The Lab

The OS Battle Cut Short?    August 2, 2012

Battle of the OSs

The past 5 years have been very exciting for us in the mobile industry. OSs have come and gone, we’ve seen iOS jump onto the scene holding court as the preferred OS almost from day one. However, it really isn’t part of the OS war as it’s just a cog in Apple’s complete end-to-end solution not available to other device makers. The other mobile OS companies, Microsoft and Google, have been arming their partners to compete against Apple with both finally making headway in 2011 and 2012, but all signs point to that approach shifting significantly.

 

There is a very clear business model change afoot and it will drastically affect us all. Microsoft and Google have seen the light, and it probably originated from the glow of Apple’s 600 Billion dollar market cap and its massive 300% profit margin. They know mobile is the future and failure to adapt will mean the end for them. That sounds extreme, but there is no shortage of examples of huge brand name companies like Nokia, RIM, and Nortel that have quickly fallen from grace. From top of their game at $100 per share to single digits or less—in a few short years. There’s no longer safety in size, and to stand still or move slowly is a death sentence.

 

So what is this drastic and just recently obvious twist? Android and Windows 8 are now jumping on the Apple business model. Google and Microsoft are producing very inexpensive and high quality devices with the latest version of their OS. These new devices leave very little room for Samsung, HTC, Huawei, ZTE, Sony and a litany of other massive multi-billion dollar companies to build a viable business on top of Android or Windows 8. These companies will still be able to license either OS, but always at a clear disadvantage; older versions, limited roadmap visibility or control, less optimized and less supported. We have seen what happens to a device that ships with an OS that is even 6 months old, and considering it takes 12 months to produce a new device, that makes for a huge issue for these companies. There will be some exceptions and alliances I’m sure, like Motorola, now owned by Google and Barnes and Noble’s Nook which recently took $300m from Microsoft.

 

What does this mean for the OS war? It’s going to get worse, not better. More and more companies are going to adopt the Apple model and create end-to-end, closed ecosystems from the OS to the hardware. Amazon is a perfect example with its Kindle Fire, a device running a highly customized version of Google Android OS that is completely closed off from the Google Play app store. I think we are entering the era of innumerable OSs and we are going to see some wild moves in the next three years. Another example already in motion is MeeGo, a commercial failure under the Nokia watch, which has been rebooted as Tizen with support from Intel, Samsung and others trying to bring it back to life. We might even see new variants of HP’s old WebOS, and also Mozilla’s Firefox mobile OS rumoured to power devices in China next year.

 

The real challenges these companies will face are 1) building a developer community for apps and 2) engaging their users with an innovative UI that users will flock to. Microsoft with its Metro UI and by some extension Google has managed to bring a reasonable offering of intuitive, fun and easy to use experiences to devices that run it, but all the others OSs lack a UI that users or developers want today.

 

The Apple model is obviously more than an OS, it’s a complete, end-to-end ecosystem play containing OS, hardware, content and services. Big players like Google, Microsoft, Amazon, and dare I say Facebook, will have to build their empires to truly challenge Apple. So where does that leave Samsung, HTC, Nokia, Acer, Asus, Lenovo, HP, Dell and the other well-known hardware brand names? I suspect it forces them to look for an OS they can control.

 

 

I could go on, but I need to get back to Engadget, The Verge and Twitter so I can watch this epic battle for our mobile dollars. Love to hear your take on this war.

 

Jason

 

  
  • nmsmartone

    spot on! If Apple nails the TV and can give you an Xbox game experience from the cloud or iOS device, it would have to be game over for any other device that isn’t artificially protected within their own ecosystem environment – the problem for all these companies other than APPLE, is that they outsourced their customer service experience to such a degree that the thin line between competing ecosystems will be the layer that touches the consumer the best, and that layer is the human interaction experience from the other end of your device. APPLE understands how to speak to and support its retail customers – the others have never had to develop this skill set. Maybe Dell has an edge outside of APPLE over the others you mentioned, but its APPLE’s game to lose.

    • Jason Flick

      That’s a good point. Customer service from Google has famously been bad, or better put, non existent, and Microsoft really hasn’t had to do much as it used channels.. So Microsoft or Google needs to buy Dell??

