[p2p-research] Greed kills: Why smartphone lock-in will fail and open source win

[Kevin Carson]

  Sent to you by Kevin Carson via Google Reader: Greed kills: Why
smartphone lock-in will fail and open source win via Armed and
Dangerous by esr on 3/4/10

In a previous post, How smartphones will disrupt PCs, I explained how
and why I think small, ultra-portable, general-purpose computers that
we’ll think of and use as “smartphones” are going to displace the PC. I
promised then to explain why the software of these devices will be open
source.

Go read Androids Will Challenge the iPad. It isn’t about smartphones,
but the logic that will break the iPhone business model is clearly set
out in it for anyone who’s paying attention. What we’re about to see in
the smartphone and tablet markets is a repeat of the way the IBM PC
shouldered aside the Apple II after 1980. Google’s deliberately
slow-balled launch of Android via the G1 was just prelude; it’s with
the Motorola Droid, the unlocked Nexus One and the generic Android
tablets that the game begins in earnest.



After 1981, IBM seized the lead in the personal computer market by
exploiting two advantages over Apple. The first was marketing and sheer
size: IBM’s brand had a lot of power, and IBM’s run rate allowed it to
fund product development and reap economies of manufacturing scale on a
scale Apple couldn’t match. Twenty-nine years later Google has at least
as cool a brand as Apple, more financial mass, and more engineers. And
that’s all I need or want to say about the biz-journalism end of things.

IBM’s second advantage was openness. The PC was designed to be
kit-bashed; it became the hardware platform that launched a thousand
hardware startups and, effectively, the entire PC industry as we know
it. The manuals included a BIOS listing, the bus specification was
public; anyone could plug in, and did. IBM’s own attempt to close the
platform a few years later, the PS/2, was a failure that sank almost
without trace.

Fast forward three decades. The commoditization of hardware that the PC
pioneered has succeeded so completely that all smartphones are built by
anonymous OEMs on the Pacific Rim and the real competition has shifted
from hardware to software. Forget details like smartphone vs. tablet
form factors and which handset manufacturer is the belle du jour: the
real competition is the OS X ecology vs. the Linux/Android ecology.

And isn’t it entertaining, boys and girls, how thoroughly Unix won?
Both OS X and Android are Unix underneath. Windows Mobile is
hemhorraging market share and even the most notoriously
Microsoft-gullible elements in the technology press can see it’s a
no-hoper.

On its way down, Windows Mobile gives us an object lesson that allows
us to predict how the OS X/Android war will end. It’s the same lesson
that the Apple II vs. PC war taught, and it’s heightened by the way
that Microsoft has (just barely) managed to hang onto a dominant
position in desktops — by allowing lots of third-party developers to
make money from that dominance. (Update: I wrote “just barely” because
Microsoft has had to give away most of its profit margin to maintain
share.)

IBM won its battle for ubiquity over the Apple II because it was
willing to give up control, to let third parties (including Microsoft
and the peripheral-card industry) make most of the money and content
itself with a tiny sliver of a rapidly expanding pie. Microsoft kept
Windows viable on the PC desktop by yelling “developers, developers,
developers!” and conceding third parties a huge share of that pie.

And now? Google is willing to let handset makers, telecoms providers,
and third-party developers capture most of the overt value of the
Android market. Google can give all that prompt revenue away because
everything it’s doing in this space is actually funded the same way its
search-engine business is; by the volume of consumer attention Android
devices will bring to its advertising. Apple, on the other hand, acts
as a very controlling gatekeeper of its products — requiring (and
insisting) that it’s going to capture most of the profit margin for
itself.

Apple’s problem now is the same as the Apple II’s problem in 1981: in
markets reliant on a vigorous ecology of allies to add value to a
product, greed kills. Gatekeepers lock out potential allies; walls
limit the garden’s growth. Ask any strategic planner at a telecoms
provider or handset maker why Windows Mobile failed and you’ll hear the
same thing: they saw what happened to IBM and swore they’d never let
Microsoft talk them into being its butt monkeys. Windows lost out to
Linux in the medium and high-server market, because third-party
developers are much less important there; customers tend to be writing
their own bespoke software, so server Windows isn’t pinned in place by
a huge collection of allies. There’s a harsh tradeoff between control
and ubiquity; the original IBM PC and desktop Windows got on the right
side of it, but Windows mobile got on the wrong one.

The competitive dynamic between Linux/Android and OS X can be
understood in the same way. OS X is playing a control game and Android
a ubiquity one. We can expect the outcome to be the same: when the
bazaar meets the walled garden, the walls will eventually come down,
crushing the life out of the garden.

This is why Symbian is now open-source in spite of having no
inheritance from Unix-land; its backers have figured out that a control
strategy collects short-term gains over a ubiquity strategy but simply
cannot compete in the longer term against open-source Android and
open-source Maemo. Apple will learn this, to its cost, too. Because
Steve Ballmer may be an evil maniac, but when he yelled “developers,
developers, developers!”, he was right. In the war for market-share,
allies are better for your long-term prospects than walls, and ubiquity
will always eventually triumph over control.

UPDATE: I wish I had read Where Android beats the iPhone before I wrote
this. It bolsters the argument pretty effectively.

UPDATE: And here’s Gylnn Moody dispelling some anti-Android FUD.

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