Post the maps fiasco, Apple has been under some heat – and Google’s alacrity was very natural and expected. Symbolically, Google is now churning better Apps that work with the Apple eco-system thereby challenging the status quo of the Apple Mobile eco-system as the piece de resistance of the Mobile world. Google is thus taking Apple out from its biggest strength eating into it – as like a worm- going inside-out.
From the Google perspective, Google is putting its resources at apps that work on the iOS platform as well and there is statistical evidence that Google strategy is working. Sample the AppData which now records YouTube and Google maps as the No.1 and 2 iPhone apps.
Now then- it puts Apple on the backfoot then? In a pre-2008 Internet world dominated by Google, Apple’s app experience based strategy was a major departure in terms of branded apps, app publications and “there’s an app for that approach”. Suddenly Internet was not a passive media – it was rich content media with immersive experiences designed by publishers for the users. Advertisers and Publishers saw Apple as the challenger in chief to an Internet world to which Google search was the prominent portal. Android coming from behind to take over Apple’s App domain is something that the Late Steve Jobs or the current Tim Cook wouldn’t have wanted. Unfortunately that is how its seems to be panning out now.
However, from a longer perspective – it aint much of anything really – The battle is not so much between Google and Apple as much as Open Source and Propreitary. And Apple has a lesson or two to take home in terms of the amount of control of its walled garden that it must forego, choosing its strenths in terms of device based service/experience integration.
As quoted in an earlier post – Does Apple need to change course its philosophy of exclusivity?
To maintain its position, the company will have to focus more on giving its devices superb access to content it doesn’t control and hasn’t approved. Apples’ dogged and quixotic quest for control on the eco-system, my lead it to block more realistic and better solutions that emerge on the open Internet. There is leaf out of the book of Amazon that Apple could take a learning from (managing the eco-system). Apple must learn and execute to collaborate – rather than whole control.
There is no win-all. You win some,you loose some. The timess- they are changing!
In the early 1980s, the Macintosh faced an onslaught of competition from an army of PC makers whose products ran Microsoft software. The fight did not end well for Apple. In a few years, Microsoft all but sidelined Apple, and the company almost went out of business. Can Apple, which insists on tight control of its devices, win in an intensely competitive market against rivals that are openly licensing their software to scores of companies? It faces that challenge not only in phones, but also in the market for tablet computers, where the iPad is about to take on a similar set of rivals.
For Apple which has lived the part of the bitter PC history, the stakes are huge, as the mobile computing market could prove to be larger than the PC market ever was. Having a tightly controlled ecosystem, which is what Apple has, is a large short-term advantage and a large long-term disadvantage. The competition this time is more formidable: Android, Windows Mobile, Blackberry and (even) Nokia. For now, the smart phone market is growing so rapidly that the rise of Android has not necessarily been at the expense of the iPhone. That will change as the market matures.
Apple’s stock has soared nearly 50 percent this year, and touched all-time high of $314.74. But the rise of Android has been both sudden and unexpected, and its ascent highlights some of the advantages of an open approach. There is much more rapid innovation taking place in an open environment. For every new version of the iPhone, Android has 20 odd smartphones ready to challenge Apple’s leadership mantle. That leaves little room for error at Apple. The company must continue to create hit products, as a single misstep could give Android and other rivals an opportunity to make inroads and steal market share.
Also, as the number of people with Android phones grows, Android will grow more attractive for app developers. For now, Apple’s App Store, with more than 250,000 applications, enjoys a large advantage over the Android Market, which has about 80,000. And those numbers don’t tell the whole story. Apps made for the iPhone tend to be of better quality, are more frequently downloaded and on average are more profitable for developers. But that edge may not last, especially as many developers fret about Apple’s tight control over the App Store.
While the naysayers stack up, the view isn’t as dooming as it seems for Apple. For starters, Apple is the richest company in the technology industry. With $45.8 billion in cash, it can afford to invest heavily in research and development. Apple’s large early lead in devices and developers puts it in a much stronger position than it ever had in the PC market. And because it is one of the largest purchasers of Flash memory, which is one of the most expensive components of a smart phone, it has enormous economies of scale,
What’s more, the iPhone isn’t really fighting alone. The two other devices that run Apple’s iOS mobile software, the iPad and the iPod Touch, further strengthen the iPhone, because consumers like being able to access the content and applications they bought on iTunes and the App Store on multiple devices. Apple has sold more than 120 million iOS devices.
And while Apple’s personal computers were by and large technically superior to Microsoft-based PCs, they were also far more expensive. In the smart phone market, carriers, who play a vital role in distribution, have been willing to subsidize the iPhone so that its cost to consumers is roughly the same as that of comparable Android phones.
Bottomline: Apple may lose its overall leadership, but maintain a share of the market that could easily be in the 25 percent to 30 percent range at a very profitable level. Even that is enough to sustain a very large and very profitable business.
