Will Google's Android Play DOS to Apple's iPhone?

Daniel Eran Dilger Today's broad array of smartphone operating system contenders are offering lots of potential answers to a problem that only requires one. It appears the market has two options ahead: either pool generic hardware makers behind a single operating system and deliver a smartphone marketplace that resembles the Windows PC market, or watch them fall to a dominant leader and have a smartphone market that resembles Apple's iPod ecosystem. This decision isn't going to be made by a class of intellectual elite, or by government mandate. it's going to be made by the market itself. Here are the factors that will influence the outcome, either marginalizing Apple's iPhone into a niche as the company has twice experienced previously at the hands of DOS in 1981 and Windows in 1991, or positioning it as the dominant leader as Apple has achieved for itself with the iPod since 2001. The third segment in this series looks at Google's Android and the Open Handset Alliance as a possible “DOS-attack” against Apple's iPhone. Subsequent segments will look at Nokia's newly opened Symbian and other mobile contenders challenging the iPhone. 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? Google Acquires Android. In 2005, Google purchased a startup named Android, which had been in business for nearly two years. The secretive startup was known only to be working on software for mobile phones. It was being run by a who's who of mobile industry veterans, including Andy Rubin, the founder of Danger. Rubin had earlier worked at WebTV along with Chris White and Andy McFadden, both of whom had also joined Android. Richard Miner of Orange and Nick Sears of Tmobile also brought their mobile provider experience to Android. At the time of the acquisition, Google didn't announce any plans for Android and instead only told BusinessWeek, “We acquired Android because of the talented engineers and great technology. We're thrilled to have them here.” It appeared that Google was only going to be expanding its search services for mobile phone users, along the lines of the Google SMS answer system it had recently released. Google Buys Android for Its Mobile Arsenal - BusinessWeek Windows XP Media Center Edition vs Apple TV: The Fall of WebTV The GPhone Myth. As reports began to leak out about talks between Google and hardware makers throughout 2007, rumors began to fly about “the GPhone,” a competitive offering that was supposed to take on the iPhone. Some phone enthusiasts hoped Google would jump in to rescue the struggling OpenMoko project and turn it into a viable project that could attack Apple's new smartphone. In October 2007, I printed the Great Google GPhone Myth, taking apart the idea that Google would be directly competing against the iPhone, and describing that Google was really working on a free alternative to Windows Mobile as a conduit for getting its search and related services on a broader variety of mobiles. Google's services were already on the iPhone. In November, Google played its hand: it had organized a consortium of companies called the Open Handset Alliance to develop open standards for mobiles. The first product from the group would be Android, a mobile operating system built on the Linux kernel. Google wasn't getting into the phone handset business at all; it was only making sure that its mobile search products would not risk being marginalized by the threat of Windows Mobile on phones in the same way Microsoft had been working to leverage its PC monopoly to push Google search off the Windows desktop. The Great Google gPhone Myth Introducing Android: Leader of Linux. Two weeks later, Google released an early version of the Android software. On top of a Linux kernel, Android uses a specialized version of a Java Virtual Machine that takes Java language code and turns it into what Google calls “Dalvik bytecode” rather than Java bytecode as a standard JVM would. This allows Google to leverage existing and familiar Java language tools without paying Sun for a Java license. Like Mac OS X and its fraternal iPhone OS, Android includes a variety of open source libraries, including SQLite and WebKit. On top of that, Google developed a series of frameworks that handle the tasks Cocoa Touch does on the iPhone. Android also bundles a set of applications. While Apple adapted its existing Mac OS X to work in a mobile environment to create the iPhone OS, Android is more like a customized Java environment running on a specialized mobile Linux variant: elements of maturity in an otherwise experimental new platform. What is Android? -Google Android was by no means the first mobile OS using Linux. Both Palm and its amputated ACCESS software arm have Linux-based mobile platforms. Nokia has Maemo, which it uses in its Internet Tablets, and also recently acquired Trolltech and its Qtopia mobile Linux platform. Motorola has teamed up with MontaVista Software to use its Mobilinux. Intel created the Moblin project for mobile Linux, aimed at Internet devices. Google's OHA also isn't the first consortium to attempt to standardize a mobile Linux platform. The OSDL started the Mobile Linux Initiative to define requirements for hardware; the Consumer Electronics Linux Forum (CELF) then worked to define various phone profiles aimed at the Japanese market; the Linux Phone Standard (LiPS) Forum tried to do the same thing in Europe. In 2007, LiPS was folded into the new LiMo Foundation, along with the OSDL. All of these committees have had some overlap and some complementary features. Several of Google's OHA partners are also LiMo members, including NTT DoCoMo, Wind River, and Motorola. So why didn't Google just join LiMo? “LiMo, very candidly, wasn't moving fast enough,” OHA board member John Bruggeman told CNET. Google hopes to herd the Linux cats into a progressive, structured platform that can battle against Symbian and Windows Mobile to succeed as the new DOS of smartphones. Will Google fracture or unify mobile Linux? The Presumption of the Necessity of DOS. The previous segment examining Windows Mobile pointed out how the PC industry as a whole assumed that Microsoft's desktop Windows monopoly would easily take over dominance in the MP3 player market, pushing Apple into a niche position. This was expected because DOS had pushed Apple's early computers into a reduced role starting in 1981, and Microsoft had repeated this again in 1991 when the DOS world migrated to Windows, effectively pruning Apple's Macintosh into a Bonsai platform. The inability of one company to dominate any product category has been frequently repeated by PC industry pundits as a given, despite the fact that history is full of examples of this happening. Sony dominated personal music players for two decades under the Walkman brand even while equally large competitors tried to push it from this position; Nintendo has similarly owned handheld gaming despite ill-fated efforts to grab a piece of its pie by products running a generic platform such as Microsoft's WinCE (Gizmondo), Linux (GP32), and Symbian (N-Gage). In fact, outside of the Windows/DOS PC, there are actually few examples of a generic platform taking over an industry. Nearly every other consumer-facing product uses proprietary platforms: car makers, stereo equipment, appliances and so on typically all use designs custom to their maker. The paradox of the Windows PC market has been that Microsoft's broadly licensed software supposedly saves hardware makers from investing in software development while ensuring compatibility, when in reality it adds significant costs to PC makers while limiting their ability to differentiate themselves. That explains why PC makers have been perpetually merging together and going out of business while Microosft has rolled in money over the last two decades. Parallel efforts to copy Microsoft in broadly licensing an operating system have regularly failed: IBM's OS/2, Apple's Mac OS, Palm's PDA OS, even Microsoft's own efforts to duplicate Windows dominance in other markets, from copy machines to PDAs to smartphones to SPOT watches to music players. The closest copy may be Symbian, but its customers are partners, not simply consumers of a generic third party's operating system as Windows licensees are. That indicates it is not necessary to duplicate the dominance exercised by Microsoft over the PC industry in the smartphone market. Google's Android and Symbian exist more as technology sharing pacts among manufacturers, but both aspire to take Microsoft's DOS role among smartphones. However, the idea that Apple's iPhone must be dethroned by a modern-day DOS, whether Windows Mobile, Android, or Symbian, is not just debatable, but does not sync with the reality of more recent events. Apple's recent history of the iPod further refutes the idea that a software analog to Microsoft is needed. The iPod Emergence: Apple & Pixo vs IBM & Microsoft. Apple's iPod in 2001 made no effort to clone the DOS business model; it actually did the opposite. When Apple entered the market, there were a number of existing MP3 devices using custom software, hardware designs, and DRM codecs. The iPod used off the shelf components to deliver a custom MP3 player using third party software, but Apple also added its own technologies: easy to use sync with iTunes, a fast Firewire interface that made uploading music far faster than the prevailing USB 1.0, and an attractive industrial design. With the iPod, Apple played the role of IBM in 1981, using Pixo's embedded operating system to enter the market quickly, just as IBM had used DOS. The difference was that Apple didn't direct any market attention toward Pixo and added a lot of value on top of that core embedded OS. A modern day Compaq couldn't simply clone the hardware and license Pixo to run on it in order to compete against the iPod, because the iPod was much more than just generic hardware running Pixo software. As the iPod developed, Pixo's role diminished and was eventually displaced. Just like IBM, Apple jumped into a new market just as demand was beginning to explode. Apple made MP3 players far more attractive to a general audience by delivering greater playback capacity than most entry level devices offered, along with an ease of use that encouraged buyers to jump in at the higher end of the market. That left Apple with not only the lion's share of the market, but also by far the most profitable segments of the market. Two decades prior, IBM badly fumbled its play with the early PC and ended up irrelevant in the PC world by the late 80s, sideswiped by Microsoft's DOS and the cloners who were licensing it in parallel, notably Compaq and later HP and Dell. Steve Jobs had witnessed that happen, and was determined to not let it happen again to Apple. Rather than being manipulated by a software middleware vendor as IBM had, Apple worked to incrementally develop the iPod market itself. After consuming the hard drive-based player market, Apple took on the Flash RAM-based market with a tiny hard drive system used in the iPod Mini, and followed up with Flash-based devices of its own in the Nano and Shuffle. This allowed Apple to progressively serve an increasingly wider market, incrementally growing upon an established foundation. With the iPod, Apple became, in effect, an IBM with its own internal Microsoft. Microsoft's Failure Despite Features. In contrast, Microsoft entered the music player market by promoting music player hardware reference designs around WinCE. However, it was unable to ship a finished design until the iPod had become firmly established around 2005. Later branded as PlaysForSure, the devices were sold by various hardware makers and all purported to support the same DRM and the same music subscription services while also offering a broader array of hardware that presented video before the iPod did, supported wireless before the iPod, and so on. Despite these unique features, all of those PFS designs still failed. Microsoft blamed the failure of PFS upon its music store and hardware partners and decided to take Apple on itself in 2006. It relaunched a Toshiba PFS player as its own device under the Zune brand, adding WiFi music sharing features and a larger display than the current Pods had. It failed dramatically as well. Did Microsoft's attempts to float a new DOS among music players fail because of Apple's success, or due to Microsoft's own problems? The failure of the Zune, which followed the iPod model rather than the DOS model, seems to suggest that Microsoft itself was to blame. Consider too that Microsoft's Windows Mobile phones, which use the same underlying operating system as its failed PlaysForSure music players and the Zune, had similarly flopped even before Apple could release a charismatic phone equivalent to the iPod. Of course, when the iPhone was released, it hit Windows Mobile hardest. The iPhone made Windows Mobile Smartphones look ridiculous and underpowered, and made Windows Mobile Pocket PC phones look clumsy and awkward, despite the fact that they both supported a variety of features the iPhone didn't, including the ability to edit documents, capture video, send MMS, and so on. Simply adding on features did not enable Microsoft to compete against Apple. The only conclusion that can be drawn from all this is that competing against Apple requires more than just having a feature arsenal. Microsoft's failures in themselves do not necessarily mean that Google's Android will fail in its attempts to float its own smartphone platform. Why Microsoft’s Zune is Still Failing Microsoft’s