Friend or Foe: How Apple Is Forcing Microsoft, Amazon, Google, and AT&T to Raise Their Game
Apple’s increasing overlap with other technology companies—including mainstays of the Seattle and Boston scenes—is one of the biggest business trends of the year. It doesn’t matter whether you are the world’s biggest software company (Microsoft), a Web search and advertising titan (Google), an online retail giant (Amazon), a wireless carrier (AT&T), a digital music startup (see this story on Seattle-based Melodeo), or a mobile advertising network (Cambridge, MA-based Jumptap): Apple is now moving in on your turf.
I’ve been talking with a number of techies about this tangled web and its implications for innovation. “What’s really interesting is the fact that everybody is sort of co-dependent and sort of competing,” says Steve Hall, managing director of Seattle-based Vulcan Capital. “Where companies start and stop is getting blurrier. AT&T is a network and a carrier, but it’s also trying to push specific devices to gain market share. Apple is a device maker and also an [operating system] and software maker, but it’s dependent on a network like AT&T.”
This is a relatively new phenomenon, says Hall, an avid iPhone user and longtime technology trend spotter. “In the pre-iPhone days, LG made my phone—who cares? That was decoupled from who was the software provider,” he says. But now with Apple and Google getting deep into the device market and controlling what’s in the mobile platform, “that has loosened the grip the carrier has had on the consumer choice,” he says. That doesn’t bode well for carriers.
A couple of new developments this week involve Microsoft, Google, and Amazon in particular. For one, there’s a rumor (floated in BusinessWeek) that says Microsoft and Apple are in talks to make Bing the default search engine on the iPhone, instead of Google. Whether or not the alleged talks go anywhere, it’s a very interesting premise, given that Apple and Google are increasingly butting heads in smartphones, mobile advertising, and digital music. (Interesting to note that former Genentech CEO Art Levinson, an Apple board member, left Google’s board in October, following Google CEO Eric Schmidt’s departure from Apple’s board last July; I wonder how long Al Gore can stay involved with both companies.)
Bing is already available on the iPhone as a downloadable app, or through its website. But the rumored partnership would boost Bing’s profile immediately, and would probably require users to change the search setting to Google (if they want to). One anonymous source with knowledge of Apple was quoted in BusinessWeek as saying, “Apple and Google know the other is their primary enemy. Microsoft is now a pawn in that battle.”
Meanwhile, Amazon announced today it is inviting software developers to create applications for its Kindle device, through a new development kit. That’s right, Amazon is going to offer apps (it calls them “active content”)—like games, puzzles, and restaurant guides—in its Kindle Store later this year. This sounds a lot like how Apple encourages developers and consumers to congregate at its iPhone app store.
Amazon’s strategy makes sense in light of the fact that Apple is slated to make a product announcement next week, widely rumored to be a new tablet computer that could be a formidable Kindle competitor, in that it could be very easy for consumers to use as a digital book reader. And as the Consumer Electronics Show demonstrated a couple weeks ago, laptops, netbooks, and e-book readers seem to be converging toward a merged device for entertainment that—largely because of the iPhone’s success—may well have a tablet-like form.
The Amazon news underscores the importance that tech companies are placing on challenging the monopoly of apps and users that Apple has amassed with its iPhone and iTunes app store. “The phone is shaping up to be a much stickier platform [than the Web],” Hall says. He thinks Google’s Android operating system and apps will “get there” in time, because of the platform’s openness, but Google’s phone, the Nexus One, has a lot of catching up to do.
As for Bing on the iPhone, it’s potentially a big deal, Hall says. And it’s not really about mobile search versus Web search. “These are all computers. What you’ve really got is a question of search market share via certain browsers,” he says. “This is a deal that would give someone else [Bing]… a huge growth vehicle from a search standpoint.” And where it could hit Google hardest would be location-based ad revenues.
Then again, some iPhone users clearly will not be happy if Bing is the default search engine and they can’t change it. Which might help Google’s Android gain some market share over the iPhone. And around and around we go.
Things were certainly simpler in the Mac vs. PC, Google vs. Microsoft days. But more competition is almost always good. Let’s hope Apple makes it all worth our while in the end.
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