Comparing Apples and Androids

Yesterday I gave you a taste Apple's seemingly unstoppable ascent during the past three years. I concluded the post with an attempt at a cliff-hanger and a promise to my booming readership that all would be resolved in today's post. Don't say I never did anything for you.

First, a bit of background for your edification. Steve Jobs unveiled the first iPhone in January of 2007. Since that time, the phone/ music player/ fashion necessity/ utterly touchable gadget has enjoyed an unimpeded rise to world domination... Maybe not world domination, but certainly domination in the smartphone market. Topping out at around 24% market share, the iPhone was by far the most popular smart phone and iOS was similarly dominant in the mobile operating system sphere.

This brings up a crucial distinction that is often overlooked. While hardware makers battle to promote their handsets, another, more important battle rages over mobile operating systems. The operating system is important because it determines what applications can be developed for and run on a particular phone. With so much parity between new phones from HTC, Motorola, and Apple, apps play a big role in differentiating the product in the consumer's eyes. What would the iPhone be without the hundreds of thousands of apps that run on it?

After a few years of unopposed dominance... enter Android.

Android mascot

Android is the open source mobile operating system developed by Google and other members of the Open Handset Alliance. "Open source" is a loaded term with a lot of subtle distinctions, but in this case it more or less means that the operating system is free for handset manufacturers and cell carriers to put on their phones. Top of the line operating system at an unbeatable price? Sounds good to me. Apparently a lot of handset manufacturers agree with me. Not only were more than 50 different Android devices unveiled in 2010, but over 300,000 individual Android devices are activated every day.

Why would Google spend money developing Android only to give it away for free? In order to answer this, we have to look at how Google makes money. Certainly you've noticed the text ads in the right hand column when you perform a Google search. The vast majority of Google's revenue comes from users clicking on those ads. Certainly nobody actually clicks on those, right? The graph below begs to differ.

Which brings us to Google's rationale for giving Android away for free. Google conveniently made its own search engine the default for the Android system. More searches means more $$$.

Android home screen prominently displaying the Google search box.

So far, Google's strategy has been remarkably successful. Andy Rubin, the Android team lead, has confirmed that the Android strategy is profitable for Google. Additionally, Android has surpassed iOS as the most popular mobile operating system. Android's app store still lags behind Apple's but continues its rapid growth.

You can see that a showdown between titans is inevitable in the mobile space--almost certainly the most important space in tech right now. Which is why acting Apple CEO Tim Cook's recent comments regarding Android are so provocative.

Earlier this week Engadget reported that Tim Cook described Windows tablets as "big and heavy and expensive." Of the next generation of Android tablets, he said "today they're vapor." As for Android, Cook said, "In net we think our integrated approach is better, rather than making the end user a systems integrator."

These are bold words from a company facing a company seemingly bent on world domination (Google) and a platform with an insatiable appetite for market share (Android). Not that he cares, but I've got a few words in response to Cook's analysis of Apple's competition.

First of all, the next generation of Android tablets is right around the corner. And this time, they'll be running the newest version of Android (dubbed Honeycomb) which has been optimized for a tablet-sized screen.

More importantly, I take issue with Cook's claim that the "unified" approach will continue to prevail. Granted, Apple has enjoyed enormous success by developing both the hardware and the software for their products under one roof. However, I think this is unsustainable. To me, Apple is saying that it can single handedly take on the majority of the rest of the technology industry. Google's software has proven functional and incredibly popular. Handsets from HTC and Samsung are approaching the iPhone's level of performance. Combining the two creates a more than credible challenge to the iPhone and its ecosystem. In order for Apple's unified approach to continue to succeed, they will have to outrun an entire industry that has been notified of the importance of mobile--the same industry that has closed most of the gap in the past two years.

If I were one to make bold predictions (and I am) I'd say that Android will continue to gobble market share. Consumers will continue to take advantage of the wide choice of hardware and carrier service available under the Android system. Developers will continue to augment the Android Marketplace until it reaches parity with the App Store. Sure, the iPhone will continue to be a popular platform and a popular product, but Apple's sole reign on top of the mobile world is coming to an end.