Zune, Vista, and Windows Mobile 7 Strategy vs the iPhone Will Google Succeed where Microsoft Failed? Microsoft's demonstrated inability to successfully enter consumer markets for MP3 players and smartphones has given observers little faith that the company will somehow turn things around in late 2009 when its next generation of devices are expected to be released. However, prior to that the first fruits of Google's efforts to build its own smartphone operating environment will arrive. Will Google's Android take over Microsoft's crown as the “DOS vendor” among smartphones? Supporters of Google's Android project point to some parallels between Android for smartphones and Windows on the PC: Android will allow hardware makers to differentiate in ways that can offer features Apple can't (or doesn't want to); it should allow software developers to offer features Apple does not allow on the iPhone; it embraces open, hobbyist experimentation in ways that Apple currently isn't; and it opens the potential for content providers that Apple is not interested in allowing. Openness is Android's key competitive feature. Will all this openness allow Google to unseat the iPhone to become the primary platform developers want to participate in, and subsequently soak up the market for third party hardware makers that Windows Mobile serves? While Google currently has no market share due to the fact that no Android phones have yet shipped, it does have broad vocal support from a variety of the same kinds of hardware manufacturers that supported DOS and Windows and helped to make those platforms successful in the desktop PC market. HTC and Android. The first Android phone is expected to be the HTC Dream; Taiwan's HTC (High Tech Computer) also manufactures Palm's Treo Pro phone as well as many of the most visible Windows Mobile devices. In addition to models produced under its own name, HTC also sells Windows Mobile devices under the Dopod brand, as well as no-name phones branded by providers, such as AT&T, Orange, Sprint, T-Mobile, Verizon Wireless, Vodafone, and others. HTC will also be building the XPERIA X1 Windows Mobile phone for Sony Ericsson. HTC was quick to throw its support behind Android despite its long term alliance with Windows Mobile. Why would it so enthusiastically support an unproven platform from a company that has no experience in consumer hardware platforms? One can only assume that HTC is not happy with the current state of Windows Mobile, and desperately wants another “DOS” to succeed where Microsoft's has so spectacularly failed. As an Original Design Manufacturer for Palm, HTC watched as Palm adopted Windows Mobile in place of the Palm OS and subsequently fell even deeper into crisis. Palm's only successful phone since has been its Palm OS-based Centro. HTC undoubtedly sees Android as its ticket to becoming the next Dell, but without a similar dependance upon Microsoft. Android for mobile phones is essentially playing the role of Linux for PCs, except that it has the backing of a major company behind it. Can Android Take on the iPhone with Openness as its Feature? As great as this sounds, it's important to consider that Linux on the desktop has made no significant progress in eating into Windows dominance after a decade of trying. Being open, free, flexible, and decentralized hasn't been enough of an advantage to get consumers to migrate from Windows to Linux in any fraction of significance. Similarly, in the music business, Linux-based MP3 players have had no impact on the iPod, despite offering more features, flexibility, support for additional codecs, and so on. In the mobile phone area, Linux enjoys a sizable portion of the smartphone market, but this is almost entirely due to phones sold by Motorola in China, where the advantages of Linux' openness are void. Motorola's Linux phones offer nothing to users in terms of openness or flexibility, and are really no different in terms of features than other appliance 'feature phones' based upon closed operating systems. And again, a key problem with assaulting Apple in a feature war is that neither the iPod nor the iPhone became popular by being “highly featured.” They both delivered perhaps 80% of the functionality found in all other devices in the market. Rather than trying to match every feature and cater to every niche as Microsoft had with Windows Mobile, Apple's devices did a few things very well at launch, and incrementally developed into full featured devices that still lack some of the more unique features of their competitors. Further, in terms of openness, the demographic that embraces Linux' characteristic freedoms is not the same as the demographic that buys smartphones in quantity and then pays for data service. This is a critical fact to consider because a big part of the iPhone's success stems from the fact that it is being pushed by mobile providers who want to capture the cream of the market willing to pay a premium for data services. The Frankenphone. Combining the fractured aesthetic of HTC's Windows Mobile phone hardware with Android's software, based upon Linux' perpetually unfinished DIY openness and Google's Java-like development platform, will not result in a product similar to the iPhone. Instead, it will look a lot like phones that have already failed in the market. Apple's advantage comes from slick hardware designs with a close attention to detail, combined with software that purposely does less so that it can do what it does better. Even Apple's own conservative attempts to broaden its software capabilities with iPhone 2.0 have resulted in instability problems that can be blamed upon both Apple's early releases of its phone operating system and software from inexperienced third party developers new to the platform. Would the current frustrations with iPhone 2.0 be somehow mitigated by additional openness that also embraced all kinds of variables from different hardware makers with less quality control than Apple, a loose committee of additional cooks working to serve up operating system features targeted at every possible conceived need, and a wider third party software group with fewer constraints on illegal behaviors? The Failure of Open. While it is politically unpopular to criticize the well meaning efforts of open source contributors, the failure of Linux on the desktop, the failure of the vaporware Indrema game console, and the failure of the OpenMoko project to deliver a workable phone within a year of its deadline all underline the serious problems open development faces in the world of consumer oriented devices. Open has simply failed to deliver on its promises in the world of consumer hardware. OpenMoko was supposed to release its first mobile phone to consumers for $250 several months in advance of the iPhone. When the iPhone shipped, the group then announced new plans to get its phone out by the end of 2007. Instead, this spring the group announced new plans to move to an entirely different development platform, and ship its phone mid year for $400 with limited functionality and incomplete software outside of basic GSM phone features. Linux's notable successes, from Motorola's Linux phones to the Tivo DVR to Linksys Routers, have often come without any associated openness or freedom, and were instead delivered simply to provide their manufacturer with a free kernel to build upon. This indicates that while Linux may find its way into an increasing number of smartphones, it will likely not be accompanied by the glorious freedom of an open development environment Google has said it would offer with Android. Apple iPhone vs the FIC Neo1973 OpenMoko Linux Smartphone Can Google Succeed Where Open Has Previously Failed? Despite “openness” being Android's strongest competitive feature compared to Apple's iPhone, Google recently revealed that its wide-open development model is intentionally gravitating towards a closed association of top tier partners due to practical considerations. In July, Google accidentally sent out a notice that revealed that it had been seeding private SDK updates to only a subset of its contributors, angering those who believed that Android would be as open as Linux on the desktop or the OpenMoko project. Further, Google has restricted initial development to higher level APIs just as Apple did, further indicating that Google itself realizes that being wildly open to impress a minority of hobbyists will not result in the commercial success of its new platform. That serves to neuter Android's primary advantage over the iPhone. Without delivering on the premise of being wide open, Android is really just a less mature set of Java libraries used to create a specialized binary that runs on a Linux foundation. Unlike Apple's iPhone, Android phones won't have a slick user interface developed by professional artists, nor the iPhone's legacy of mature software development frameworks crafted over the last thirty years, nor the iPhone's tightly integrated hardware with award winning industrial design, nor its marketing power tied into the iPod and Apple's retail stores. Android won't be an open iPhone, it will only be a Windows Mobile phone with a better kernel that runs specialized Java software instead of Win32 or .NET code. Don't expect consumers to be impressed by that. The Biggest Missing Feature. There is one remaining factor that strangles to death any last remaining hope that Android might assassinate the iPhone and assume the crown of the “DOS of smartphones.” That is: Android delivers zero price advantage to consumers. In 1981 and 1991, consumers who wanted Apple computers faced the sticker shock of a somewhat arrogant price tag. Apple sold its computers, as it still does, at the higher end of the market, but there was simply far more range in prices available. In 1981, that meant the Apple II was $2600 and the new Apple III was $3500, even before you added a monitor. On the low end, Commodore sold its far less powerful, but “still a computer” Vic-20 for $300, while IBM entered the market with the IBM PC at $3000. Over the next few years, Apple focused on delivering additional sophistication at the same price, releasing the $10,000 Lisa and then the $2,500 Macintosh. IBM continued selling PCs in the same $3,000 to $10,000 range, but other DOS PC vendors began selling machines at prices that ranged as low as $1500. That left Apple with a roughly $1000 price premium over low end PCs. The products weren't really comparable, but consumers only saw the huge price difference. In 1991, Apple was still selling moderate to high-end Macintoshes for $3,800 to $10,000; the crippled Mac LC was $2500, and obsolete-at-birth Mac Classic ranged from $999 to $1500. Windows allowed PC makers to ship a functional $1500 PC and claim a rough approximation to Apple's $2500 entry level system, maintaining that apparent $1000 price premium. Today, pundits are lucky to find a Dell or HP system that is even a couple hundred dollars less than a comparable Mac. However, in the smartphone business, the iPhone 3G is now the same price, if not less, than generic competing phones on the market. Even more significant is the fact that the price of the phone hardware is nearly nothing compared to the cost of the service plan. This fact simply eases any price premium that could cause buyers to flock to a smartphone running a generic operating system over buying the iPhone 3G, regardless of whether it runs Windows Mobile or Android. 1990-1995: Planting Software Seeds Android Partners Have Already Failed. That same pricing principle similarly prevented buyers from considering many of the alternatives to the iPod. While Apple's original iPod models were more expensive than many of the first MP3 players on the market, they were price competitive with models offering similar features. By 2004, it was Apple who was undercutting MP3 competitors on price. Microsoft offered zero price advantage when it began selling the Zune, a major factor in its failure, but Microsoft simply couldn't out-price the iPod; it was already losing money offering the Zune at the same price as the iPod. Apple now has tremendous market power in buying RAM and other components that will prevent any competitors from being able to offer a huge discount over the iPhone's $199 price tag. Even if competitors were to give their phones away, they would only offer a $200 discount to users who would then still need to pay the same mobile fees to use the phone. Android's other partners, including Samsung and LG, have already failed to capture any significant market share in the music player market. Are they going to maintain their position as smartphone makers now that they face similar competition from Apple, its iPod ecosystem, its iTunes Music and Apps Store, Apple's retail store experience, and other factors that are pushing the iPhone? If they can, it is not obvious how partnering with Android will help. Other Problems for Android. Android was announced in early November 2007 and was followed with an early preview SDK within a couple weeks, a month ahead of Apple's initial announcement of the iPhone 2.0 SDK. However, between March and July 2008, Apple delivered nine progressive releases of its SDK, opened its App Store, and sold 60 million apps, raising $30 million to support iPhone software development in just the first month. It has since released three more SDK updates to developers related to iPhone 2.1, which is expected next month. Android just published its first open SDK beta update earlier this week, warning developers that “applications developed with it may not quite