Inside Google's Android and Apple's iPhone OS as business models

Posted:
in iPhone edited January 2014
Google's Android offers a free software alternative to smartphone makers hoping to catch up to the iPhone. This article is the second in a series examining how Android stacks up in comparison to the iPhone as a smartphone software platform, looking particularly at the business model of each and how this affects users.



Articles in this series:

Inside Google's Android and Apple's iPhone OS as core platforms

Inside Google's Android and Apple's iPhone OS as business models

Inside Google's Android and Apple's iPhone OS as advancing technology

Inside Google's Android and Apple's iPhone OS as software markets



Android vs. iPhone: Restrictions vs security



Platform vendors, in this case Apple and Google, have to balance various factors to create a desirable environment for consumers. On one hand, users want a phone that works reliably and does everything they might want it to do without artificial restrictions or limitations put in place by the vendor.



At the same time, users also want a progressive platform that offers them new features as they become available and want to be protected from security threats such as malicious viruses causing data theft or loss, annoying adware, spyware and spam.



The problem is that adding lots of new features tends to result in bloat, slow performance, and the inadvertent introduction of bugs, while imposing vigilant security measures results in a certain amount of inconvenience and limitation for users. Balancing these factors is an engineering art. How well Apple and Google can do this is closely tied to the business model of their smartphone platforms.



Business model: iPhone



Apple's iPhone platform has a pretty simple business model: everything is run under the tight direction of one company to deliver what it hopes to be the most desirable offering possible, in order to sell the most iPhones to users.



The iPhone's software platform is knit into Apple's own hardware design and is tightly integrated with iTunes for setup, software updates, backups, media syncing, application management, and Apple's optional MobileMe cloud sync services.



The iPhone is exclusively tied to official mobile providers who must agree to certain user-friendly concessions (such as supporting iTunes rather than pushing their own expensive ringtones and music services and software). However, Apple's carrier deals also currently limit users' options in many markets such as the US, where the iPhone can only be used on AT&T's network.



Apple also maintains rigid control over where the iPhone is sold, and manages nearly all support issues itself. There's absolutely no passing the buck on user troubleshooting, hardware problems, or software issues like security flaws or poor performance. If there's a problem with the iPhone, it's squarely Apple's fault.



On the other hand, you can't get the iPhone OS from any other source, you're not allowed to modify the core software, you can't install apps that Apple determines to be of poor quality, incompatible with its design goals (including background operation of third party apps), or damaging to its platform (such as Adobe Flash) unless you take it upon yourself to hack the iPhone via a jailbreak, something that Apple discourages and works to prevent. In some cases there's simply no way to shoehorn in features that Apple doesn't want to support or allow.



Business model: Android



Google's business model is more complex in some respects and yet also simpler. The company doesn't make money selling phone hardware or even in licensing the core Android software (which is free and open source). Google makes money selling ads and tracking users' preferences, which it does through its own Google-branded, bundled apps (which are not free nor open source).



This results in Android software only being as tightly integrated with hardware as third party vendors might choose to deliver (or are capable of producing). Hardware makers can add features that Google doesn't fully support (such as multitouch gestures or unique user interfaces), and Android can offer features that aren't implemented in certain hardware devices (such as compass support).



Unlike the iPhone and iTunes, Android phones aren't integrated into a central desktop app of any kind, so users with different mobile providers and buying from different hardware makers will all face unique configuration circumstances because setup, updates, backups, media sync, software management and cloud sync services can all be implemented in different ways on different Android-based products.



How exclusively a specific Android phone is tied to a given provider is also negotiable. Some models may be unlocked and used virtually anywhere, while others are locked down just as tight as a Verizon feature phone, with disabled hardware and non-removable VCast.



There's little leverage for Google to seek concessions from mobile providers the way Apple does, as the company is not the hardware vendor. Android is supposed to arrive on a flurry of new devices from various makers early next year, but nearly every vendor is promising to deliver a customized experience to differentiate their offering, making the Android platform nothing similar to the cohesive, global experience of the iPhone (or for that matter, Windows on the PC).



