Apple vs. Google: Is it déjà vu all over again?

Since the mid-1980s it’s been Apple vs. Microsoft. Windows dominated and prospered while Apple and the Mac survived. Barely. That was then, and this is now. Today, Apple is worth more than Microsoft, and the Mac, iPod, iPhone, iPad have a monopoly on mind share. Where it was once Windows vs. the Mac, now it’s Apple vs. Google, or, more accurately, Android smart phones vs. the iPhone. Is it déjà vu all over again? Almost. But not quite.

None other than market prognosticator extraordinaire Henry Blodget (yes, that Henry Blodget) sees the handwriting on the wall. Rather, he sees This Android Chart Should Scare The Bejesus Out Of Apple.

Blodget delves into the history books to reveal the following (except for those pesky facts that he so often ignores):

Apple invented an amazing new product (the Mac) that revolutionized the PC industry.

Except that the Mac almost failed, Steve Jobs was booted from Apple, and what Apple wrought didn’t hit businesses or homes en masse for many years. So much for a revolution.

Developers and consumers went bananas

Except that they didn’t. The Mac wasn’t a hit for years after its introduction. Apple had a hard time convincing developers to write software for the Mac. Customers didn’t go bananas, either. The Mac’s market share peaked at barely 15-percent, less than a decade after launch.

Everyone concluded that Apple was going to take over the world

Fine, except that nobody concluded that Apple was going to take over the world with the Mac (except maybe a few insightful Mac users who figured the graphical user interface might). Remember, Steve Jobs lost his job after the Mac didn’t take off.

Apple insisted on controlling every aspect of its product—from hardware to software to distribution—instead of opening up the platform and trying to achieve ubiquity

As if licensing the Mac OS to other manufacturers would have saved Apple. Apple cut a deal with clone makers to sell more Macs, and almost went bankrupt in the process. Clearly, that strategy wasn’t right for Apple. But, yes, Apple likes control. Based on current market capitalization, cash on hand, market share, I would say that strategy is working well.

A much-less-loved competitor (Microsoft) copied Apple’s software (badly) and sold the software to every PC vendor who wanted it

OK.

Developers went bananas about the size of Microsoft’s (inferior) platform

OK.

Microsoft took over the world

OK. Though there are other reasons, too. Apple was an incompetent one trick pony back in the early 1990s. Microsoft already had a monopoly on OS market share. But still…

Apple was relegated to a niche market and left for dead.

OK. Now you see where Blodget is going with his déjà vu all over again approach, right? Substitute Microsoft with Google and see what happens. Same thing? Almost. Not quite.

Apple has invented an amazing new product (iPhone/iPad) that has revolutionized the industry

OK, though he comfortably failed to mention the iPod, the iTunes Store, the App Store, and the fact that iPad competitors, so far, are few and far between. But, OK, go on…

Developers and consumers have gone bananas

OK.

Everyone has concluded that Apple is going to take over the world

I don’t remember reading that anywhere, but I understand the sentiment. In fact, Apple’s Steve Jobs stated, when he introduced the iPhone, that their initial market share target was 1-percent of the annual cell phone market share. The iPhone might have 3-percent market share now, so that’s hardly “going to take over the world,” is it? Apple tends to get a larger mind share than market share.

Apple is insisting on controlling every aspect of its products, from hardware to software to distribution, instead of opening up the platform and trying to achieve ubiquity

If by ubiquity, Blodget means dominant market share, then Blodget does not understand history or Apple. Apple has never, ever been much for market share, with the exception of the iPod and iTunes Store, both of which have a commanding share, mostly born from an excellent product mix, ecosystem and wholly incompetent competition.

If Apple wanted more market share wouldn’t a huge drop in price be the right step to take? How would AT&T’s already creaky network handle customers if Apple’s iPhone market share doubled?

A much-less-loved competitor (Google) has copied Apple’s software (badly) and given the software away for free to every phone (and, soon, tablet) vendor who wants it

Now we’re into differentiation rather than a repeat of history. Google is not Microsoft, which profited handsomely from Windows market share dominance. It made Microsoft rich beyond imagination. Even with Microsoft’s continued dominance of operating systems in the PC world, Apple and the Mac have prospered and profited handsomely, even owning the above $1,000 market segment for PCs. High revenue. High profit.

What is Google’s business model with Android? There is no revenue stream and no profits for Google, save some indirect (and increasingly obtuse) potential with mobile advertising. Android disrupts the smart phone market, yes, and is especially damaging to the old guard of Nokia, Symbian, RIM, and Microsoft. Yet, again, Apple prospers. How does Google prosper other than from the profit of smugness?

Developers are now going bananas about the size of Google’s (inferior) platform, Android

Oh, only if it were true, Henry. There is a huge difference between Microsoft’s Windows platform vs. Apple’s Mac back in the day, vs. Apple’s iPhone ecosystem today. The two are not equitable in any fashion.

Developers prosper with their wares on the App Store. With Android? Not so much. Customers flock to the App Store and lay their money down. With Android? Not so much. Customers stand in long lines to buy the iPhone and iPad. Android products? Not so much.

What’s next, Henry?

Google’s Android will take over the world

I’ve already said that will happen. Mostly. Cell phone makers get Android for free, so what’s not to like? However, cell phone makers face the same trouble that plagued Windows PC makers. How can they differentiate their products if the mobile OS is the same? Dell, HP, Sony, Toshiba, Lenovo, et al, tend to compete on price, and, as history reminds us, that’s not where Apple plays. Apple loves cool products that are well integrated—and the company loves revenue and profits (not necessarily in that order).

Most 21st century cell phone makers have Google’s Android, yes, so how do they compete with one another? Hardware. Low prices. Low profit margins. Apple will compete and prosper as it always has.

Apple will be relegated to a niche market again and left for dead.

Except that didn’t happen then, it’s not happening now since Apple is prospering, and it won’t happen in the future, either. But I understand the analogy and the sentiment. Unfortunately, Henry Blodget, who apparently is not a student of history, is succumbing to the inevitable rule of what happens to those who don’t study history.

Don’t scoff.  Back when Apple introduced the Mac, no one would have given Microsoft a snowball’s chance in hell of toppling it.  And look what happened.

Yes, what happened back then? Microsoft was already on top of Apple. Today, Microsoft is dying a slow death, drowning in profits, yet drowning all the while. Remember, Henry, when Apple introduced the Mac, Microsoft already dominated the PC OS market. All the Mac had was mind share; not market share. Microsoft had that. Always has. Probably always will. At least, with what we know as PCs. How is Microsoft doing in the smart phone market, or the burgeoning tablet market?

What of Google’s Android vs. Apple’s iPhone? Blodget to the rescue:

…developers are wholeheartedly embracing the Android platform. This is because the Android platform is rapidly building a global user base that rivals Apple’s in size.

Is this déjà vu all over again? Blodget seems to think so. The trend is clear. Barring some crazy change in the landscape, Google’s Android OS will be the market share leader by the end of 2010 (units), but clearly Google is the loser in revenue and profits (none), and Android only disrupts the smart phone market for Microsoft, RIM, Symbian, and others. But not for Apple.

How does Apple prosper? By doing what Apple does best. The strategy of building tightly integrated hardware, software, and ecosystem worked very well for the Mac, iPod, iTunes Store, iPhone, App Store, and now iPad yields revenue growth, profit growth, and growing customer satisfaction. Google and friends will have to compete very well on all fronts to relegate Apple’s iPhone to niche status. Unlike the Microsoft vs. Apple wars of yesteryear, it’s not déjà vu all over again.