You're only supposed to blow the bloody doors off
Saturday, January 7, 2012 at 11:14AM I find it interesting that so many commentators seem to be equating Android market share with iOS failure and doom. I suppose it's because, to their eyes, the "last time around", Windows won because it took 90% of the market, and because Apple refused to license its OS to third parties.
If this is indeed the worry, then it's woefully off-target, and betrays a deep misunderstanding of what happened back in the 90s. The simple truth is that Windows "won" because it did something that no other OS had been able to do to the computing industry in the 80s: it defined what a computer was in the eyes of 90% of the market.
Let's take a look at what the computing industry looked like in the 80s. If you wanted a home computer, you could choose to buy, say, an Atari ST, or an Amiga 500, or a Sinclair Spectrum, or an Amstrad, or a Tandy, or even an IBM PC or an Apple Macintosh if you had the budget. Each of these ran an OS built by the manufacturer (mostly), and the OS your computer shipped with was likely the OS it remained with. The idea that you could, or should, be able to take an app from your ST and run it on your Mac was ludicrous, despite the fact that they were based on the same underlying chips, and could read each others disks.
If you read my previous article, this situation should sound remarkably like the mobile industry in up till 2007.
Now, let's look at what happened to the computing industry in the mid 90s: Microsoft released Windows 95. Its wild success homogenised the market, and within a couple of years, every computer ran Windows. Why? Because Microsoft introduced most of the world's population to a modern concept of "computing", and it looked like a button saying "start".
Microsoft didn't make its own computers, so had to license its OS to manufacturers in order to get its product in front of users, but here's the key point: the OEMs shipped what Microsoft gave them. MS didn't create Windows as a way to let Dell build its own OS, it created Windows in order to own the idea of computing. Dell didn't ship Dell OS, it shipped Windows. So did HP. So did IBM. So did everyone. MS retained an immense amount of control over its platform, in order to ensure that its users would recieve a consistent, unified experience of computing, and would insist on only purchasing computers that provided that experience.
Microsoft redefined what the computer industry was with Windows 95, in that it took a previous idea that had traction (you buy a computer, it ships with its own fixed OS) and flipped it (the version of the OS isn't tied to the hardware you bought, and your next machine feels exactly like your current one).
This is precisely what Apple did, and is doing, to the mobile industry.
The only difference between then and now is to do with how Apple and Microsoft chose to make money. A Windows license costs far less than a PC, and costs more to build and maintain. Software isn't cheap: You don't get economies of scale with software, unless you sell a boatload of them. Microsoft didn't make its own PCs, so it had to ship volume to become profitable. That's why market share mattered for Windows, that and the fact that, in order to turn the industry, MS had to "own" computing.
But make no mistake, market share was won in pursuit of profits. Android has market share, but how much profit is Google making from it? Market share is a meaningless business metric unless it's bringing in cash, and Android could have 100% market share but still make no profit for Google.
Compare with Apple's route to profits: It sells its own hardware, has an insanely well-tuned supply chain, and is simply gobbling up the cash in the market. Share doesn't matter when you make your own incredibly profitable hardware, and when you've locked up the supply chain so nobody else can hope to be as profitable.
And here is where the Android = Windows comparison finally breaks completely. Imagine a world where Microsoft had launched Windows 95 on its own hardware, not licensing it. Windows is still insanely successful (it's still Windows, after all). Suddenly, the PC industry is going to go out of business unless it can sell hardware with a comparable OS to Windows. What happens? Dell, IBM, Atari, Commodore et al turn to Linux. They can use Linux to build their own Windows-like OS, and remain competitive. So they do that. And Linux fragments. And nobody loses to begin with: Windows PCs are premium products, Linux knock-offs sell to those that don't know any better.
For a while, the Linux PCs are far more popular than the "premium" Windows PCs, despite the fact that Linus makes not a cent in profit from any of those PCs that run his OS.
But eventually people realise that Linux is just lipstick on the pig that was the "force them to upgrade the hardware" model that dominated the 80s, and that the real revolution is that Windows is a "computing platform" that grows as they grow, instead of the siloed "development platform" that the manufacturers are using as a stick to sell hardware. The truth is that there is no "Linux Platform", only old computers running a Linux-derived OS.
And all the while, Microsoft can't hear anyone say they're losing over the sound of the cash registers.
Of course, that didn't happen, and that's why the cries of "here we go again" are simply bullshit. What happened is that MS dominated the computing industry for a over a decade. And then, well, then it found out what happens when your profits are directly proportional to market share.
Microsoft's profits relied on manufacturers considering them the only game in town. Apple's profits rely on nothing other than continuing to make something people that want.
And Apple has a ten year head start on defining what people want.
