Consider for a moment Pat Benatar’s iconic song, ‘Love is a Battlefield.” Anyone who’s been in love knows the comparison. Likewise, anyone in business will tell you something similar. Business is war. And the battlefield of business is littered with dead or dying products and companies. To the victors go the spoils, right? Look at the battles Apple fights on many fronts.
Scratching The Surface
Apple’s Mac owns somewhere around 50-percent of the entire profits in the PC industry, a business segment which hasn’t been doing well as of late– while Apple has scoured up the majority of the profits.
What does that perch on the mountain top get Apple? More competition. Look at the dozen or so new Windows PCs on the market and how they resemble Macs; especially the new MacBook, an ultra-ultra light device that is little more than an iPad Air with a keyboard and OS X and Intel Inside.
PC competitors want a chunk of Apple’s growing profits from an industry segment which has been shrinking a few years. That example just scratches the surface of all the battles Apple faces by disrupting industry and competitor alike.
The original iPhone in 2007 didn’t have third party native apps. Steve Jobs himself insisted that all users needed were web apps; those that ran in a browser window, much like Google’s Chrome OS. Whether or not Steve Jobs and Google CEO Eric Schmidt conspired together to split the nascent smartphone business years ago (as some conspiracy theorists I’m familiar with seem to think), will be left to historians. The market doesn’t care.
What happened is obvious. Instead of web browser-based applications, which Google loves because the company derives revenue and profits from searches within browser windows, Apple fomented upon an unsuspecting world native applications which perform better, faster, and can do more than Google’s view of the world, lightweight browser apps.
To Google, it’s not enough to stream music, videos, and advertising. The company has stepped up efforts to stream applications over the internet in much the same way that apps run on the Chrome browser in a Chrome OS notebook. By pushing inexpensive plastic notebooks which run an anemic Chrome OS on the market, Google hopes to shake up the industry, throttle Microsoft’s comeback plans, and put a skid on Apple’s ownership of most of the industry’s profits.
Google’s mantra of pushing cheap notebooks on the left hand, and cheap, streaming applications on the right hand smacks of desperation. Wait. How can Google be desperate? Just as Microsoft lumbered along over the past 20 years basking in the profits of Windows and Office and completely missed the mobile device revolution at the hands of Apple, Google’s revenue and profits come from a technology segment with little growth; the search engine giant is king of a mountain which seems intent to flow into the sea of change below.
Google has spent tens of billions of dollars in an effort to diversify itself from the core revenue and profit engine but has met with failure after failure along the way. Just as Microsoft’s desperation to get back into the mobile pushed the company to deliver nearly best-of-breed apps for all mobile platforms, Google’s desperation to reign in Apple’s ownership of industry profits forces the company to give away products and services at or below cost simply to compete, all in the hopes that large enough numbers will aid revenue and profit growth in the future.
If love is a battlefield, then business is war, and those on the losing side become desperate, and take risks, regardless of the potential outcome. Even Apple did something similar just a few short years ago. The Mac was a stagnant 2-3-percent marketshare, so the company ventured into retail stores, launched a portable music player (Mac only), launched the iTunes Music Store which helped to thwart Napster and peer-to-peer file sharing. Those risks helped propel Apple to the forefront of modern mobile technology. Will Google’s recent risks to sell cheap notebooks and give away apps for free help stem the current that seems to flow only in the direction of Cupertino, CA?
Time will tell.