Subba’s Serendipitous moments

January 30, 2010

The Nexus One and iPhone – A clash of paradigms

Filed under: Uncategorized — Subbaraman Iyer @ 10:50 am

The media has been agog with news comparing the iPhone and Nexus One. Even before the battle broke out, I alluded to the possibility of they becoming rivals. Some have referred the ongoing battle as the title fight of the decade. It is easy to compare phone features, ease of use, cost of ownership, price, the “cool” factor and maybe even the choice of applications available on each platform and arrive at some tentative conclusions. Such analysis serve as a product comparison guide at best.

I see this as a fundamental clash of business models and a collision of paradigms. It is too early to predict winners.

Let’s begin at the beginning: 

Apple changed the business model in a dramatic way when it launched the iPhone. It wanted to control the user interface– something that the service providers were very reluctant to part with. More importantly, it insisted on a share of mobile subscription revenues which was unprecedented. It worked with only one operator in the US (AT&T) and chose specific  service providers in the rest of the world.

With cool features, it became the phone that everyone wanted. The App Store with close to 100,000  applications and over 2 billion downloads completed the iPhone  partner eco-system propelling it to unprecedented success.

Till date it sold over 55 million phones with high profit margins.

In all fairness, Google didn’t begin to build the Android platform to counter Apple or for that matter any mobile handset player. It started off to protect its core business – advertising and not to make money off either the hardware or the software. To this end, it did the exact opposite of what Apple did – it offered to split the advertising revenues with the carriers. It put the entire code on open source so that as many handset manufacturers can use it. And more importantly, it even ceded control of the user interface.

I would even go further and say that because of Apple’s insistence on strict adherence and its growing clout pushed  both the cellular operators and the handset manufacturers into Google’s arms. Google’s flexibility and “open approach” just made the embrace more warm.

Let’s analyze how this battle will play out:

Will the iPhone users (the 55 million users) switch to Nexus One? Unlikely. Well, that’s not Google’s target market for sure. Google is more likely to target the remaining 3 billion users. Google may well become the choice of the masses with Apple comfortably perched at the top end with its cool design and premium price points.

Apple will continuously leverage on its strength and popularity of its killer apps like iTunes. Yet it may have to re-jig its other native applications like iPhoto or the iMovie for the iPhone environment.

The Nexus One and the Android platform is built on simplicity and completeness of cloud integration and cloud based data applications. The synching applications are all great, happens in real time and the cloud applications will just get better by the day with speech recognition getting ubiquitous for one. Apple’s cloud applications are still in its infancy.

Google will have no choice but to keep its popular apps on the iPhone. Google would not want a Microsoft product on the iPhone and open up another battlefront.

Google would have no choice but to build a partner ecosystem to build applications and services for music, books etc. and hence a Google AppStore is inevitable.

Conclusion:

The reason that I call this a collision of paradigms and a battle of the business models is because of the underlying premise of the future:

Is the device primary with the web as the “add-on” – the Apple’s thesis and its reasons for its unprecedented success?

Or

Is the web and the cloud providing robust and rich data services, social network awareness the primary factor with the device as the “add-on”?

That indeed is the title fight of the decade. Not the iPhone or the Nexus One. At best they serve as proxies for their respective constituencies.

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3 Comments »

  1. Which is more important, the cart or the horse? Neither. Both are equally important because it’s relational. It’s a symbiosis. In order for the cloud to remain relevant hardware will need to lubricate access to such a concept as a seamless experience and when the cloud advances an becomes more and more necessary then the handset will advance. One pushes the other forward as both facilitate the evolution of the other.

    Comment by Luke — January 30, 2010 @ 12:18 pm | Reply

  2. […] much as the media portrays this as yet another battle between Apple and Google, I do not see this way! The entire market for mobile advertising is less than U.S. $ 500 million […]

    Pingback by Is Apple rewriting history? « Subba’s Serendipitous moments — April 14, 2010 @ 12:27 pm | Reply

  3. […] One more step in the paradigm shifts between Google and Apple. The earlier ones are written about here. […]

    Pingback by Google’s App Inventor – philosophically different, pragmatically questionable | Expanding Thought — March 10, 2011 @ 5:09 pm | Reply


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