HTC markets its unique look and feel as Sense, Motorola sells its own user interface as MotoBlur, and Sony Ericsson is calling its interface for the upcoming Xperia X10 "Rachael" or UX. Other vendors are guaranteed to create their own layers of unique user interfaces.







Imagine if Dell and HP made Windows PCs with completely different desktops and user apps: would most users even recognize them to be Windows? It would be more like Linux PCs, where there's so many choices that no significant number of users makes any one of them, resulting in little commonality for software developers, user training or support resources to target. Microsoft worked very hard to force PC makers to present a unified desktop look so that consumers would know to ask for Windows, and so PC makers could present a familiar product with known features.



Many Android users won't even realize they're using an Android phone, and won't even see that much familiarity between it an an Android phone from another vendor or mobile provider. That's because there's no standardized branding, no enforced minimum feature set, no consistent user interface nor any standards on how things look, how touch gestures should work, or where physical buttons are.



The brand that wasn't there



Unlike the iPhone, Android presents no significant limitations on which apps Google will list in Android's software market, but there's also no requirement for software signing or other security restrictions in place to prevent users from being spied upon or attacked by malicious apps or hassled by adware, nor any app quality guidelines.



And while customers might not have any complaints with Google's lax brand management of Android, it will impact how the market receives Android products, and in turn, how widely adopted and competitive Android phones are, and subsequently how much software is available for the platform.



As an example, while Apple has one carefully-guarded iPhone brand worldwide, Google allows any device to call itself Android. If one vendor makes a terrible Android phone, it has the ability to taint the perception of the Android platform itself. This is another reason why Microsoft worked so hard to create a minimum standard and consistent desktop for Windows PCs.



Google has no experience in managing a platform, and does not appear to have even examined what factors helped make Microsoft successful on the PC. But Google also seems to have no sense of brand management, a curious problem for a company with a name that has become the verb for web search and with widely known products including Gmail



Google doesn't seem to be advertising the Android brand to mainstream consumers at all. Instead, it allows its partners to co-opt the brand in various ways. For example, Verizon is now branding specific Android models it carries as Droid; those same hardware devices can be from different vendors ("the Droid" is made by Motorola, while "Droid Eris" is an HTC product running a completely different user interface on an older version of Android and running on slower hardware), and those models must be named something else on other providers (Motorola's Droid will be sold as Milestone elsewhere, and the Droid Eris is HTC's Hero on other carriers).



This completely stifles any ability for Motorola to market its new Android phone globally, or for HTC to leverage the goodwill it creates with one provider to other markets. It also hijacks users' perception of Android to associate it with Verizon, despite the fact that the first Android phone sold via T-Mobile, and that all US mobile companies will likely be selling Android phones next year.



Imaging Apple allowing some carriers to exclusively sell the iPhone as "iPho" and the brand confusion that would result. Or imagine Apple trying to market the iPhone under completely different names in different markets globally. The whole point of a brand is to create awareness of a product and establish a trade name that customers recognize and associate with a strong reputation.



Google is allowing its partners to fight over the Android brand, invent competing and confusing sub-brands, and to create different experiences associated with its brand. The result will be a series of short lived flashes that fail to leave any mark in the minds of consumers, the same way LG's Prada, Vu, Viewity, Venus, Voyager, enV Touch, Cookie, Dare, Secret, Arena, Xenon, Cyon, Shine, Incite, and Renoir (all identical or very similar touchscreen models sold in different markets or by different providers) have failed to establish any sort of competitive mindshare against the iPhone during the same period of time on the market.



If there's a problem with an Android phone, users might be pointed at their mobile provider, or at the hardware vendor, or to the Android open source community, none of whom can take full responsibility for the whole widget even if they wanted to, and none of them have any real reason to want to. This results in Android being a fantastic platform for hobbyists and hackers, but one which presents series of terrible scenarios for mainstream users who want things to just work consistently and intuitively, with adequate and appropriate security and yet still offer plenty of viable commercial potential without compromising convenience and usability.



