The premise, from Preston Gralla in Computerworld:
Apple, Google and Microsoft are locked in a three-way struggle for industry dominance, competing to varying degrees on hardware, computer and cell phone operating systems, applications, entertainment, Internet search and more. Today, Google owns Internet search, Microsoft owns operating systems and applications, and Apple owns high-end hardware and entertainment and media devices.
Which will thrive? All are prospering, yes, but which company will thrive in the future? The difference is that Google is a one-trick pony. Advertising (via Google’s search engine). Microsoft prospers on past spoils, Windows and Office. What of Apple?
Apple, far more than Microsoft or Google, has a business model somewhat akin to that of a Hollywood studio: It requires blockbuster hits in order to bring in big profits. When Jobs leaves, those hits will stop coming.
So, let me get this straight. If Apple’s string of hits stop, it’s because Steve Jobs is gone? Forget about the resurgent and highly profitable Mac. Forget about the iPod or the iTunes Store. Forget about the iPhone. Apple will be brain dead when Steve Jobs leaves the company?
The Hollywood analogy is interesting, but not apt. Blockbuster movies make big money quickly—in theaters first, then DVD sales and rentals. A hit movie’s initial revenue gains are lost over time, usually less than a year. Apple’s products continue to grow both revenue and profits and market share over time. How is that like a Hollywood studio? It’s not.
Who will thrive?
Of the three companies, Google is best positioned to thrive in the future. It has a near monopoly on Internet search, the core of the world economy’s greatest growth engine. That gives it both an excellent base to expand upon, as well as a massive war chest it can depend on to fund new ventures.
So, let me get this straight. Google will thrive because it has a monopoly on search advertising, and a massive war chest. Didn’t Microsoft have a monopoly with Windows and Office? And a massive war chest? How’s that working out?
Since when did “the core of the world economy’s greatest growth engine” become search advertising?
Apple is the most diversified of the three companies, and has an even more massive war chest than Google or Microsoft, but will go into a long, slow decline (sounds like Microsoft) after CEO Steve Jobs leaves? What about Microsoft’s fortunes?
Unlike Apple, it doesn’t need big hits in order to grow. With a stranglehold on operating systems and productivity applications, and with solid enterprise tools, it will grow steadily. Google won’t be able to break its near monopoly.
Yet, both Windows and Office are in decline already, Windows Mobile is in rapid decline, and Microsoft’s other ventures have only lost money through the years, and continue to lose money. By the way, Google is an advertising company that runs a search engine. How would they break Microsoft’s so-called monopoly in a market segment where they don’t even complete against each other? The only way to do that would be to give away competing software for free. How’s that working out?
Microsoft won’t unseat Google as the Internet search leader, Bing shows that it can make plenty of money in that business.
Since Microsoft has never made any money in search, when and how will it show that it can?
Gralla’s conclusions are totally lame.
I can only conclude that authoring nearly three dozen books has depleted Gralla’s ability to think and write clearly. What’s fortunate is that he is doing so at a time when Computerworld’s editors don’t need insightful analysis, but are content with occasional hit-whoring articles to drive up page views and advertising impressions.