Brian Caulfield over on Forbes has asked the question: will Android crush iOS similar to the way the Windows PC crushed the Mac? He is looking for discussion, ideas and opinions on the topic. Here are my thoughts on the subject. As background, some of this is similar to what I discussed in a previous piece, discussing how new is the tablet market.
Part of why the smartphone market is shaping up differently is that it started out differently from the PC, and it started in a different technology environment. People like to think that the “personal” part of Personal Computer means that the PC got its success in the home for personal use, and that price was the deciding factor in favour of Windows PCs vs the Macintosh. The PC as we know it, though, didn’t just have the Mac to contend with. It got started during a time where there were dozens of other “personal” computers running a variety of operating systems. What really got the ball rolling was a combination of 3 things: IBM putting their name on the box, and the presence of Lotus 1-2-3 and Wordperfect. The PC really got its start in the corporate world, starting in the late 1980’s and into the early 1990’s, before the advent of the Internet and the widespread adoption of the PC into the home. IBM made the PC a legitimate piece of corporate computing (you couldn’t lose your job by recommending IBM back then). As people started to use the machines at work, they started to see possibilities at home. The advent of Windows and the rise of the Internet made the PC more useful than just for documents and spreadsheets, and since most people used a Windows/DOS PC at work, that’s what they bought for home. Until that point, the PC didn’t have a significant presence outside of the office, simply because there wasn’t a great answer to the consumer question “what would I do with it?”.
Smartphones, like the PC, also started as largely corporate devices, mainly because the first versions of them were basically the merger of the PDA and the phone, with e-mail added to the mix. The origins of the market go back to 2000 when the first Symbian phone showed up. From there, things diverged. In North America, we saw the rise of the Treo, which was supplanted by Windows Mobile, which gave way to Blackberry. Globally, Symbian took the lead and hung on, with the others playing catchup outside of the US and Canada. During this time, you rarely saw smartphones being used by people for personal use. In North America, people used Blackberries, which were adequate as phones, had excellent e-mail support (including enterprise integration with Blackberry Enterprise Server, something unrivalled by Palm and Windows Mobile), good security and integrated these features well. However, the data plans to support them were pretty expensive, and as web browsing tools, they were a bit clunky. There were 3rd party apps for Palm and WinMo, but few if any for Blackberry.
Both iOS and Android have enjoyed tremendous success, but unlike the PC, that success didn’t start in the corporate world. Their growth and user base is largely retail consumers, and consumers enjoy and prefer a great deal more diversity than your typical business. Corporations are driven, in part, by availability of resources and trained staff. The presence of the PC and Windows in many offices in the early days of the PC meant that you had a better chance of finding someone with that experience than other systems, including the Mac. That starts a virtuous circle: companies see that it’s easier to find Windows-trained people, so people get trained on Windows to have a better shot at jobs, which makes the potential employee pool with Windows experience larger, and so on. It was the same thing with the mainframe: yes, there were other computers around, but for mainstream work, you bought a mainframe because that’s where most of the people with training were, and where most of the software a company needed existed. Even then, the mainframe never enjoyed near-complete dominance of the computing landscape the way the Windows PC has.
So, will the smartphone market evolve the way the PC market did, with one platform almost completely dominating the landscape? I suspect that’s unlikely because it is still largely driven by consumers, and not corporations. Unlike other consumer products, the PC is an anomaly in terms of how the market developed. Consider any other product category, and name a company that dominates it to the same extent that Microsoft dominates the desktop and notebook world. The only example that comes to mind is the iPod and the MP3 player market. No one in the automotive industry, media player industry (CD, DVD, Bluray), game consoles, kitchen appliances, furniture or clothing even comes close to owning 50%+ of a mature market, let alone nearly all of it. In the car industry, the best that any car make did was GM, which owned 52% of the US car market at its peak in the late 1960’s. I wouldn’t count the tablet market just yet, simply because it is too new, and it’s too early to tell how that market is going to shape up.
The other reason, at least for the time being, is that Apple is leading the market at the moment, not in terms of sales, but in terms of direction. Apple has an outsized influence on the market and what people expect from a smartphone, and appears to be the gold standard in the minds of consumers. Android may be leading the way in sales, but it isn’t the one setting the expectations for other smartphones. Both RIM and Nokia have basically lost whatever leadership position they had in the market last year, and now Nokia has effectively abdicated what they had left to Microsoft. This influence from Apple is extending beyond retail consumers, as the iPhone is enjoying interest from corporate users in a way that Android doesn’t appear to have captured yet.
There are other factors at play, like the barriers to people switching from iOS and Android, specifically having to repurchase their apps and some of their content. It isn’t that people won’t rebuy their library of apps and such: consumers replaced other libraries of content wholesale, and multiple times (e.g. vinyl to cassette to CD to downloaded music). But they only do that when the new platform is substantially better, and the switch from iOS to Android isn’t really “better enough”. Switching between Android and iOS has similarities with home video: people happily upgraded from VHS to DVD, because the improvement in quality was significant, but the next upgrade to Bluray hasn’t gone as hoped, simply because the difference isn’t big enough for most people. The image quality of the DVD is still good enough. Back to smartphones, some will move, because of costs to upgrade, but don’t expect a lot of movement for the time being. Once the market starts to near saturation, I would expect that the share numbers will settle down as people pick their vendor and stick with them for a while.
For now, it appears that the smartphone market is going to progress and develop more like other consumer products. It appears unlikely, at least in the short and medium-term, that one platform is going to simply own the market. What will probably happen is the weaker players may get shaken out, and we’ve already seen the effective demise of Symbian with Nokia switching more-or-less to Windows Phone 7. HP will be on its own with WebOS, so I wouldn’t be betting a lot of money on that one, given that competition for app developers is hard, as RIM is beginning to find out, and the user experience simply won’t be an order of magnitude better than Android or iOS. I fully expect RIM and Blackberry will be the next to go, and my guess will be they will move to Android.
So, unless something changes radically with either Android or iOS, I expect that we’ll see both as significant players in the smartphone market as well as the tablet market for a few years.