be compatible with devices running the final Android 1.0.” Additionally, Android still has no phones available. By the time the HTC Dream is expected to launch, Apple will have an installed base of around ten million iPhone (and iPod touch) users supporting software development through iTunes. The business model for selling Android apps is no better than that for selling jailbreak iPhone apps: there is no iTunes Apps Store to promote them, so users will have to track them down on their own. Android developers also have no real freedom that jailbreak iPhone developers lack. The only difference is that there are ten million iPhones to sell jailbreak apps to, and currently zero Android phones. If selling a jailbreak iPhone app sounds like more trouble than its worth, imagine trying to sell Android apps to a non-existant audience. Now add the official iPhone App Store into the mix, where publicity, promotion and profits are booming. What platform is going to have the most applications? How many users will flock to a smartphone platform with no apps? The wisdom of releasing a desirable phone and achieving a significant installed base before releasing an SDK makes a lot more sense in retrospect. Additionally, while Apple has a decade of experience in shipping regular updates to Mac OS X and its Xcode developer tools, Google has only shipped a random assortment of web-oriented SDKs (a number of which have been abandoned) as a tangent to its core business of selling advertisements. When the Android SDK 1.0 is finished later this year, developers will not only lack an installed base to sell their apps to, but will also have no high profile market for selling their apps in, and subsequently no financial incentive to develop applications that add value to the Android platform, just like Linux on the PC desktop. Around the same time, possibly within the next month, Apple will be shipping its second major OS release: iPhone 2.1. Apple will also be upgrading its entire user base to the new software so that developers will have a cohesive platform to target. This mirrors the efforts Apple has taken to upgrade its Mac OS X users to the same reference release. Mobile developers will be seeing money pouring in via iTunes while crickets chirp in the Android section of various mobile online stores. Apple’s iPhone Vs. Other Mobile Hardware Makers: 5 Revenue Engines Same Same, But Different: DOS Model Problems. Android developers will also have a series of other problems to manage. Like Windows Mobile, Android is intended to support everything, from BlackBerry-style keypad phones with a small touchscreen to the simple Windows Mobile Smartphone form factor lacking a touch screen to iPhone-like full size touch screens. Also like Windows Mobile, Android phone makers will have the option to leave off Bluetooth, WiFi, GPS location services, graphics hardware acceleration, and so on. Each Android phone will also have unique camera hardware, support for different video and audio codecs, and varied support for other differentiating proprietary services demanded by mobile operators. This will force developers to to make complex decisions regarding the lowest common denominator they choose to support. So while the iPhone will have a cohesive feature set, a managed software environment, and a functional market, Android will be a loose federation of hardware makers selling the same random features found on Windows Mobile today, with a chaotic development environment that lacks any central market for users or developers. And it will be run as an experiment by a company with no experience in consumer hardware or platform development. The Missing Tap. One specific example of the “DOS model problem” is that Android currently does not support multitouch. It's not touched on in the API, and Google quietly tap dances around its omission. Why no multitouch? Because multitouch screens are expensive, and most OHA hardware members are more interested in making a profit in a competitive phone market rather than impressing consumers as Apple did with the iPhone. Most existing smartphones, even those trying to directly rival the iPhone, use a stylus driven, pressure sensitive tap screen or a simpler, cheaper touch technology that lacks support for sensing multitouch. The iPhone's screen can actually sense up to five fingers at once, but the primary feature multitouch offers on the iPhone is the two fingered tapping and the pinching effects everyone associates with it. Android could certainly support multitouch if there were a demand for it, but that's the point: Google knows that its hardware partners are cheap and unlikely to put out hardware that actually competes with the iPhone. Instead of using expensive technologies that deliver clever yet largely invisible functionality, OHA members, just like PC makers, are far more likely to add flashy, impractical gadgety fluff that's cheap to tack on, such as slide out keyboards, neon tubes, and scratch and sniff stickers. That's how you impress gullible nerds on the cheap. Google itself is blowing smoke and erecting mirrors to distract from the reality that it being a “DOS vendor” means supporting bargain basement hardware from penny pinching duplicators. Android has been demonstrating some “wow” features such as a Street Maps app that pans around based on an internal compass in the demonstration phone. The problem is that that kind of thing only makes for a fun demo. Nobody needs to twirl around their phone in the air to see a view of the other side of the street, but everyone who has used an iPhone will wonder why they can't pinch to zoom out. Even worse, most Android phones aren't going to have a compass built into them, so Google is demonstrating features most Android users won't be able to use. That Sounds Like Microsoft… Google's design decisions are beginning to look a lot like Windows Vista; rather than actually working to make laptops boot faster, Microsoft came up with the idea of adding a small screen to the back of Vista laptops so users could check their email without having to wake the system up. But this was a stupid idea for a number of reasons, the most obvious being that most users just want a laptop that boots up quickly. Few laptops got the mini screen, but every user who tries Vista on their laptop will wonder why it doesn't boot up as fast as Mac OS X Leopard. In the same way, Google is advertising features for Android that most users won't ever see in their actual phones while ignoring things people will expect based on their exposure to the iPhone. Android is simply selecting the wrong features. Android will offer the advantages of supporting MMS, recording video, and the list of other features Windows Mobile already supplies. Those features didn't stop Apple from firing past Microsoft in the smartphone arena however, just as the Zune's highly touted WiFi and screen didn't phase iPod buyers. Incidentally, just months after the Zune, Apple had not only demonstrated a larger display but a higher definition multitouch screen, and not only WiFi, but functional WiFi that could be used to browse the web or check email. This suggests that Apple, with its faster release schedule, won't stay behind any of the leading features potentially offered by Android for very long. Android partners, however, will find it as difficult to catch up with Apple's unique features, just as Microsoft has been stymied to keep up with Mac OS X, the iPod, and the iPhone. The underlying reason: both Google and Microosft are tasked with maintaing support for a huge variety of hardware options demanded by all their partners. Apple has the unique circumstances to do only what it needs to do itself. Android in Windows Mobile's Shoes. Like Windows Mobile, Android faces a difficult market. In the US, it competes against the popular BlackBerry in corporate markets and the iPhone among consumers. Worldwide, it competes against entrenched market leader Nokia. The difference is that Google, unlike Microsoft, has no in. Windows Mobile was adopted by Windows-bound IT shops despite its weaknesses. Nobody has any preexisting reason to try an Android phone apart from hobbyists and open software enthusiasts, a demographic that has done little to move Linux on the PC desktop. Google also lacks Microsoft's installed base; it's starting from zero. The smartphone industry initially doubted Apple's chances of making much progress with the iPhone, despite the company having the Mac platform, the iPod, retail stores, platform development experience, marketing savvy, industrial design prowess, and so on. Google doesn't have any of those things. Mobile Providers vs Android. Apple also started with an exclusive partnership with AT&T, a three legged race that demanded effort from both. Google is hoping that hardware makers handle the hardware details and that mobile providers will be excited to sell its Android phones. While hardware makers such as HTC clearly appreciate having found a free alternative to Windows Mobile, it's not obvious why providers would be excited about Android, as it promises an openness that most mobile providers strongly oppose. AT&T took a big risk in getting behind the iPhone, as the phone encouraged users to use email rather than fee-based SMS and MMS, it supported WiFi for data access, and it bypassed AT&T's MEdia Net services to plug into iTunes instead. Verizon refused to parter with Apple and grant it those kinds of concessions. Is AT&T going to take a similar risk to partner with a phone that is not exclusive to it, and is Verizon now going to open its arms to support phones that do not exclusively support BREW, VCast and its other proprietary services? While Android may well eat into Microsoft's Windows Mobile business by stealing away its hardware makers, it seems unlikely that Android will ever serve as more than free alternative to Windows Mobile in a market where Windows Mobile is increasingly irrelevant. Android may have the dubious distinction of swallowing Microsoft's mobile business the same way Microsoft ate up the Palm OS, but even if it accomplishes that goal, Google will likely find itself unsustainably hungry immediately afterward. It will also find itself swimming in a shark tank of hungry rivals, including Nokia's Symbian, RIM's BlackBerry, and Apple's iPhone. Symbian is the final generic platform vying for the opportunity to play DOS in the smartphone market. The next article will examine Nokia's chances in its bid to match Microsoft's PC dominance in the mobile market while setting out in a new venture to copy Android's open software model. Did you like this article? Let me know. Comment here, in the Forum, or email me with your ideas. Like reading RoughlyDrafted? Share articles with your friends, link from your blog, and subscribe to my podcast (oh wait, I have to fix that first). It's also cool to submit my articles to Digg, Reddit, or Slashdot where more people will see them. Consider making a small donation supporting this site. Thanks!

• RoughlyDrafted Magazine on August 24, 2008
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Forbes' Fake Steve Jobs Is Also Fake On Apple

Daniel Eran DilgerDaniel Lyons is the author of the Fake Steve Jobs blog and a columnist at Forbes. After developing a reputation for attacking bloggers, open source, and any alternatives to Microsoft, Lyons has shed his skin to escape from one scandal while at the same time squirming into position to choke the truth out of his next victim: Apple.Reader Marc Elson sent in a link to Lyons' “Snowed by SCO,�? an article Lyons wrote to both apologize for and marginalize his years of articles in Forbes that misrepresented the issues in the SCO Groups' attack on Linux. He blamed his reporting on bad information he'd been fed by SCO. It's easy to backtrack now that SCO is toast; in fact it's rather impossible not to. However, neither Lyons nor Forbes can erase the years of false information and misleading spin they published, which not only idealized SCO but also lambasted any individuals critical of the company. He described anyone supporting Linux as religious folk "convinced of their own righteousness."While fighting for SCO, Lyons also attacked “bloggers�? in a front page article in Forbes that screamed, “they destroy brands and wreck lives. Is there any way to fight back?�? as if everyone who writes on the Internet operates as a class that can be summarily judged and dismissed at once. [Snowed By SCO - Forbes]Daniel In the Lyons Den Again.Lyons' lack of hesitation in throwing out poorly conceived attacks is getting him into trouble again. He seems to be working frantically to spin together a bizarre new tale of how Apple is going to simultaneously be torn apart by the can-do-no-wrong Microsoft while also turning into a shadow of the evil monopolist itself, threatening us with its fearsome dominance.Lyons resurrected the identical, wholly illogical conundrum of a paradox posited last year by Windows Enthusiasts, principally Paul Thurrott, who spoke in fear of a threatening monopoly position achieved by Apple's iTunes while--puzzlingly--also describing Apple's music business as a pitiful failure that could never withstand the market dominance of Microsoft. Is it part of a new Forbes campaign? Lyons' new work echos other regular articles from Forbes writers, all attacking Apple and reality in the same breath:Presenting Apple TV a supposed flop, despite its profitably outselling the TiVo this year without incurring the tens of millions in losses TiVo has suffered in the last quarter and in every one of the last several years.
