/service/hardware providers being based on content consumption logs. All content/service/hardware can then be subsidized/free or paid, at the consumer’s option! Everybody wins, the content/service/hardware providers get paid for their goods via a proportional centralized payment schema, the advertisers get willing end users with guaranteed ad delivery and the end users get a full range of choices from fully paid to fully ad subsidized content/services/hardware. Now I think it is worth noting that Apple has, of late, taken out patents on just such hardware/software ad delivery lockdown technologies and is building out a very large server farm facility. Coincidence, maybe, but I thing Not!

30 beetle { 12.21.09 at 7:13 am }

@The Mad Hatter et al.
> If you don’t like Windows, you can’t just ditch it like the iPhone

It’s not about preloading. The issue is that your typical business has invested in all this Windows-only software. Ditching the OS requires ditching all your IT and starting from scratch. Think back 15 years. One could keep all your productivity apps (e.g., WordPerfect, dBase III, Lotus 123) and switch out MS-DOS for PC-DOS, DR-DOS, etc. There is less choice now than there was then. Dan is correct on this point!

31 The Mad Hatter { 12.21.09 at 7:55 am }

beetle

@The Mad Hatter et al.
> If you don’t like Windows, you can’t just ditch it like the iPhone

It’s not about preloading. The issue is that your typical business has invested in all this Windows-only software. Ditching the OS requires ditching all your IT and starting from scratch. Think back 15 years. One could keep all your productivity apps (e.g., WordPerfect, dBase III, Lotus 123) and switch out MS-DOS for PC-DOS, DR-DOS, etc. There is less choice now than there was then. Dan is correct on this point!

This is not true. I know several businesses that have migrated, and others that plan to.

Microsoft wants you to think that you can’t do it. They go to great lengths to give that impression to everyone, because they’ve made a discovery. If a user/business switches to OSX and/or Linux, they will NEVER willingly go back to Windows. Never.

32 MetalboySiSo { 12.21.09 at 11:56 am }

@ Mad Hatter –
Thanks for that vid, that was awesome.

@ gus –
Thanks for “Google Doc,” I laughed way more than I should have at that.

33 MetalboySiSo { 12.21.09 at 11:57 am }

(I keep doing this, grrr…)

@ Daniel –
Thanks for yet another terrific article. I never have to worry about getting “rainbows and unicorn farts” from you, man.

34 The Mad Hatter { 12.21.09 at 1:32 pm }

Now this one is interesting – I wonder if Apple really did try to buy Palm?

35 Peter { 12.22.09 at 9:18 am }

Monopoly is indeed the BIG problem with Google. The odd thing is that they used to use “Don’t be evil” as their mission … but indeed how much is true this statement today?

36 ChuckO { 12.22.09 at 10:19 am }

Peter, what does “Don’t be evil” mean? How are they not evil? Do they not do business in places like China where a repressive Gov’t limits peoples freedom? Everybody works from a position of self-interest. Everybody. Everybody. Hopefully most of us try to do so in a forward looking enlightened way. It’s time for people to grow up. Nothings free in this world. That statement (“Don’t be evil”) was either never true or will always be true because companies do what’s best for the company and good and evil have nothing to do with it.

37 Peter { 12.22.09 at 11:55 am }

Hello ChuckO, I’m growing :-) I know nothing is free but “Don’t be evil” is a statement from Google, not mine. I’m trying to establish a business using AdSense and it’s about 1 year that I discovered that every time I need to receive a cheque they always close my account. What’s the meaning of this? It’s monopoly for me. Google has lost its original “shape”. IMHO it’s now only a “rough copy” of Microsoft (with some differences of course). You don’t have any chance to do business with Google. They offer you the ability to do business but indeed it’s false. You don’t have any chance to talk with someone, you can only talk with robots. Apple has a lot to teach to these “giants”.

38 Peter { 12.22.09 at 11:57 am }

If you want to take a look on my project, here is the link: http://www.eccellio.com

39 ChuckO { 12.22.09 at 12:50 pm }

Peter,
I don’t know if a small business would have any more luck with Apple in a similar situation than Google. See all the complaints about the app store. On the scale of platforms like the app store or Adsense if small would-be partners can’t get the platform to work for them Apple or Google can’t spend the time working on these issues. They just have to many people coming at them.

40 Peter { 12.22.09 at 11:57 pm }

But there is, in my opinion, a slightly difference. People can earn money from the AppStore. With AdSense you can’t get any money, see all the complain on the Net. AdSense doesn’t work. Google has no interest in give this framework to the community but it gives you the perception you can. With the AppStore you have a clear app workflow approval. It’s working and people can establish a business. Google instead offer a very poor service and it’s ignoring the users that try to establish a business using their technology.

41 RDM: Apple vs Google; it’s all about who pays « Day and Age { 12.23.09 at 6:10 am }

[...] Daniel Eran Dilger on the two waring ideologies behind Google and Apple: Apple is all about micropayments, voting with your dollars, while Google is all about finding a sponsor to subsidize your services. This results in premium-oriented buyers flocking to Apple (explaining why the company sells the vast majority of all PCs over $1000) and why the freetards can’t stop defending Google, even when its really doing something bad. Sides have been picked, the war is on, and it really all has nothing to do with Apple’s products or Google’s offerings. It’s the division of freetards and those who want to drop cash on things that they deem worth it. [...]

42 The Mad Hatter { 12.23.09 at 8:21 am }

Dan,

A couple more links. As you may have gathered, I’m hoping to inspire you into writing more :)

Android HTC Profile
How Microsoft blew it

Oh, and here’s a rant of my own, responding to a Doctor Ficsor of the WIPO, who appears to have some problems with rational thought.

43 ChuckO { 12.23.09 at 12:20 pm }

Peter, I feel for you. There’s nothing worse than doing all the work to realize a labor of love like a web site and then being let down by somebody like Google not delivering what they promised. I hope it works out for you in the long run.

44 Peter { 12.23.09 at 12:52 pm }

Thanks a lot ChuckO for your words. We have a lot of idea to improve our eccellio.com project. But for now we don’t have enough money so we need an underlying technology like Google. But we can easily replace Google with Yahoo or Ask, or something else. We will try next year. Now it’s time to rest. All the best for new year to everybody.

45 kisap { 12.27.09 at 5:59 am }

Thanks for one more good and well thought writing :-)

>Or paid through socialist TV licensing taxes, like the BBC

This is not necessarily bad. In Finland we have also this “socialist” system (YLE, Finnish Broadcasting Company). It is the only provider which sends stuff that people with brains care to watch. Then we tons of free and pay channels which make sick. The YLE license costs c.a. $360 per year. Compared to the high quality content the license fee is a steal.

46 PeterR { 12.28.09 at 5:13 am }

Hi Daniel, really excellent analysis. I keep wondering why Americans are so absolutely not worried about the amount of personal information that Google collects… free is all that matters. (And I am not talking about the information they share consciously when registering, but all the click tracking that is going on invisibly, emails etc.) It seems they are selling their most intimate information with an anonymous superpower to save a couple of dollars! (Same applies to Europeans, increasingly, unfortunately, even though they have all this past with Stasi etc. and should know what it means if somebody knows you better than your best friends.)

47 How Apple could slay Google at WWDC 2010 — RoughlyDrafted Magazine { 05.26.10 at 10:11 am }

[...] Apple Plays God with the iPhone SDK Apple vs Google: it’s all about who pays Other casualties of the war on ads While content creators (a group that includes yours truly) [...]

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