      • nmsmartone

        Ecosystems are new business models that have to be organic and part of your corp dna to be ultimately successful – while its not too difficult to understand the principles of building your own ecosystem, it will take some time before a new ecosystem becomes corp wide dna – Apple has a such a huge lead here. Samsung just released their iTunes competitor last week and while MSFT is tip toeing into their own retail stores, the jury still out on whether that will be successful. Apple consumers are just way too entrenched with their products to be easily switched to another brand. I have to believe that any successful ecosystem must include a consumer touch point that matches in value and experience what you expect or get from a device, app or service. ck out http://thewidelensbook.com/ for a look into the rise of successful ecosystems. A Dell acquisition may make sense for Google, probably not for Microsoft – I’m thinking Vizio would be ideal for Microsoft and a whole lot cheaper and gives them a fuller CE line with some sense of consumer touch points :)

  • Scott Rosenquist

    My thoughts are:

    We still have yet to see the result of Windows 8. Their surface tablets may reign as Windows 8 tablet champion, but they’ll still need someone to build desktops/laptops for them, unless they announce those too. And this is all if Windows 8 actually takes off on anything besides a tablet.

    edit: Read over the post again, and my following Google comments still stand, but each point may not apply directly to the post.

    And I wouldn’t worry too much about Google until they actually stop people from putting Android on their own devices. So what if they make inexpensive high quality products that have the most up to date Android? That creates competition between the other Android tablets. Compete or fail. It’s not, you automatically fail because we won’t give you the OS any more, it’s just, “Step up your game.” – Google. In my opinion Android OEMs need to stop futzing about with their customizations. I have not once used a tablet with a heavily customized Android gui and liked it. Not only preference, but they make it so much SLOWER. My Asus Transformer has gotten timely updates, and the most mildly customized gui of any Android tablet that I’ve tried. And it’s fast, and smooth.

    I’m getting ranty and losing focus, so I’m going to cut it off here.

    • Jason Flick

      I completely agree that windows 8 tablet (the surface)
      has to prove itself before it’s a real concern, but the other thing MS has
      learned from Apple is that selling product through channels does not work.
      Consumers get confused with all the choices in Costco, BestBuy, etc and
      just go for the cheapest one. So you will see Microsoft launching 100′s
      of new stores and training their staff to sell their products(see their public
      filings it’s in there). It’s the only way to avoid competing on price,
      and being the cheapest isn’t where anyone but a few OEMs in China want to be.

      It’s true that most of the Android UI augmentations are
      not adding value and most are slower than stock android UI. It’s really
      hard for OEMs who get the Android OS months before shipping dates to do
      anything well, and they often don’t have time to optimize for the hardware’s GPU,
      which is all a very specialized skill that only a hand full of
      companies have. Here is the problem; if they don’t build
      a differentiated UI then they are competing on price again. All
      the device makers have access to the same T.I., Freescale, Qualcomm chips sets,
      and the same Screens and cases from Foxconn, Quanta, ect. You pick a
      price point and these firms build to order, they all use the same guys, even
      Apple. So that only leaves the UI as the piece they can
      do competitively.

      The other reason they customize the UI (even if users don’t
      want it) is you can’t work toward a closed ecosystem if you don’t do that.
      Why build a device where you probably will lose money per device (the
      e-book reader space) if you can monetize it through content and apps.
      If all you do is ship with stock android you are just giving away money
      to Google who is now also your competitor…

      Ugly for them, interesting for us consumers.

  • http://twitter.com/mecandes Mecandes

    We definitely live in interesting times, and it is going to be fascinating to see how this all plays out in the next few years. On one hand, we’ve lost Steve Jobs… and on the other, we’ve got Microsoft agressively reimagining Windows 8. Will the closed ecosystems and app store business models be the death of the promise of the open Internet?
    How things have changed. Every now and then, I like to imagine an alternate history: where, when Windows 95 launched, Microsoft had forced software makers to fork over 30% of their revenue for the priviledge of being included in a mandatory “Windows app store” for all these years. It would have been laughably unthinkable! Now, thanks to Apple — the company with the famous “1984″ commercial no less — that is perfectly acceptable to everyone.

    • Jason Flick

      It’s true that we now think apps stores are ok, and apple made no effort to explain to us why they did it. I do think that MS could have gotten away from it if they sold us on the benifits. No viruses, easy upgrades, no more disks. I’d have jumped in board. Amazing apple has there closed Eco system and they never marketed any of the reasons we benifit from it.

      No Steve jobs at the helm is maybe the chink in apples armour that google Et. Al. Need.