Software integration in consumer devices



Many of the issues negatively affecting Android are related to Google's business model, which happens to be very similar to Microsoft's Windows Mobile and PlaysForSure. Unlike its very successful Windows on the PC, Microsoft's efforts in mobile devices have been colossal failures, largely because the hardware/software integration issues that impact PC users are not nearly as critical as those affecting handheld devices that involve more direct use and include power management, performance and user interface issues that require much more integration work than desktop PCs.



Microsoft's software licensing model works best among servers and PCs where users are supported by professional IT staff, the same place Linux is most popular. In PCs, Microsoft's control over the user experience helps it edge out any real encroachment from Linux among mainstream users, but has not stopped Apple from eating into PC market share with its more integrated, cohesive Macs. However, in mobile devices, Apple's strict control of the user experience has enabled it to excel with the iPod and iPhone, two markets that neither Microsoft nor other broadly licensed open software platforms have managed to crack.



The best success story in mobile licensing has been Symbian, but this was largely a partnership between major phone makers who simply shared work on kernel development. Nokia, Sony Ericsson and NTT DoCoMo each maintained its own version of Symbian tightly integrated with that company's phone hardware.



Faced with competition from even more integrated phones from RIM and Apple, Symbian's share has slipped rapidly and dramatically, and Nokia has since worked to turn it into an open source foundation giving away shared code. There is yet no evidence that this will stop Symbian's share of the smartphone market from its slide in the future. The failure of both Windows Mobile and the once widely-licensed Palm OS also provide some perspective on how well this model works in mobile devices.







In addition to their differing business models, Android and the iPhone platform also differ how the core software platforms are developed and advanced, what first party software is bundled with the phone, and what third party software is available after the sale. Upcoming segments will look at how Android and the iPhone compare in these respects.
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Comments

  • Reply 1 of 143
    Gee, a Dilger article that should be entitled "Why Product X Sucks and Apple's Product Y Rocks".



    Color me (un) surprised by this sudden turn of events.
  • Reply 2 of 143
    iPhone's is proven, Android's has yet to be proven.



    Simple as that.
  • Reply 3 of 143
    Quote:

    There's absolutely no passing the buck on user troubleshooting, hardware problems, or software issues like security flaws or poor performance. If there's a problem with the iPhone, it's squarely Apple's fault.



    Nope. When OS 3.0 was having issues keeping connections to AT&T's 3G network, I had an Apple store employee tell me the issues were with AT&T and I needed to contact them. I was told the same thing from the Apple phone support.



    The problem was subsequently fixed when 3.0.1 was released, so the problem was indeed not with AT&T (at least not soley)



    To Apple's credit, this was after a replacement phone was issued and the problem still existed, but to say that Apple takes full responsibility for iPhone issues is disingenuous at best.
  • Reply 4 of 143
    Quote:
    Originally Posted by caliminius View Post


    Gee, a Dilger article that should be entitled "Why Product X Sucks and Apple's Product Y Rocks".



    Color me (un) surprised by this sudden turn of events.



    I thought that too.



    I looked at the picture and thought "multiple options gives me choice" rather than what that image's title was. I also thought the iPhone OS interface looked a bit tired in comparison.
  • Reply 5 of 143
    geekdadgeekdad Posts: 1,131member
    Quote:
    Originally Posted by Quadra 610 View Post


    iPhone's is proven, Android's has yet to be proven.



    Simple as that.



    You are so correct. Froma consumer level Apple has the race won and just needs to keep updating the iPhone every so often as they have been and no one with come close to their market share.

    What I would like to see and purley from a business corporate level is Apple along with AT&T produce a application interface that would let corpoations have limited control over the the platform. To be able to do what can be done with a BB. To be able to remotely manage the iPhone in a simple stand alone solution. That would include being able to handle encryption, changing the PIN, activation, remote wipe. If they did this they sky would be the limit in the Corp environment.

    But then things are going pretty well right now!!! :-)
  • Reply 6 of 143
    Quote:
    Originally Posted by moo-shu cereal View Post


    Nope. When OS 3.0 was having issues keeping connections to AT&T's 3G network, I had an Apple store employee tell me the issues were with AT&T and I needed to contact them. I was told the same thing from the Apple phone support.



