Today it occurred to me, Google has taken a play directly from the Microsoft playbook. These days there is a prize fight being fought between Google and Apple for the heart and mind of smart phone users. Apple has a head start, but that doesn’t historically mean a whole lot.
A Brief History Lesson
Back in 1984, Apple released the Macintosh computer. There had been home computers before, but the Macintosh was the first computer that anyone could just sit down and use. Before the Macintosh, computers were obtuse, they required knowledge of arcane commands and were accessed in a, and I am being nice here, less than approachable interface.
Apple came back from Xerox after seeing the mouse and graphical user interface and in perfect Steve Jobs form set out on perfecting it and making it as sexy as possible.
The problem that Apple has never managed to solve is that sexy is expensive. In 1990, 6 years after Apple had released the Macintosh with great success, Microsoft released Windows 3.0. Windows 3.0 was the first version of Windows that had a true graphical windowed environment and it was the first version of Windows that truly caught on with PC makers.
You can practically thank Windows 3.0 for the birth of several major computer manufacturers, namely Gateway, or Gateway 2000 if you are old enough to remember them then.
What Windows 3.0 managed to do was put a computer in your home, with roughly the same capabilities as a Macintosh, but at almost half of the price. Computers were still very expensive then compared to today. A Macintosh went for about $2,495 and a PC with Windows could be had for less than $1,500.
Isn’t This Article About Phones?
Oh yea, that’s right. So what does this have to do with phones? The Apple pundits will tell you “Price doesn’t mean much, you can get an iPhone on contract for $200 and they are selling light hot cakes. That’s true, but there is quite a long tail on that user acceptance curve and the real wealth of users are not yet holding smart phones.
As of 2010, ComScore says 45.5 million people in the United States own smartphones. The mobile phone market is comprised of 234 million subscribers. That’s just in the United States! That means all of the smartphone OS’s, and Palm, Google, Apple, Microsoft and RIM are the biggies, are fighting for less than 20% of the available market. Are these numbers starting to sound familiar?
Today that means 80% of the market aren’t willing to pay for either the phone or the data plan. Google is already trying to figure out ways to subsidize the data plan with advertising, and you can already get Google Android based phones free on contract. This year Best Buy had an Android phone free with contract for every major carrier.
That means we aren’t too far from free Android phones with cheaper data plans. Once Apple has soaked up all of the tech savvy people with expendable income, Google or Microsoft (I hope!) can walk in and just sweep all the remaining people into customers. If you think this sounds crazy, it’s happened before.
It’s like déjà vu over here if you ask me. A “good enough” competitor, prices that attract the consumer at large, and a willingness to let anyone build on their platform to build devices that fit whatever the user wants.
I don’t know about you, but if I was Apple, I’d be looking in the rearview mirror. And in case you think the iPad is any different, read this article again and replace iPhone with iPad in your mind.
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Droid Incredible (8g) $149. iPhone 3gs (8gb) $99
Samsung Galaxy S $149 (16b) iPhone 4 (16gb) $199
Droid X (8gb) $199
Droid Pro (2gb) $199
Droid 2 (8gb) $199.
How is this cheaper? Also. be careful of lumping feature phones into the smartphone category; while it may run Android, unless it acts like a smarphone, it’s like lumping Linux Point of Sales devices into Linux’s marketshare.
Also, so far, it seems as if “openness” only applies to what the Carriers can do to the phones; not what the user wants. I think to get close to the intended nature of a Google phone, you’d need to buy directly from Google.
For instance: 2.2 lets you turn your Droid into a hotspot… if the carrier allows it.
Sprint has the LG Optimus free..Verizon has Motorola Citrus free… I am not saying all the high end phones are free now, I am saying there is a wave of low price (less than carrier subsidy) phones on the way which will surely be free.
These were free in December:
HTC Droid Incredible (Verizon)
HTC Aria (AT&T)
Sony Ericsson Xperia X10 (AT&T)
LG Ally (Verizon)
LG Optimus S (Sprint)
LG Optimus T (T-Mobile)
LG Vortex (Verizon)
Sanyo Zio (Sprint)
Thanks for the article Jason! very informative. I think you are correct to say that Apple needs to be watching out for the competition as they are quickly catching up in the race.
Many people believe that the android OS phones have much better capabilities out of the box then the iphone, which many people have jailbroken to get the same features. I own an iphone 3GS and I love it.
The only thing I really dislike is that every time that Apple releases a new product such as the much improved iphone 4 it comes out just a few months after I have bought their latest version.
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