Promoting MusicNet Digital's failed Microsoft partnership in selling music against iTunes and describing the Zune as something other than a spectacular failure. Even the most giddy Zune fan sites are appalled by Microsoft's lack of support in providing updates and fixes for the Zune's major failures. How is Forbes framing it as some kind of sleeper hit?[The iTunes Monopoly/Failure Myth][Scott Woolley Attacks Apple TV in Forbes, Gets the Facts Wrong][Forbes Prints Insanely Self Serving Attack on iTunes by MediaNet CEO Alan McGlade]When Cost Is No Object: Microsoft Media Center.Reader Robert de Bie forwarded a link to Lyons' breathless accolades over Microsoft's Media Center software, which opened with the line, “Guess who's got the slickest software for handling TV, movies and music? Not Apple.�?Lyons compared using a Mac and Apple TV with a PC running Vista Ultimate with Media Center features and an Xbox 360 to relay content to a TV. He raved that the Microsoft solution “can do things with digital media that even Apple can't match.�? That's true, as Media Center is principally a DVR, a software version of the TiVo; Apple doesn't sell anything the works like a TiVo to record TV. However, Lyons only noted in passing that “Microsoft charges $400 for Vista Ultimate--$300 too much,�? failing to add up that a Mac comes with free Front Row features. Apple TV hardware costs $300; it supplies ultra fast 802.11n wireless and, at a minimum, a 40 GB hard drive.In contrast, an Xbox 360 with a 20 GB hard drive costs $350, and another $100 for slower 802.11b/g wireless. So as a wireless media extender, the Xbox 360 costs $450 (50% more), but gives you half the disk capacity and slower networking.Additionally, the required Media Center software that costs another $400 in Vista Ultimate doesn't magically provide you with a TV tuner, so you still have to buy one.In other words, all the money you throw at Microsoft only gives you software that is otherwise free. Without having to pay for all that software licensing, you can go buy whatever TiVo-like TV tuner for the Mac fits your needs, and solve the problem for hundreds of dollars less.Of course, what Apple wants you to do is go without a TV tuner and an expensive cable subscription and simply buy the TV and movies you want to watch from iTunes. Of course, that's not necessary to use Apple TV; you can also rip your own DVDs or even use it to manage your home movies and free podcasts, something Media Center isn't really designed to do because there's no money in it. Don’t forget that there are more fees involved with Xbox Live services, and that TV downloads are more expensive. You’ll also need to pre-purchase Microsoft’s points, converting your cash into Microsoft Live currency that’s subject to change. And once you buy Xbox Live TV shows, don’t expect them to play on your Zune or Windows Mobile phone the way iTunes content plays on Apple’s iPods and iPhone.Of course, when Microsoft sends writers all this equipment to try out for free, then it’s easy to gush over how great it all works and report, "No crashes, no reboots, no blue screen of death. Stunning," as Lyons did. Had he actually been forced to pay the $840 premium to actually use Microsoft’s system, perhaps he’d sing another tune.While Lyons is certainly entitled to his opinion, he should at least present the facts correctly. Outlining any Microsoft product without a consideration of its true cost is always a mistake, because the true cost is almost always hidden. Lyons also wrote “Microsoft's system supports high-definition video; Apple TV does not,�? a line that isn't true. Content from iTunes isn't yet available in HD, but the Apple TV does support HD video from other sources and comes equipped with support HDMI, which only the newest Xbox consoles have. Considering that Microsoft has barely sold any new Xbox 360 units this year, fewer than 20% of installed Xbox users even have HDMI outputs. [Windows XP Media Center Edition vs Apple TV][Forrester Research: Epic Terror of iTunes and Apple TV]Big Brother Says: Apple is the New Microsoft.Since publishing that “Media By Microsoft�? article a couple weeks ago, Lyons has ramped up his attack on Apple into a web of false information that approaches his SCO shilling. He even exploits his popular Fake Steve Jobs blog for dramatic effect.Lyons starts his newspeak reporting, ironically enough, in an article titled “Big Brother,�? with a comical juxtaposition of Apple's 1984 Macintosh ad and a modern screenshot of Jobs presenting the new 3G iPod Nano against a huge video screen of his own image. Lyons had earlier published the images on his Fake Steve Jobs blog after a reader had submitted them.This is funny stuff, because in both images, there's a greying white man with glasses on a huge TV screen talking. But in 1984, the man is talking about universal ideology to a numb audience, while in the modern scene, Jobs was talking about changing the market for mobile video with a 6.5mm device, and the crowds were enthusiastically applauding.There was one other amusing similarly however: shortly before eating the hammer thrown by the Macintosh girl in orange hotpants, the 1984 Big Brother screen says, “Our enemies shall talk themselves to death and we will bury them with their own confusion. We shall prevail!�?In 2007, Jobs has said some similar things about Microsoft, but the Macintosh hammer is actually being thrown at Vista. So while it’s not exactly the same thing, it is a funny coincidence. Along those lines, Lyons provided some examples of how, as an enemy of Apple, he can talk himself to death and be buried in his own confusion.[Big Brother - Forbes]Here's What You Believe.So far, we've just covered the photos on the article. Once Lyons started writing, it was like SCO all over again. He says early iPhone buyers “were threatening to take to the streets again--only this time with pitchforks and torches. They were furious because Apple Chief Steve Jobs slashed the phone's price to $400 from $600, making early adopters look like suckers.�?If Lyons really wants to make up garbage and rewrite history, he should confine himself to Wikipedia where he can't do any damage. The people complaining about getting what they paid for were a whiney minority amplified by a desperate press trying to find something wrong with the most successful electronics product launch in history.Anyone who thinks buyers who paid $600 for the iPhone to get the hottest new device available--and who ended up with a phone that cost less overall than even the $99 Motorola Q, and further got a $100 refund credit--are “suckers�? needs to reevaluate what being a sucker might mean. Perhaps paying Microsoft $850 for the equivalent of a $300 Apple TV with less storage and a slower network, and then still needing to buy a TV tuner is a better example of being a “sucker.�?The only difference is that Lyons didn't get a free iPhone from Apple, but did get a bunch of Microsoft Media Center stuff to try out without having to pay for any of it as the rest of us would have to do, were we inclined to let Microsoft control our TVs.[Ten Fake Apple Scandals: 1 - Phony Rage About iPhone Price and Profits]The SCO Shill Lines Up Behind Microsoft, AT&T, and the RIAA.It might not be a surprise that a writer who identified SCO as safe to cheerlead for because of its seemingly legitimate corporate position would similarly jump at the opportunity to weep crocodile tears for some of the other most reviled companies doing business on the planet. Lyons is apparently not very smart about picking corporate favorites.“It looks like an anti-Apple backlash has begun,�? Lyons wrote, noting that NBC Universal pulled out of iTunes to partner with Microsoft's Windows Media DRM-based Amazon UnBoxed store. He didn't mention that NBC also partnered with Fox in setting up a joint Microsoft store, and then went solo on its own website trying to offer ad-encrusted, Microsoft DRM-ed, exploding content. No doubt all of those efforts are going to work out well for NBC.Lyons also said “Vivendi's Universal Music Group also reportedly won't renew its contract with Apple,�? without clarifying that only refers to its long term contract; Universal music hasn't budged from iTunes. He also cites unhappy noises from Hollywood about Apple's desire to lower prices to make content more desirable to consumers, who can already obtain movies and TV programming free over the air or via unauthorized downloads.Omitted from Lyon's one-sided overview of the iTunes Store is CBS executives' comments that they are very happy with its deals with Apple, and that both CBS and Fox are offering free season premieres through iTunes.And what about Viacom billionaire Sumner Redstone, who was recently cited by BU reporter Jessica Ullian as saying that “iTunes has 'resurrected the music industry' by creating a legal, affordable, instantly gratifying purchasing system for fans. The challenge now is for the film industry to catch up, he said, and for competing companies to work together to establish new standards and practices.�?[CBS and Fox offer free TV through iTunes US - iPod/iTunes - Macworld UK][How iTunes Saved the Music Industry - BU Today]Pity the Poor AT&T.Lyons wrote that “Jobs isn't known for treating partners well,�? noting that the iPhone doesn't sell AT&T's worthless media services or overpriced ringtones. That's really an example of Jobs treating the customer well, and the Fake Steve Jobs should know that. Why repeat the “Apple can’t partner myth?�? AT&T is making a major turnaround, funded by record numbers of headlines fawning over the iPhone. Apple has propelled Cingular from a middle of the road brand into its new AT&T name, which the company purposely rolled out in conjunction with the iPhone to benefit from the excitement surrounding it. Should we be aghast that Apple declined AT&T's own overpriced MEdia Net TV clips and ringtones? Is AT&T even worried about it?The service provider reported that the iPhone has outsold any phone it has ever introduced. Does that make Apple a bad partner? Would it be better if Apple really was the New Microsoft, extending its support and then yanking it back in a PlaysForSure/Zune style move? Does Lyons really have the extra credibility to burn in making such ridiculous comments? [How AT&T Picked Up the iPhone: A Brief History of Mobiles]More of the New Microsoft Meme.After noting some of Apple's recent successes, Lyons wrote, “the flip side of Apple's success is that Apple has started to seem scary.�? Scary, uncertain, and doubtful! “No longer is Apple the plucky underdog out to save the world,�? Lyons fears. Oh really? Has evil been vanquished? Is there not still the inky black bile of Windows Media DRM dripping from every alternative store in the universe? Does not Microsoft still have the remains of that $50 billion it took in last year from its monopolies--real monopolies, not the imagined fantasy kind pinned on iTunes by the media? You know, the monopoly in PC desktop operating systems held by Windows, the monopoly in servers, and the monopoly in desktop Office software? The monopolies that earn Microsoft overall profit margins as high as 81% on products that are over a half decade old? From that perspective, Apple could really turn evil over the next twenty years and still not compare to the wrongs we've suffered from Microsoft. Even so, Apple really isn't doing wrong by its consumers. If the best Lyons can do is to suggest that some RIAA labels and Hollywood executives are miffed by Apple's push for low prices, he'd better scramble to find something more problematic than that. I like low prices in content. I don't long for access to AT&T's expensive ringtones.iPhone Price Problems.Apple's iPhone was a better deal at $600 than Microsoft's Windows Mobile Motorola Q at $99, because Apple twisted AT&T's arm to provide lower priced service, making the iPhone around $200 cheaper across two years of use. Apple then dropped the iPhone's price by another $200, making it now almost $400 cheaper than the nearly free phones on the market.Is this wrong? Did Apple harm those of us who recognized value in the iPhone back in June? Did Apple defraud a million people who bought the iPhone at a good price when it lowered the price afterward? [Apple's iPhone Price Cut Unleashes Complaints]Apple TV Only A Flop For Forbes' Frauds.Lyons repeats in passing--without any factual backup--that the Apple TV is a flop. Oh really? Is that because it profitably sold a quarter of a million units with little advertising? Incidentally, that's nearly double the number of new customers TiVo signed up, as reader Timothy Bandy pointed out. He noted that “TiVo-owned subscriptions totaled 1.71 million, up 136,000 on an annual basis compared to the year ago-period.