    The problem was subsequently fixed when 3.0.1 was released, so the problem was indeed not with AT&T (at least not soley)



    To Apple's credit, this was after a replacement phone was issued and the problem still existed, but to say that Apple takes full responsibility for iPhone issues is disingenuous at best.



    On whose part? Apple's? AT&T's? Or the author's?



    Taking the full context of the statement, there is nothing disingenuous stated here:



    Quote:

    AppleInsider:

    Apple also maintains rigid control over where the iPhone is sold, and manages nearly all support issues itself. There's absolutely no passing the buck on user troubleshooting, hardware problems, or software issues like security flaws or poor performance. If there's a problem with the iPhone, it's squarely Apple's fault.



  • Reply 7 of 143
    Quote:
    Originally Posted by geekdad View Post


    You are so correct. Froma consumer level Apple has the race won and just needs to keep updating the iPhone every so often as they have been and no one with come close to their market share.



    What I would like to see and purley from a business corporate level is Apple along with AT&T produce a application interface that would let corpoations have limited control over the the platform. To be able to do what can be done with a BB. To be able to remotely manage the iPhone in a simple stand alone solution. That would include being able to handle encryption, changing the PIN, activation, remote wipe. If they did this they sky would be the limit in the Corp environment.

    But then things are going pretty well right now!!! :-)



    It is already available. http://www.apple.com/iphone/business/integration/
  • Reply 8 of 143
    melgrossmelgross Posts: 33,510member
    Quote:
    Originally Posted by caliminius View Post


    Gee, a Dilger article that should be entitled "Why Product X Sucks and Apple's Product Y Rocks".



    Color me (un) surprised by this sudden turn of events.



    Did you actually read this? Did you even bother to read who wrote it?



    No, you did not.
  • Reply 9 of 143
    melgrossmelgross Posts: 33,510member
    I agree with this article. It's what I've been stating in the other thread, and for some time now.
  • Reply 10 of 143
    teckstudteckstud Posts: 6,476member
    I want an in depth side by side comparison between Droid and iPhone- hardware. Everyone knows Apple OS rocks and other's don't, but I want to see the physical limitations of one versus the other. Speed, power, and so on.
  • Reply 11 of 143
    geekdadgeekdad Posts: 1,131member
    Quote:
    Originally Posted by Abster2core View Post


    It is already available. http://www.apple.com/iphone/business/integration/



    Not really......it is so hard to use. Also there is no over the air support. It would be nice to have everything done over the air without having to sync with itunes.

    We are testing the iphone at my work with 100 to start the project. The admin guys are saying that the business intergration that Apple defines leaves allot to be disired. It is just so much easier with the Blackberry Enterprise Server(BES) solution.

    Now this is not a knock on Apple just that they have some work to do to catch up to the BB for business. They are making strides though......
  • Reply 12 of 143
    gwydiongwydion Posts: 1,083member
    Quote:
    Originally Posted by melgross View Post


    Did you actually read this? Did you even bother to read who wrote it?



    No, you did not.



    Yes, I did and he is right. But is Daniel, you can't expect anything else.
  • Reply 13 of 143
    teckstudteckstud Posts: 6,476member
    Quote:
    Originally Posted by geekdad View Post


    Now this is not a knock on Apple just that they have some work to do to catch up to the BB for business. They are making strides though......



    Face it - they'll never catch up as long as they're perceived as a toy (read App store, iPod, games) and have the AT&T ball & chain around their neck.
  • Reply 14 of 143
    melgrossmelgross Posts: 33,510member
    Quote:
    Originally Posted by Gwydion View Post


    Yes, I did and he is right. But is Daniel, you can't expect anything else.



    Go back and look at who actually wrote the article before posting again.
  • Reply 15 of 143
    Quote:
    Originally Posted by caliminius View Post


    Gee, a Dilger article that should be entitled "Why Product X Sucks and Apple's Product Y Rocks".



    Color me (un) surprised by this sudden turn of events.



