The other day I read an article on Gizmodo entitled, “Why the iPad can’t lose.” The thesis was simple enough. Apple was Gillette, the iPad was the razor handle and the apps and the advertising were the razor blades. Gillette sold the handles at a loss and made money on the proprietary blades. Apple can afford to sell the iPad at a loss and make money on the apps (30%) and iAds (40%) instead.
The article was compellingly written and questioned how much longer manufacturers of the various Android tablets could afford to race towards razor thin margins while Google made all the money from its Android Market. It also spoke of Amazon’s Kindle Fire as the only real threat to the iPad for its similar business model.
But, after reading it, I could not help but feel that the analogy was flawed. Razors have not evolved much since the dawn of time, from the cutthroat razor to the safety razor in 1875 and then King Camp Gillette's disposable blade money-making paradigm shift in 1901. On the other hand, Mobile phone OSes have evolved enormously and continue to do so.
Remember the day when there was a choice of three camps for your mobile smart device, Symbian, Palm and Windows Mobile?
It is not like Microsoft didn’t have the money to invest in Windows Mobile, but when HTC tried to skin Windows Mobile with Sense, remember the headlines? Well, maybe not. But essentially all that we journalists had to write about was how Microsoft’s watertight contracts meant that the Windows logo had to be on the top left of the home screen, no matter how HTC wanted to innovate and spice up the user experience, and boy did the UI need spicing up.
Symbian was not exclusive to Nokia. Sony Ericsson used it too and to great effect in the heyday of the P800 and P900 and as recent as the Vivaz Pro of mid-2010. Samsung used it in quite a few of its phones too. They treated it as a razor handle, one that could be used and re-used, but it flopped. Despite a €500 million loan guarantee to the Symbian foundation from Nokia, Symbian failed to evolve. The death of the platform is threatening to take even the once mighty Nokia down with it.
The €500 million price is half of what HP paid for Palm (€939 million) and what did that accomplish? Zilch.
Intel tried to create a mobile OS in Meego. Nokia tried its hand at Maemo. Both failed and merged into Moblin which died stillborn despite some promising prototype hardware such as the Atom-based LG 990.
The point is, giants such as Intel, Microsoft, HP and Nokia failed to innovate the mobile OS. The razor paradigm simply does not hold. Innovation in the razor handle is still very much alive.
Remember that small Canadian upstart called Research in Motion that took the world by surprise and turned a backward, smartphone averse country into the leading adopter of mobility in the workplace?
Today RIM is facing the same fate as Nokia did a few years earlier. Its once unassailable lead in the smartphone sector has been undermined, arguably by the availability of 3G that made its centralized, bandwidth efficient model a moot point and sheer innovation on the other hand. RIM is trying to innovate and transition to the new Unix based QNX but, like Intel and Nokia before it, is struggling to convince developers and investors that it has a workable plan or a future.
No, tablet makers are not in a blind race to razor thin margins (pun intended) in creating a better razor handle only for Google to cream off the revenue from the marketplace. Rather, they know that they cannot go it alone and create a mobile OS that lasts. Nokia tried and failed. Microsoft tried and failed (and is starting afresh). Intel tried and failed. Palm tried and failed, and failed again with HP. RIM tried and is failing as we speak.
As long as Google can continue its breakneck speed of innovation with Android, the industry will be happy to rally around it and allow it its nice slice of app revenue as long as there is still money to be made on newer, faster, more powerful devices. It’s push towards mobile payments and RFID with yesteryear’s Nexus S, at least in the US of A, is one point; quad-core Tegra 3 in the Asus Transformer Prime today is another.
Perhaps the refresh rate is too fast for European and American users tied in on a two year contract, but for the rest of the world, it is a breath of fresh air. The Jokers in the pack are the forked Androids. Kindle Fire is one, and in China the Baidu Yi, Lenovo’s LePhone and China Mobile’s OPhone are all trying to break out of the Google app market lock-in.
Google is betting on innovating faster to make these forks unwanted by the user rather than locking the OS down through legal measures. Time will tell if this strategy works.
But it was at Google IO last year (the Honeycomb launch) that really showed how Google had designs for much more than just a mobile OS. The Android Open Accessory API allows the phone to interface with the real world, thanks to the Arduino board. Light bulbs controlled by Android, rooms and homes, even a giant room-sized tilting game board. The possibilities are endless.
While it might be true that the iPad cannot lose in a straight tablet battle, Google has inherited, no doubt partly through Eric Schmidt, the Sun Microsystems attitude of blue ocean thinking; of openness and how through tapping into the talent outside of the four walls of the office, great things will happen.
Sun’s mantra of the Network is the Computer is very much alive in Android, and as long as Google continues to believe in endless possibilities through openness, it will win. We all will win.