Apple reported a profit jump of 70% from last year, driven by strong sales of Macintosh computers, iPhones and iPad multimedia devices. This has taken the analysts by surprise who had underpitched on the numbers. The reported net income for the fourth quarter of $4.31 billion or $4.64 per share, compared to $2.53 billion or $2.77 per share for the year-ago quarter. Gross margin for the fourth quarter fell to 36.9% from 41.8% in the prior year quarter, while operating margin for the quarter decreased to 26.8% from 30.1% a year earlier.Net sales for the quarter rose 67% to a record $20.34 billion from $12.21 billion in the same quarter last year. International sales accounted for 57% of the quarter’s revenue. iPhone sales of 14.1 million were up 91 percent year-over-year, handily beating the 12.1 million phones RIM sold in their most recent quarter. Apple sold 3.89 million Macintosh computers during the fourth quarter, up 27% from the year-ago quarter. Apple sold 4.19 million iPads during the fourth quarter, which however, trailed estimates of some analysts who were expecting the company to sell about 4.8 million iPads during the quarter.
The striking thing about Apple’s numbers are that they are consistent northbound. This is perhaps also mirrored by the share prices. Analysts feel that Apple is not out of steam yet and the rise will continue through a good part of 2011. The factors that would aid the growth of Apple in the future 1 year horizon are the following:
1. Apple is looking to increase its distribution and tieing up with operators such as Verizon will only increase momentum of its iPhone sales. Already the iPhone is eating into a disproportionate share of the global smartphone profits.
2. Apple is building huge economies of scale across its iPhone, iPad and iPod and this helps keeping its costs low.
3. Apple is also able to drive consumer usage across various products. However they have kept the platform constant and its 120 million iOS users are a definite lot who keep coming back for more.
4. iPhone drives data traffic and that is sweet music to carriers who are willing to subsidize Apple products so that the user cost is roughly comparable to Android devices.
5. While Apple TV is taking its first steps, the Apple TV along with the iPhone (for smart computing), iPad (The cross between Laptops and Smartphones),iTunes, Music Streaming, Application Store, iOS, iPods (Multimedia devices), Mac Computers are beginning to forge a media network eco-system which fortifies the Apple Media, Web and Mobile proposition in a unique manner. Come to think of it no other competitor comes close to matching Apple’s scale across these range of devices and solutions.
However the question that nags is while the “Walled garden” approach has yielded great results for Apple, will it be enough to fight the “Open Source” juggernaut. Will Individual brilliance continue to overshine the Collective Enterprise-Open Source (Read Google). Sooner or later Apple will be at crossroads to question its Strategic imperatives and Organization philosophy.
From the gods of personal computing to almost bankruptcy and then being back as the god in Smartphones, Apple has seen the full circle and if the graphic below was to be believed, it is bound for a repeat of its downward spiral.
If you are ruminating disregarding the idea suggested hereby, heres more hard evidence about how vulnerable Apple is on the top:
2.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. Eventually, the Android user base will be a lot bigger than Apple’s. Scale and Threshold is the name of the game which could upset the “Apple”cart!
3. With the Open source, Android has faced problems in maintaining the sanctity of the platform against loosing out on a uniform user experience due to customization by its vendors. That would reduce the Android experience as a whole and is a negative against the Androids. However, Android is preparing to address that issue sooner.
4.It is believed that Apple can maintain its extraordinary profit growth merely by being a “premium” player–selling fewer devices than the Toyota of the smartphone world (Android) but maintaining a superior product and superior margins.
This is wishful thinking.There just aren’t that many premium buyers in the world.And the gap between the latest iPhone and the latest Android phones is closing.
Apple is possibly trying to counter it by tie-ing up now with CDMA operators that would give them access to markets which they had not touched yet. Also Apple follows an aggressive pricing policy.But the game it seems is likely to be in the “open” space more than Apple’s “walled garden”.
More than two large companies this is two different ideologies at war. Android seems to be getting ahead slowly here.
Guardian’s experiment with open source data has proven one thing quite clear that Public data is a growth media for an ecosystem to form. Public data on open source is a nutrient of a whole new eco-system and allow new things to happen. The key to monetization of the open systems in this case is building user centric apps which have a business model.
The applications build on the Guardian Open source platform is divided into three categories mainly differentiated by span of Guardian’s control and the revenue/revenue share model.
So then where is the money?
Guardian’s open platform gives API and Content Developers 3 tiers of access and 3 separate revenue models to choose from:
BESPOKE: Taking, Reformatting, and content augmentation with same access as that of Guardian. Allows custom access for licensing content and integrating rich applications. The revenue is a combination of sponsorship, media, fees, revenue share and downloads.
APPROVED: This involves taking the full Guardian article content, with an advert. Out of this Guardian keeps the ad revenue and the API developer keeps the rest of the page revenue.
KEYLESS: The API developer takes Guardian’s content and keeps part of the associated revenues. Thus there is free access to headlines,data,tags and meta data. There is no key required and partner keeps associated revenue from the page.
What this means for Guardian is that developers are able to access full content APIs on demand from Guardian with keys approved thus making the platform a place to do business with Guardian and engage its scale. Rapid scalability, reliability and performance are the core requirements.