�?If Apple sold 250,000 units of the Apple TV, “it's already doubled the amount of new customers Tivo made last year,�? Bandy wrote, “or to put it another way, they already have 1/7th of Tivos' customer base without hardly trying. And as you pointed out, I doubt they've lost several million bucks in the process.�?TiVo lost $19 million in the last quarter, and $50 million last year. Apple sells the Apple TV at a profit, although not much of one. That's because the company is working to sell content that works on the Mac, and Apple TV only serves as a contributing part of that strategy. Apple is working to expand the market for fair priced Internet downloads, in opposition to high-DRM, high-priced alternatives.Microsoft has lost billions in its consumer electronics products, including the Xbox 360 that Windows Enthusiasts like to compare against the Apple TV. Microsoft also stomped on efforts by Linux users to recycle the old Xbox as a media playback system. Where's the outrage? Where's the “suckers�? blubbering? Where's the reporting that “Microsoft regularly betrays its partners?�? It's certainly not in the pages of Forbes. [Brent Schlender's Apple TV: Fortune Dud or Fortune FUD?]It's all Downhill From Here.Lyons then complained that iPhone sales must be fading because Apple dropped the price, neglecting to account for the fact that Apple met its million unit sales goal three weeks early. “The next version of OS X, called Leopard, has suffered delays,�? Lyons wrote, again failing to compare its 6 month delay to the six year delay of Vista. I guess Apple isn't the New Microsoft after all.Lyons begged for forgiveness after beating on Linux users for years and glorifying a bunch of greedy SCO investors trying to exploit intellectual property rights the company didn't even own. In describing his partnership with Rob Enderle, I downplayed his SCO role after he pleaded for evenhanded coverage of his past, noting that he did publish some correct information after the writing was on the wall for SCO.However, for his shameless attempts to present the same kind of one-sided, half-truth, negative-spin that praises the worst corporations on Earth while reviling the only company that seems to share any interests and values in common with its customers, Lyons has lost the bits of credibility he begged to retain. Shame on him, and Zoon on Daniel Lyons' head. [Daniel Lyons: Fake Steve Jobs and the SCO Shill Who Hated Linux]Thanks to John Schmidt for the “Big Brother�? link.What do you think? I really like to hear from readers. Comment in the Forum or email me with your ideas. Like reading RoughlyDrafted? Share articles with your friends, link from your blog, and subscribe to my podcast! Submit to Reddit or Slashdot, or consider making a small donation supporting this site. Thanks!

• RoughlyDrafted Magazine on September 25, 2007
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Microsoft's Zune, Vista, and Windows Mobile 7 Strategy vs the iPhone

Daniel Eran Dilger What secret partner has Microsoft discovered to bail water from the deck of Zune and its Zune Marketplace music store in a last ditch attempt to take on Apple's iTunes, the iPod, and iPhone? Microsoft's own Windows Mobile, of course, with some help from Windows Vista! Who Else Will Help Zune? Certainly not Nokia, as one Zune fansite tried to suggest last week. Nokia has nothing to gain by promoting the Zune. A more credible sounding rumor, as long as we're inventing stuff, would be to instead suggest that it could be Sony Ericsson that is interested in putting the Zune software on its new phones. At least Sony has already demonstrated its complete failure at selling music on its own, and actually has a Windows Mobile phone in the works. The simpler reality is that Sony Ericsson may have no choice in the matter. Microsoft is clearly out to wed the Zune with Windows Mobile in a effort to get the two failures to prop each other up in its “I'm not dead yet!” fight against the iPhone. Microsoft is likely to make inclusion of its Zune Marketplace a mandatory feature that its Windows Mobile partners will have to swallow, just as it forced its PC licensees to bundle its Internet Explorer browser and later Windows Media Player, while prohibiting them from seeking their own bundling deals with other companies. Microsoft took quick steps to block Compaq's licensing of QuickTime, for example. Those deals were bad for HP, Compaq, Dell, and the other PC makers, bad for competition within the tech industry, and subsequently bad for consumers. However, they did enable Microsoft to use its powerful Windows monopoly position to push proprietary standards and or anti-interoperable technologies designed to expand its monopolized control, while making big money selling Windows in a market that lacked any alternatives. Will Nokia Rescue Microsoft’s Zune? Haha No. Apple in the Web Browser Wars: Netscape vs Internet Explorer Microsoft's Plot to Kill QuickTime A Lot Has Changed. This time around however, all Microsoft has to leverage is Windows Mobile, a struggling platform with little respect in the industry, now in a distant third place. Further, the technology Microsoft is trying to push is essentially its Windows Media DRM, which has already been swept up and trashed by Apple's iTunes, QuickTime, and the iPod. The dismal fate of Windows Media was sealed with the failure of PlaysForSure. The Zune's new, albeit incompatible, reincarnation of Windows Media DRM never stood any chance of making any headway. However, the most problematic part of Microsoft's strategy of pushing its Zune Marketplace store on its Windows Mobile partners is that music stores don't make money. Apple's iTunes Store is the biggest online music store on Earth, and does tremendous volumes of sales. Still, Apple reports minimal profits from the store. It recently warned its investors that it's now selling so much through iTunes that the low profit, high volume venture may have a negative impact on the company's overall profit margins. As problems go, that's certainly a nice one to have. Apple is not at all worried about turning a big profit with iTunes because it runs the store exclusively with the intent of ensuring new content for the iPod, iPhone, and Mac. That in turn sells its hardware. However, Microsoft doesn't have hardware sales to nurture. It has barely sold two million Zune units, many at fire sale prices (compared to 150 million iPods, 93 million of which have been sold since the Zune's release). It now faces impossible odds in tilting against the momentum of iTunes' rapidly spinning windmills, with no possible upside in terms of eventual music store profitability. There's simply no way that any amount of investment in the Zune Marketplace could deliver profits, because Microsoft is competing against Apple's non-profit motivation behind iTunes. Further, Windows Mobile is similarly a big loser with no potential because Microsoft has little ability to profitably license its mobile software. It's competition is the iPhone OS, which Apple develops for free to sell iPhone hardware (Microsoft does not sell its own phone hardware); RIM's mobile OS, which is also free for BlackBerry hardware; the Symbian OS, a partnership between hardware makers; and various mobile distributions of Linux, including Google's Android, all of which are also run as profitless ventures to support hardware sales (or in Google's case, service sales). The Great Google gPhone Myth Why Microsoft’s Zune is Still Failing 10 FAS: 7 - Apple’s Hardware and Dvorak’s Microsoft Branded PC Good Money After Bad. All that unpleasant reality hasn't phased Microsoft. Its executives haven't found a way to make money in consumer electronics yet, and the company's attempts just keep getting more and more expensive. Barron's recently featured the speculation of one Microsoft investor who hoped the company would spin off its hemorrhaging online services division as well as its profitless entertainment and devices unit, which includes the Zune, Xbox, and Windows Mobile. The investor calculated the value of Microsoft's other businesses (its high profit Office, Windows, and server divisions) and decided that the market wasn't assigning any value at all to Microsoft's consumer electronics and services products divisions. No wonder; they're nothing but a huge drain on Microsoft! Even so, the investor seemed to think there must be some value to obtain from selling off the black holes, citing the market value of the highly profitable Nintendo. The investor's real intent seemed to be finding a way to “discourage the company from overinvesting in the business.” Microsoft's stock has only appreciated by 6.3% over the last decade. Apple has appreciated 1,822.6% in the same period. Microsoft is trying to develop new markets as Apple has, it's just failing to do so. Microsoft’s Outrageous Office Profits Strength in Bundles. Microsoft has always been interested in promoting its products by using strong ones to prop up weak ones. From the start, it bound its strong Mac apps to the rather weak Windows offering to invent the PC platform, and has since tied Word and Excel to a suite of otherwise fair to marginal apps under the Office banner. Once Windows became established, the company tied in an unfinished, third-rate web browser and was able to rapidly build it into a strong competitor through market inertia. On the server side, Microsoft similarly ties in tragic products into package deals that often (but not always) enable the weak bits to gain some traction. So Microsoft is again working to stitch together its various properties to support each other, but now most all of its recent products are in flames and desperately need reinforcement. There's only so much one failure can do to support another. Even worse, Microsoft's historic strengths are no longer working. The Windows monopoly was supposed to brace up Windows Media Players, Windows Media Center, Windows Mobile, Windows Live Search, Windows Live Soapbox, and a series of other cobranded products that haven't gone anywhere. Office Wars 3 - How Microsoft Got Its Office Monopoly Office Wars 4 - Microsoft’s Assault on Lotus and IBM Why Does Microsoft Really Want Yahoo? Certifiable Failure. Windows itself is now in the throes of crisis, as the failed launch of Vista nearly two years ago has signaled the undoing of Microsoft's ability to rely on its desktop monopoly to advance failures into strength. Is Vista going to put out the Zune's flames by beating with its own flame-engulfed wings? That's part of Microsoft's current strategy, which included rebranding PlaysForSure as 'Certified