Stop the Noiz

All Roads Lead to Apple

Frank Fox - 2010.01.08 - Tip Jar

The latest tech news wonders if Nexus One will or won't be a challenge to the iPhone. Or it examines theories that Google, with Android and Chrome OS, will be able to take on Apple's iPhone and OS as Microsoft did on the desktop. Or it contemplates whether Andy Rubin, a former Apple employee and current Android engineer, has a little Steve Jobs in him.

All of this is mostly blind guess work with a failure to understand the scope.

No iPod Killers

Let's ask why all the competitors to the iPod failed.

They could match or even beat the song capacity (at least for a short while, until the next model came out). They could add an FM radio and other less useful features. Many tried building their own download stores to match the iTunes Store. Even Microsoft, with all its money and connections, failed to dent the iPod's market with the Zune.

What did Apple have that the others lacked? Initially, it was the iTunes Store, and later it was the much larger selection of the iTunes Store. The iTunes Store gave iPod users something to do with their huge storage capacities. Since Apple kept the iTunes Store to itself, it locked competitors out of a huge support structure.

Image if you could make the world's fastest or most fuel-efficient car, but the catch was it could not be driven on regular roads. No matter how fast or efficient, if you can't drive it where you want, the car is useless. Features matter less than utility. Ultimately even price won't help if the difference is small and the limits are noticeable.

At issue is who controls the most widely used roads.

Mac vs. Windows

In the first battle between Apple and Microsoft - over operating systems: Apple II & III vs. MS-DOS, and later Macintosh vs. Windows - Microsoft did a better job of getting businesses and developers on its side. It then locked Apple out. Apple remained a niche provider for schools, the publishing and imaging industry, and high-end consumers.

Microsoft effectively controlled all the other roads.

Lesson learned: Apple switched to Intel chips in 2006 and added Boot Camp so Macs could run Windows. Now I can take my MacBook anywhere a Dell PC can go. By going Intel, Apple gained access to all the roads that Microsoft and PC makers controlled.

Apple has turned the tables by building the roads for its new products. The iTunes Store was the first. Then there is the iPhone/iPod touch App Store. Apple controls access to these stores. It built the system, designed its products to use these systems, and is negotiating contracts to expand these systems with more music, TV, movies, developers, etc. Soon Apple will have advertisers under its system as well.

Controlling the Market

Roman emperors built roads because that is how you control an empire. You need access to all your territory for the free movement of goods and troops.

The roads were built to match the Roman chariot; any one using the roads had to fit this requirement. Rome built to satisfy its own needs first, but it gave access as a benefit to encourage their use. Once people used its roads, Rome set up controls, check points, and tax booth where it chose. The merchant and consumer class was beholden to Rome's road system.

Google vs. Apple

Google is definitely trying hard. Of all the companies, it seems to most clearly understand the challenge that Apple represents. The Android phone and the Chrome OS netbook are both trying to steer some control back to Google. Mostly Google is fighting for the scraps that the iPhone has left behind, including Verizon and Sprint customers.

Unfortunately for Google, Apple has a long lead in this road building challenge. Apple isn't slowing down, and it is going to attack Google directly on the advertising front. At the end of the day, Google will be lucky to remain an important niche player.

Remember Apple has $23 billion in cash sitting around. If it needs to buy or build access for its products, it can and will. Today, all roads lead to Apple. Until someone meets or exceeds that situation, I don't care how many features are crammed in. Apple wins because it owns the roads - and Apple is building new roads faster than anyone else. LEM

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