To assist the developers, Guardian has the Microapps which is a third framework for integrating 3rd party apps into the Guardian platform. The Microapps helps developers integrate their solutions more easily and readily into the Guardian core and evolve the Guardian open platform to be the commercial future of the partners/developers.
Thus the open source platform would be instrumental for Guardian in terms of
• Moving away from content broadcast, and yet keep the growth engines running
• Partner engagement and open source contributions on journalism, data, software, applications, revenue and ads
• It would also support the developers and partners with data and APIs, scalability, reliability and speed.
Guardians enterprising effort build on open source is pretty much on its way to re-define media and thought behind media.
In times to come, media will need to evolve into a two way communication path and Guardian will be referred as a case study, as a pioneer of new media.
RIP, Print Media!
The proliferation of Digital and Social Media and Google have had an adverse impact on the print media by means of replacement.Communication is two way, immediate and Twitter has now added a dash of “conversation streams” to the news and print.
In this context, Guardian’s effort to move from being just a broadcast publisher to a platform and use content , search and open source to build a new business model around news and media is noteworthy. The transition from news and journalism to news, data, video, audio, content partnerships, innovation, conversation, comments, keywords, podcasts, recommendations, hashtags and live blogs is a case study.The bottomline is about Guardian’s evolution to a platform and not just a publisher.
This platform approach is about changing the perspective from “bringing the data and apps from the internet” to “enabling partners to build applications using proprietary content and services for all digital platforms”. The idea is “experimenting in combining the experience and knowledge of a large media network with experience, opinions and expertise of people who want to participate rather than passively receive content and news”.
Guardian’s open platform is thus its suite of services enabling its partners to build applications with Guardian. The platform has three parts to it:
Content API: A service for collecting and selecting content from the Guardian for re-use
Data store: A directory of useful data curated by Guardian editors.The developers can take this content of the newspaper as the raw material for building new businesses. This raw data is useful in profiling demographics and trends and data catalogues,
Politics API: Database of candidates, voting records, constituencies, election results and live data on election day. The data here is again freely available for use and analysis. Developers innovate on this data and develop interesting tools such as the voter power index for the recent British elections which lets the user know his vote’s woth basis his marginality and constituency size.
Thus Guardian has been making interesting use of Public data to make its own media eco-system and allow “open ssource” innovation to take over.The emerging trends point to change in public participation space aroud public data. Public data can create new economies, improve procurement processes and through evolutionary pressure in the marketplace increase the usability and user centricity of applications that access Government services. Guardian is stepping as a facilitator for consumers of these services to provide an environment where Consumers can get better and access to newer things, mediated by the ingenuity of the developers
Part 2: How the open source makes money?
Wikipedia goes with “Flagged Revisions”: Emphasizes on importance of discipline in crowd-sourced data
Crowd-sourcing to create an online repository of data/information has been a masterstroke from Jimmy Wales, the founder of Wikipedia! However, monitoring content in flow and validating data to be “clean” is key to building credibility. A little bit of censorship/discipline of data may actually favor Crowd-sourcing and content democratization!
Wikipedia, the online encyclopedia launched by American entrepreneur Jimmy Wales in 2001 with the idealistic intention of being an online repository of all human knowledge, announced this week that it would have to abandon one of its founding principles. To combat a growing amount of vandalism on the website, all entries would be edited before they go up on the site. Wiki announced this on August 31st and will conduct a pilot run over the next fortnight to assess the data validity, cleanliness on these lines.
Previously, any user was allowed to make – almost – any change to any entry: this was hailed as part of the democratizing power of the internet. But a sharp increase in false information – particularly in relation to people still alive – has forced a rethink.
How did the Wikipedia work before?
Wales has been feted as a brilliant business mind and social innovator for tapping into a popular impulse to add to public knowledge that few people knew existed, and even fewer publicly predicted.
Wikipedia still works largely by allowing anybody to login as a user and click on an “Edit this page” tab at the top of an entry. From there it’s simply a case of making changes and saving them, albeit according to a policy on “biographies of living persons”.
Any changes are then filed under the “Edit history” of the page, and the IP address – a numbered identity that shows where the change has been made from – is also kept on record. Pages that contain unverified information are highlighted.
Wiki introduces “Flagged Revisions”
The new policy is referred to as “flagged revisions”. It allows editors to adjudicate (mainly through reference to other news sources) on changes made to the pages of a living person. The flagged revisions will be rolled out by September15th,2009, and Wikimedia, the non-profit organisation that runs the website, will monitor users responses over the trial period.
A team of “experienced volunteer editors” will oversee amendments to such pages. “We are no longer at the point where it is acceptable to throw things at the wall and see what sticks”, said Michael Snow, chairman of the Wikimedia board.
And Mike Peel, its UK spokesman, clarified the intention: “Anyone can continue to edit these articles, but the work of inexperienced editors with less than three days’ experience will be subject to review by more experienced editors”, he said. “This is our attempt to create a buffer to ensure that editors do not commit acts of vandalism.”