for Windows Vista.' The Zune is also Certified for Windows Vista, despite not being compatible with the Certified for Windows Vista PlaysForSure. Confused? You needn't be for long, as the remnants of Microsoft's one-time strategy for creating an 'ecosystem of hardware, service, and software partners' to provide choice and freedom in the music industry is pretty much dead now. All of Microsoft's significant PlaysForSure store partners, including AOL MusicNow, MTV URGE, Musicmatch Jukebox, Wal-Mart Music, Yahoo Music, and Microsoft's own MSN Music have now unplugged their PlaysForSure stores, ironically making the brand among the least accurate names for a service ever. The remaining stores making use of PlaysForSure music, principally Rhapsody and Napster, are now on death's door. PlaysForSure video stores such as CinemaNow, which once worked with Microsoft's PlaysForSure-certified Portable Media Players no longer do. Even Amazon's UnBox service, which is supposed to sync with some devices that are PlaysForSure-certified, has not bothered to get certified under Microsoft's program. Incidentally, the failure of Yahoo Music and Microsoft's MSN Music (and the company's outrageous plan to simply unplug its customers from DRM authentication) caused CNET to wonder if Apple might be next in line to make users' music purchases unplayable, echoing the poorly conceived idea that Microsoft's Vista failure, its mobile platform incompetence, and desktop viral malware security crisis all somehow also predict a similar certain doom for Apple at some point in the future. For some reason, CNET saw no connection between the failure of Yahoo and MSN (hint: PlaysForSure), and no reason to speculate about the future of other media stores facing actual failure and likely disbanding in the near future, including Rhapsody, Napster, UnBox and Microsoft's own Zune. Nearly all of the recent DRM deactivation controversies, including Major League Baseball's, have been related to Microsoft's software, although Google decided to similarly to dump users of its paid video when it pulled the plug on Google Video last fall. Rise of the iTunes Killers Myth Forrester Research: Epic Terror of iTunes and Apple TV But Wait, What About This Ecosystem Failure Sounds Familiar? The complete failure of Microsoft's PlaysForSure hardware and software licensing program paints a damning prophetic picture foreshadowing the fate of Windows Mobile. Pundits often dance around this fact by spewing Microsoft's talking points: Window Mobile has lined up scores of hardware partners! Windows Mobile has lots of software partners! Choice is good! Oh wait, that's the same stuff they said about PlaysForSure in explaining why the iPod couldn't stand a chance once Microsoft could deliver its Windows Media Player reference designs and the Windows Media DRM that would enable PlaysForSure stores to open their doors. The only real difference between PlaysForSure and Windows Mobile is that the former was expected to prove that the Windows licensing model would work well among mobile devices, while the latter has already proven for some time now that it can't. Windows Mobile has been a snowball of failure ever since it launched a half decade ago with clumsy-looking phones running buggy, poorly architected software with abysmal battery life that makes the iPhone 3G look exceptional in comparison. Windows Mobile simply shares too much in common with the PlaysForSure failure to escape the event horizon if its blackhole. Pairing software from one vendor to hardware from another is problematic in the PC market, but completely untenable among highly integrated mobile devices. Microsoft tried to blame PlaysForSure incompatibilities on its music store and hardware partners, but the real problem was the model. Microsoft's own software problems didn't help either of course. The issue on Windows Mobile is even more significant because having functional mobile phone service is far more critical than being passively entertained by an MP3 player. Unchecked diversity among the devices of a platform is a bug, not a feature. The mantra of choice and freedom, hailed among Windows enthusiasts and homebrew hackers alike, makes for a great mission statement but in reality delivers products that just don't work. It's great to be able to compile your own servers from free and open source software, but most consumers don't want the accountability that comes along with that freedom when trying to dial 911 from their phone. For that matter they don't even want to troubleshoot the installation of a firmware update, or deal with why software designed for a tall screen looks awful on a square screen. With an integrated product like the iPhone, they can complain to Apple for a fix. With Windows Mobile, you get passed around by Microsoft from the mobile operator to the hardware maker to the third party software developer. Everyone is responsible but nobody is accountable. The Spectacular Failure of WinCE and Windows Mobile Count the Flames of Windows Mobile. And so, in terms of failing platforms, Windows Mobile is closer to PlaysForSure on the flames meter than it is to the only smoldering Vista, which is a moderate success by comparison. If attaching the Zune, Microsoft's phoenix on fire, to Vista's train wreck didn't have any impact on the relative salvageability of either, what will Windows Mobile 7 do for Zune 3 a year and a few months from now in late 2009 at the earliest? That's Microsoft's current schedule, barring any customary delays. By then, Apple will have had the iPhone in international distribution for more than a year, the App Store will be a year and a half old, and the WiFi iTunes Store will be more than two years old. What in Windows Mobile 7 will make a difference for smartphone buyers? According to Microsoft: copycat touch controls hobbled by an interface trying to look like Vista (below, and yes they did spell Internet Explorer wrong, as well as putting a space in ActiveSync), and no doubt a major new push to force Zune Marketplace media sales down the throats of Windows Mobile users in imitation of Apple. Microsoft is no Apple. The problem of course, is that the market for Windows Mobile phones is almost exclusively among corporate IT users, who don't give a rats ass about downloading music from the Zune store. So there's really little potential for cross pollination between Windows Mobile and the Zune. In contrast, Apple originally marketed the iPod and iPhone to consumers, who do buy up music to the tune of billions of tracks every year. Apple now has success to build upon, and has targeted its year-old iPhone platform toward the enterprise, with development tools, a software deployment infrastructure, and management utilities that in most cases meet or exceed what Microsoft has delivered over past decade on WinCE and Windows Mobile. On top of that, the iPhone platform has a far superior, standards-based web browser, development frameworks recognized to be easier to use than Microsoft's mobile .NET, and a core OS that is simply more stable, not to mention a user interface that's designed to look good and be simple to use rather than to match the flashy branding of a failed desktop OS. WWDC 2007: Kevin Hoffman Presents .Net vs. Cocoa The Other Problem: Windows Mobile is Going Down. Anyone banking on Microsoft's promises to deliver Windows Mobile 7 on time by the end of 2009 should also consider the company's track record in delivering Windows Mobile updates. The company initially intended to get Windows Mobile 5 out next to Longhorn [Vista] in mid to late 2004. Windows Mobile 5 was actually released in May 2005, and Vista finally popped out “officially” at the end of 2006, although one couldn't actually buy it until it was relaunched to consumers in early 2007. Even after Microsoft “released” its subsequent Windows Mobile 6 nearly a year later (based upon the same underlying WinCE 5), it took six months or more for many of Microsoft's partners to approve it and set up distribution so that users could actually get the software on their phones. In contrast, Apple releases regular iPhone updates every month or two that are always available to users immediately after their release, directly from Apple. Microsoft doesn't exactly have years of leisure at its disposal. Windows Mobile has already been hit hard by competition from the iPhone and from other rivals, including RIM in the enterprise market and Symbian internationally. That competition has resulted in Microsoft's mobile market share slipping year over year. This year, Microsoft failed to meet its frequently repeated goal of selling “more than 20 million units” through all of its various hardware partners, and instead only sold 18 million. Microsoft senior vice president Andy Lees blew off the missed goal as a “rounding error.” He cited numbers from IDC that indicated Windows Mobile had grown from 11% to just under 13% of the worldwide market for smartphones, growing faster than the overall market, and that unit sales of Windows Mobile phones have both outpaced sales of BlackBerry phones and outsold the iPhone by a factor of two. Windows Mobile misses target Oops, Microsoft Fibbed a Bit There. Canalys reports that Microsoft actually started out with a 23% share of the smartphone market in Q1 2004, which fell to 18% in Q1 2005, then down to 12% in Q1 2006, where it remained in its Q4 2007 figures. Apple ranked at 7% worldwide in Q4 2007, but that was based on sales in one market, of one model, and on one mobile provider, after only being on the market for six months. Smart mobile device shipments hit 118 million in 2007, up 53% on 2006 (Canalys press release: r2008021) If the best Microsoft can do is to claim victory for selling twice as many phones as Apple, worldwide across all of its partners despite having a many years long head start and that great ecosystem of manufacturers behind it, then it should probably just not say anything. Incidentally, with the release of the iPhone 3G, AT&T is reporting having doubled its sales volumes, not to mention all of the other new markets the iPhone 3G is now being sold in worldwide, at half the price of the original model. Within just the US smartphone market, which was Apple's only market last year and is also Microsoft's strongest market for Windows Mobile, the iPhone grabbed a 27% share in its debut third quarter of 2007, and maintained a 28% share in the fourth quarter 2007, behind RIM with 41%, but ahead of Palm at 9%. Adding up all of the Windows Mobile manufacturers selling in the US, Microsoft could only claim to have its software on 21% of the phones sold, a significant step behind Apple. Canalys, Symbian: Apple iPhone Already Leads Windows Mobile in US Market Share, Q3 2007 iPhone Grabs 27% of US Smartphone Market Also, all of these figures bundle in all of the “convergence” Pocket PC mobile devices sold by Microsoft's partners, but none of the iPod touch units Apple sells, which are likely to be in well in excess of its iPhone sales. So Apple's mobile WiFi platform is actually far larger and growing much faster than market statistics companies report under their smartphone category. Anyone hoping that Windows Mobile 7 to going to reverse that trend when it arrives over a year from now is seriously delusional. Did you like this article? Let me know. Comment here, in the Forum, or email me with your ideas. Like reading RoughlyDrafted? Share articles with your friends, link from your blog, and subscribe to my podcast (oh wait, I have to fix that first). It's also cool to submit my articles to Digg, Reddit, or Slashdot where more people will see them. Consider making a small donation supporting this site. Thanks!