    You've been delivering regular personal attacks against Prince Dan, but I have yet to see any cogent explanation of why you think his articles are bad. I'd rather see you voice your own opinion that to denigrate the author's. Or even point out what you think is inaccurate or misguided. This article seems pretty spot on.



    If you can't argue your own position, you might as well put on blinders and wave cardboard signs about Socialism and pictures of the president with The Mustache. I think the guys who hate Prince Dan are just upset that he's been right over and over again, from PFS to the Zune to the iPhone. He seems to be the only writer pointing out that there's some serious potential downsides to Android. Are you afraid he's right and don't want to be proven wrong next year, or can you just not put up a convincing argument about why this is all somehow off base?
  • Reply 16 of 143
    Oh man, I was going to port my iPhone app to Android...



    Just kidding :-) I will port it anyway. The Blackberry port is already 50% done.



    What I want to say by this - I hope that all 3 (iPhone, Android and Blackberry) do well. This will make all of them much better. If there is no competition to iPhone, it will stall and start stinking, I have no doubt about that. I myself programmed for both iPhone and Android, I like both these platforms (I like iPhone a little more). Google is doing a lot to improve Android. I hope they don't drop the ball.



    Maybe we need to think how we can support Android a little bit, to make iPhone even better? :-)
  • Reply 17 of 143
    melgrossmelgross Posts: 33,510member
    Quote:
    Originally Posted by teckstud View Post


    Face it - they'll never catch up as long as they're perceived as a toy (read App store, iPod, games) and have the AT&T ball & chain around their neck.



    Except that Apple is making big strides in both business and government. Plus, the iPhone gets far better satisfaction ratings from business users than does RIM.



    I had a good link, but as happens so often, this is what's left:



    http://www.businessinsider.com/smart...lients-2009-10



    Here's another:



    http://www.jdpower.com/electronics/a...olume-2/page-3



    Obviously, Apple is doing it right.
  • Reply 18 of 143
    Quote:
    Originally Posted by teckstud View Post


    Face it - they'll never catch up as long as they're perceived as a toy (read App store, iPod, games) and have the AT&T ball & chain around their neck. Most businesses, in NYC at least, opt for Verizon.



    The iPhone, on a single carrier, with one model, has already narrowed that gap with RIM to the extent that it is within 10% of RIM and counting, in only two years. While RIM, with numerous devices, on nearly every carrier, is only at 40% and in decline.



    iPhone a toy? Why, because some generic carrier, desperate for this "toy", tells you??



    The iPhone is making inroads into the enterprise. And people WANT this "toy" in business, just as much as the demand for it in the consumer sphere increases quarter by quarter.



    The Blackberry is a one-trick pony that is in a downward slide. The question is not *if* the iPhone will overtake RIM, but *when.* And it looks like it won't take very long.
  • Reply 19 of 143
    melgrossmelgross Posts: 33,510member
    Quote:
    Originally Posted by teckstud View Post


    I want an in depth side by side comparison between Droid and iPhone- hardware. Everyone knows Apple OS rocks and other's don't, but I want to see the physical limitations of one versus the other. Speed, power, and so on.



    Why don't you type it into Google?
  • Reply 20 of 143
    melgrossmelgross Posts: 33,510member
    Quote:
    Originally Posted by serkol View Post


    Oh man, I was going to port my iPhone app to Android...



    Just kidding :-) I will port it anyway. The Blackberry port is already 50% done.



    What I want to say by this - I hope that all 3 (iPhone, Android and Blackberry) do well. This will make all of them much better. If there is no competition to iPhone, it will stall and start stinking, I have no doubt about that. I myself programmed for both iPhone and Android, I like both these platforms (I like iPhone a little more). Google is doing a lot to improve Android. I hope they don't drop the ball.



    Maybe we need to think how we can support Android a little bit, to make iPhone even better? :-)



    Since you're a developer. give us your view.



    How do you plan to accommodate the differing hardware and OS features of Android?



    As the OS becomes more differentiated, with different GUI's, different hardware, and little compatibility between them, what will you do?
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