• RoughlyDrafted Magazine on August 11, 2008
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Apple's iPhone Price Cut Unleashes Complaints

Daniel Eran DilgerWhile introducing the iPod Touch as a version of the iPhone lacking cellular mobile features, Bluetooth, and an integrated camera, Apple also set a new price on the 8 GB iPhone and discontinued the 4 GB model. That move angered some buyers, who felt the $200 price cut after just ten weeks on the market was too much, too soon. Jumping on Price Cuts.Along with the irritation of price conscious consumers, pundits known for delivering a negative spin on all things Apple also seized the opportunity to suggest that the iPhone's price cut was based on flagging sales. Among them was Scott Moritz of TheStreet, who earlier announced that Apple had “missed a 1 million unit sales target�? and that rivals were "rejoicing," failing to point out that analysts had really only set targets between 150,000 and 300,000 for the iPhone's opening weekend. John Gruber of the Daring Fireball declared Moritz "Jackass of the Week" yesterday for saying that the iPhone price cut “will add more evidence to the speculation�? that the iPhone "may not be selling as rapidly as some optimists had expected."Gruber noted that Steve Jobs publicly stated Apple was on track to sell a million iPhones in its first quarter, and that independent reports said that the iPhone had outsold every other smartphone on the market in July. He linked to a Reuters article citing iSuppli's report that Apple had grabbed 1.8% of the US mobile market, based on consumer surveys of two million US participants. [Daring Fireball][More on Scott Moritz and the Jim Cramer Misinformation Engine]Competitive Pricing.A number of readers asked why Apple would drop the iPhone's price so dramatically after just a little more than two months, and whether such price cuts really as unprecedented as some pundits suggest they are. In other competitive markets for consumer electronics, aggressive price drops are typical. Over the last two months, Sony dropped the price of the PlayStation 3 by $100, and Microsoft responded with a $50 price cut on the base price of the Xbox 360 and additional price cuts on its external HD-DVD player option.Neither Sony nor Microsoft make money selling game console hardware; both are competing on price to establish a large user base and expand their gaming platforms. Sony is also working to push its new Blu-ray HD disc format over Toshiba's HD-DVD, which is supported by Microsoft. [Origins of the Blu-ray vs HD-DVD War][Blu-ray vs HD-DVD in Next Generation Game Consoles]Why Cut the iPhone Price?However, Apple is making money on the iPhone. Why would it cut the iPhone's price while the phone is currently selling at the top of the smartphone charts? Jobs said the new price was intended to make the phone more attractive during its first holiday buying season. However, it's also facing new competition from Apple's own new iPod Touch.Priced at $299 for the 8 GB model and $399 for the 16 GB version, the iPod Touch delivers the iPhone's splashy, multitouch Coverflow iPod features and its “breakthrough Internet device�? functions via WiFi and the mobile Safari browser. It's nearest competitor is Nokia's N800 Internet Tablet, which costs $399, only provides a quarter of a GB of Flash RAM, and requires a stylus to use. The iPod Touch is also gunning to replace the hard drive based “iPod Classic.�? Apple could have left the iPhone priced $300 above the 8GB iPod Touch, but by dropping the price, it makes it very difficult iPod users tempted by the Touch to not simply spend the extra $100 to gain a phone, Bluetooth, and a camera. Since Apple's iPhone also earns the company a share of service revenues from AT&T, pushing as many iPod Touch users toward the iPhone as possible makes a lot of sense.For Those Who Can't iPhone.However, there are a large number of people who can't buy the iPhone. Some are tied to existing mobile contracts and can't or don’t want to move to AT&T. Among them are millions of iPod users overseas. Since Apple won't be able to get the iPhone set up with providers around the world within the next year, it makes sense to sell them the portions of the iPhone that it can market worldwide. That strategy is highlighted by the fact that the iPod Touch is already localized in a dozen and a half languages, including French, German, Japanese, Dutch, Italian, Spanish, Portuguese, Danish, Finnish, Norwegian, Swedish, Korean, Simplified Chinese, Traditional Chinese, Russian, and Polish. The US-bound iPhone lacks any localization or support for alternative language keyboards. That indicates Apple is aiming the iPod Touch at foreign markets. Apple has also de-emphasized its hard drive players, only leaving a physical disk inside the iPod Classic, at its previous price points. That aggressively targets iPod buyers toward the iPhone, while still allowing them a variety of different models and prices to choose from. In order to keep sales of iPhones from being eaten up by iPods, its price had to be highly motivating, and the iPod Touch had to be competitive as well.[Curious Stuff about the New iPods]Apple’s Worldwide, Preemptive Strike on High End Smartphones.Reader Neil Adamson points out that the iPod Touch will also help Apple cut into the high end market for smartphones in a preemptive strike. “People will be able to keep their existing mobile phone (with built in camera) and buy a Touch to add video and WiFi networking. Just go and buy a WiFi data plan and you have in effect a two component iPhone. So now there is less incentive to buy a new expensive Nokia smart phone in non iPhone countries.“Of course, this is also why the iPhone prices had to come down in the US, otherwise people would keep their Motorolas and opt for the iPod Touch. The other part of this is that the Apple iPhone user experience is about to go global via the iPod Touch. That means that Apple will have deployed that patented technology everywhere. It just became a whole lot more difficult for other companies to introduce iPhone clones into non iPhone markets.�?Adamson also noted, “Today Apple cut the price of its iPhone by $200.00 and apparently thousands of people feel betrayed. What a lot of nonsense. I would say that you should not spend $600.00 on anything, unless you can justify the expense. I stood in line on June 29, and I got my iPhone.
“For me it was money well spent, it is the best phone I have ever owned. I delayed upgrading my old phone for almost 2 years, just on the rumor that Apple would enter the phone market. I have not been disappointed.�?Is A Lower Price A Bad Deal?For iPhone buyers who already purchased the iPhone however, that price drop might seem severe. However, even at $600 the 8 GB iPhone was a better deal that other smartphones. Adding in the price of service, the iPhone cost less over two years than even phones that appeared to be priced at $99 like the nearly worthless Windows Mobile Motorola Q. The hardware cost of the iPhone is really insignificant compared to its service plan. While incendiary bloggers have latched onto Apple's iPhone price cut to parade out a handful of steaming mad consumers threatening to form a class action lawsuit to ameliorate their frustration with being stuck in a market economy, the reality is that Apple set a fair price on a premium product, and is now lowering the price further to broaden its appeal. iPhone customers who recently bought an iPhone have 14 days to return it, and many credit cards come with "price protection" programs to refund the difference, but the idea that products won't or shouldn't change in price--particularly at the intersection of the bleeding edge of high technology and fashion--is highly unreasonable.What that $200 price drop means for existing iPhone users is a bit less exclusivity but the potential for a much greater user base, resulting in more iPhone savvy websites and more interest from third party developers of hardware and software products. That will make existing iPhones more valuable, not less. Any frustration at the lower price pales in comparison to an alternative scenario where Apple could have announced a new iPhone model that made the existing ones appear obsolete.[Phony Rage About iPhone Price and Profits]Unprecedented Discounting?Last month, Apple introduced new iMacs that were priced $200 less than the models they replaced. However, when compared to past models with equally configured features, the price drop was closer to $600. Nobody appealed to violence or the courts to right this perceived “wrong.�?One reader posting to a heavy breathing, sensationalist blog report on Apple's iPhone price cut noted, “I bought a Sony Ericsson P800 for $1050 when it first came out (same day). Two months later the price was around $800, six-seven months after that around $600 - same difference as the iPhone.“Apple did not lower the price because they felt charitable - they lowered the price because they want more people to bite and go get the phone. The early adopters bought it, most of the consuming public didn't because of the price - drop the price, get more people - simple economics. Early adopters know what they are in for - the time span does not matter. It can be 1, 2, 6, 12 months, price will drop. Who is to say that after x time it's fair for a price to go down?�?  Similar price drops are common in the disposable world of mobile phones, where even the newest technology is commonly worthless within two years. The Motorola RAZR, Palm Treo, and even the simple LG Chocolate feature phone all debuted at $500 or more, only to rapidly drop below $100, often within just a year. Bills of Materials and Manufacturing Costs.Part of that rapid price drop comes from the continual discounting of component parts and the economies of scale that drive production costs down as manufacturing ramps up. For most mobile phones, hardware prices are obscured behind the illusion of subsidized pricing. Apple's retail prices aren't. Further, Apple's customers watch prices and set expectations based on past pricing; however, the iPhone is a very different product compared to the company's existing portfolio of computers and iPods, which tend to follow regular and predictable cycles of upgrades and price changes.Of course, whenever Apple is involved, threats of class action lawsuits are bound to occur. Since the early adopters who shelled out the money to buy an iPhone reported being very happy with the product, it's hard to see how a minority can now behave as if they are somehow owed a refund for the "real price" of the iPhone. [Kevin Chang, iSuppli and The iPhone Nano Myth]What do you think? I really like to hear from readers. Comment in the Forum or email me with your ideas. Like reading RoughlyDrafted? Share articles with your friends, link from your blog, and subscribe to my podcast! Submit to Reddit or Slashdot, or consider making a small donation supporting this site. Thanks!

• RoughlyDrafted Magazine... on September 6, 2007
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Office Wars 3 - How Microsoft Got Its Office Monopoly

Daniel Eran DilgerOffice Wars 1 - Claris and the Origins of Apple’s iWork Office Wars 2 - Microsoft’s Outrageous Office ProfitsOffice Wars 3 - How Microsoft Got Its Office MonopolyMicrosoft’s Office monopoly gives the company more revenues and delivers nearly as much profit as its Windows software. How did it gain such a powerful position in productivity applications? The history of Office is rooted in decisions Apple made in the 80s with the Lisa and Macintosh, and also has an interesting correlation to Apple’s iPhone strategy today.The Origins of Office.While Microsoft has overwhelming power in desktop productivity applications today, it entered the market late. In the early 80s, Microsoft principally sold language software and struggled to license copies of AT&T’s Unix under the name Xenix. In 1981, Microsoft teamed up with IBM to license a copycat version of CP/M as the DOS for IBM’s new PC. Microsoft didn’t really get started in applications until Steve Jobs approached the company that same year with a proposal to develop for Apple’s new Macintosh.Entrusted with prototype Mac hardware and inside access to Apple’s development tools, Microsoft made an agreement with Apple in 1981 not to ship any mouse-based products of its own until a year after Apple introduced the Mac. In exchange, Apple promised to give Microsoft a rare opportunity to enter the competitive desktop applications market using its entirely new Mac platform as a launching pad.[SCO, Linux, and Microsoft in the History of OS: 1970s][SCO, Linux, and Microsoft in the History of OS: 1980s]Software Sells Systems!Prior to the Mac, Apple had released the Lisa as its first graphical desktop computer. Since developing new graphical apps for the Lisa was very different and required special training, Apple delivered its own complete productivity suite for the Lisa. It planned to open up the Lisa platform to third party development at some point after the initial launch, but the immediate focus had been to deliver a unique set of applications to demonstrate the power of Lisa’s new graphical interface.Recalling the software focus of the Lisa development team, reader Jim Hoyt emailed me several months ago in response to “Why Apple Bounced Back,�? an article crediting Apple’s recent internal software development efforts with a large role in the company’s turnaround over the last decade. Hoyt wrote, “In 1979, John Couch, the soon-to-be head of the Lisa project, was in charge of all software at Apple Computer. He commissioned this poster: Software Sells Systems.�? I’ve been meaning to publish the otherwise long since lost to history poster, so here it is, belatedly. Thanks Jim![Why Apple Bounced Back]Apple Delivers Lisa Suite Seven Years Ahead of Microsoft Office.The poster’s premise was obvious: the Lisa wasn’t going to sell itself; it needed practical software applications to usher in the future of the graphical desktop. Apple developed an entire suite of seven productivity applications that shipped with the Lisa system in 1983, including word processing, spreadsheet, database, drawing, graphing, project management, and terminal emulation programs. It was seven years later before Microsoft would first package its Word, Excel, and PowerPoint applications together as Office 1.0 in 1990. In his February 1983 review of the Lisa for Byte magazine, Gregg Williams concluded: “As you can tell, I am very impressed with the Lisa. I also admire Apple for deciding to make the system without being unduly influenced by cost or marketing constraints. The Lisa couldn’t have been developed without such a deep commitment, and no other company I can think of could afford such a project or would be interested in doing it this way (the Lisa project reportedly cost over $50 million and used more than 200 person-years of effort!). In terms of the actual, as opposed to symbolic, effect it will have on both the microcomputer and the larger-computer market, the Lisa system is the most important development in computers in the last five years, easily outplacing IBM’s introduction of the Personal Computer in August, 1981.�?A year later, Lisa ended up being replaced by the much less expensive Macintosh, which delivered much of the Lisa’s functionality at a quarter of the price. However, the Mac did not include the Lisa’s expensive megabyte of RAM, its hard drive, or its productivity application suite. The Mac only shipped with a word processor and painting tools.Why Apple didn’t port its Lisa applications to the Macintosh is a confounding riddle, because it had more than a half decade of opportunity to do so. The main reason for this was a paranoid fear of alienating outside developers, along with jitters related to IBM’s rapid poaching of the desktop computing world after the arrival of its PC in 1981.[“The Lisa Computer System�? Reprinted from Byte, issue 2/1983] [The Lisa, Apple's First GUI-Based Computer System - VAW][How Apple Keyboards Lost a Logo and Windows PCs Gained One]Apple’s Lisa vs the Third Party Mac Platform: 1980 - 1984.Competition inside Apple between the Lisa development group and the Macintosh team led to a different software strategy for the Mac. Since the smaller Mac group didn’t have the resources to develop a full suite of applications in advance of its launch, it planned to leverage third party development in the same way as the Apple II had.Sales of Apple II computers had exploded in 1979 with the release of Dan Bricklin’s VisiCalc spreadsheet software. That success was a large reason why IBM decided to get involved in the microcomputer business with the PC in the first place. It wasn’t until 1984 that Apple began making lots of money selling AppleWorks, its word processing, spreadsheet, and database package for the Apple II. It continued to sell the software with only limited updates well into the early 90s.Apple management failed to see the potential for delivering its own suite of Mac applications as it had on the Lisa, and as it very profitably would later do for the Apple II. Instead, it became increasingly enamored with the idea of partnering with third party software developers and delegating away the work--and the profits--of creating its own Mac software. Motivated by fears of inhibiting a third party software industry like the one that had grown up around the IBM PC, Apple intentionally stifled its own internal software development efforts and later spun them off into the Siberian gulag of Claris. That move would prove to be a devastatingly expensive mistake that would nearly destroy Apple over the next decade.Incidentally, three of the most important products Apple would release during that decade of decline were software products: the profitable AppleWorks for the Apple II in 1984.the free 1987 HyperCard for the Mac.the free 1991 QuickTime for the Mac.[HyperCard: Apple and the Origins of the Web][1990-1995: Planting Software Seeds][QuickTime: The Secret Weapon Inside iTunes]A Fearsome Future VisiOn for the PC: 1981 - 1983.Another contributing reason for Apple’s rush to embrace third party developers on the Macintosh may have been related to the fear of VisiCorp’s new mouse-driven VisiOn graphical desktop environment. VisiOn originally appeared on the Apple III in November of 1981, but the complete commercial failure of that new machine after the delivery of IBM’s PC prompted VisiCorp to announce moving its support to the PC in 1982, with a promised release target of mid-1983. Apple was still scrambling to release the Lisa and the Mac, both of which had slipped repeatedly.While clumsy, slow, and expensive--the base VisiOn software and a mouse cost $790, each application cost between $250 and $400, and it required a $5000 hard drive upgrade on top of a $2000 PC--VisiOn was backed by the legendary VisiCorp, the company that had helped launch the Apple II to fame with VisiCalc. VisiOn also tapped into IBM’s “up is down�? PC, which despite its high price and low level of performance and innovation, had cut deeply into Apple’s business expansion plans, almost entirely due to IBM’s reputation and its monopoly position in business computing. After witnessing its first big failure with the Apple III, and then seeing a tepid response to the $9,995 Lisa in 1983, Apple was no doubt very concerned about IBM’s PC being converted into an ugly frankenstein Mac knockoff with that $7,500 VisiOn upgrade bolted on, cheered on by a press giddy at the prospect of being bamboozled by IBM’s overpriced and under delivering PC.The only way to compete with the threat of such a graphical system for the PC would be to deliver the new Macintosh as quickly as possible at a much lower cost with lots of applications from a variety of third party developers. Fortunately for Apple, VisiOn also slipped several months and wasn't delivered until the end of 1983. Right up until it completely fizzled, the press hailed VisiOn as a promising competitor to Apple’s Lisa and the forthcoming Macintosh.By 1983, VisiCorp had fallen apart; its star development manager Mitch Kapor had left to found Lotus Development. Kapor’s new spreadsheet product, Lotus 1-2-3 for the DOS PC, destroyed the remains of VisiCorp and its VisiOn.[VisiCorp Visi On - Toasty Tech][1980-1985: 8-bit Platforms]Frying Pan to the Fire: Apple Runs to the Arms of Microsoft: 1981.Finding developers willing to commit to investing in Apple’s next new platform was difficult after the failure of the Apple III and the wildly successful launch of the PC. Apple later found that its developer relations would suffer at the release of the “no other software needed�? Lisa. For the Mac, Apple decided to copy the PC model by directing the majority of its efforts into courting third party developers and downplaying its own software releases, which were only intended to serve as basic placeholders. Even so, many PC developers planned to take a ‘wait and see’ approach to supporting the Macintosh.Hoping to prime an early and explosive business success for the Macintosh in the same way VisiCalc had launched sales of the Apple II, Steve Jobs made plans with Microsoft to deliver a graphical Mac interface for its struggling Multiplan--a VisiCalc spreadsheet clone--and a new Chart application.Microsoft had also secretly begun another Mac app initially called MultiTool Word, based on the Bravo word processor developed by Xerox PARC’s Charles Simonyi and Richard Brodie; Microsoft hired both in 1981. The company didn’t tell Apple about its new word processor project because the Mac team had already started developing a word processor for the Mac called MacWrite.[A Rich Neighbor Named Xerox - Folklore.org][An Office User Interface Blog - Microsoft’s Jensen Harris]Apple’s Problematic Partnership with Microsoft: 1981 - 1985Next to IBM, Apple was among the first companies to realize that getting into a business partnership with Microsoft was a really bad idea. Throughout 1983, Microsoft employees began intense discussions with Apple about how the Mac system software worked internally, involving issues unrelated to desktop application development. The reasons for this became obvious when Microsoft made a surprise pre-announcement at the Comdex trade show in November 1983 of a clone of Apple’s Mac environment for the PC called Windows, along with the release of a text-based Word for DOS using a mouse. Apple had previously worried about VisiCalc’s independent VisiOn appearing for the PC, but now its own partner had taken its internally developed graphical desktop work to deliver a competing product on IBM’s platform. Microsoft had discovered a loophole that allowed it to ignore its exclusive agreement with Apple because the contract had tied the year-long waiting period to the Mac’s planned ship date in 1982; that contract date wasn’t updated as the project slipped into 1984.It turned out that Word for DOS wasn’t very popular, since DOS PC users didn’t see much benefit from only using a mouse with a single application. It also turned out that Microsoft couldn’t deliver on its promise to ship Windows 1.0 by early 1984; it wasn’t actually available until 1985, and even then was a complete joke of a product and fully unusable. However, the problems Apple would suffer for trusting Microsoft were only just getting started. Windows 1.0 wasn’t much to look at, but it did offer an advancement beyond the neanderthal text interface of Word for DOS. Apple also had reason to worry when it found Microsoft was directly collaborating with IBM in 1985 to deliver a new DOS replacement called OS/2. [1990-1995: The Race to Deliver The Next New Platform][Mac Office, $150 Million, and the Story Nobody Covered]Apple Grows Dependent upon Third Party Software: 1985 - 1990.Apple’s partnership with Microsoft continued to worsen. Microsoft finally shipped its spreadsheet for the Mac in 1985, but threatened to also release it for the PC as well, prompting Apple CEO John Sculley to sign away rights to a variety of Mac system software details to Microsoft in 1985 in exchange for exclusive Mac development of the graphical Multiplan for two years. Microsoft’s Multiplan and Chart applications for the Macintosh were among the strongest software features Apple touted in its 1984 advertising. (Click to view full size).A very young Bill Gates appeared next to Mitch Kapor of Lotus Development in Apple’s Mac ads to observe, “To create a new standard takes somethings that’s not just a little bit different. It takes something that captures people's imaginations. Macintosh meets that standard.�? Were he not trying to sell Windows Mobile today, he might say the same of the iPhone!Sculley had been arrogantly dismissive of Bill Gates’ July 1985 suggestion that Apple work quickly to broadly license its Mac technology to Northern Telecom, Motorola, and AT&T. Instead, Apple sought to retain control of the unique Mac desktop as a way to sell its hardware.At the same time, Apple grew increasingly reliant upon Microsoft to deliver updates to its applications for the Mac, and worried about threatening any of its third party Mac developers with its own internal application software efforts.However, in 1984 Apple had released AppleWorks for the Apple II. That program rapidly became the top selling software title of any computer platform, despite Apple’s minimal efforts to market it. It was nearly an embarrassment for Apple, which wanted to push the graphical new Macintosh, not a text-based 8-bit program. By 1987, Apple had spun off its own apps--including AppleWorks, MacWrite, MacDraw, and MacPaint--into the Claris subsidiary. Claris went on to profitably develop and acquire a suite of Mac productivity apps, but operated at an arms’ length distance from Apple. By 1990, Sculley realized the vast profit potential in application software. Apple had two solid platforms: the Apple II and the Mac. The company’s minimal efforts to market any software for them was clearly a huge mistake. Sculley subsequently decided to retain Claris as part of Apple rather than spinning it off, but that late decision shattered the subsidiary because its employees and managers had been given the expectation that a Claris IPO would make them rich. Many left in disgust.[Office Wars 1 - Claris and the Origins of Apple’s iWork]Microsoft Becomes an Applications Company: 1985 - 1989.At the same time, Microsoft’s graphical Multiplan for the Mac--which ended up being combined with the Chart app and renamed as Excel in 1985--became a huge seller for Microsoft. In contrast, the textual DOS version--which retained the Multiplan name--couldn’t compete with the top selling Lotus 1-2-3 on the PC side.Two years later in 1987, Microsoft’s deal with Sculley expired and the company released Excel 2.0 for the PC, along with Windows 2.0, which copied more of the Mac desktop, includin