Herding Cats: Why Android Is No Threat to Apple

Steve Jobs' supposed rant about the fragmented Android market has created a lot of buzz - but not much thought.

His comments serve two purposes: They shed light on some of Apple's own thoughts back when it reviewed how to launch into the market. Apple has limitations that forced it to focus on only a few products. The other value at a quarterly conference call is to tell investors that Apple made the right choice when it picked its strategy.

Aside from giving investors confidence, questions are now raised about the direction of the Android market. Sure, it looks hot today - so does Apple - but which way will it head? Will the Android become the many-headed hydra that Apple can't beat, or is it a mob that will eventually fall apart?

Kingpin, Good Ol' Boys, Chaos

The direction of Android is today clearly controlled by Google. Handset manufacturer join the Open Handset Alliance (OHA) in order to sell Android phones. While Google really controls Android, they allow broad changes and limitations to be made by the handset manufacture or cellular provider.

We have Google as the Kingpin. As the Kingpin, it wants Android to grow, but Google doesn't sell handsets (it tried), doesn't run a cellular network, and for the most part doesn't sell apps. Google makes money from mobile ads, and other OHA members may contribute financially, but details are unavailable to know if that happens.

For Android to compete with iOS, money needs to be spent on development. The only source of revenue is Google and mobile ads. Google's ability to invest in Android will be limited to the profits from mobile ads. Google recently stated that it is earning $1 billion a year from mobile ads. Clearly there is money to pay for development, but ads - not phones - are Google's focus.

The OHA serves Google in another way to control what is allowed on handsets when a Google service is at risk. Just ask the folks at Skyhook if Google didn't step in to screw up their business deal with Motorola. Google can easily claim that using another service will affect the performance of Android. That either means the software is very limited in how much it can be customized, or Google just wants to keep its revenue streams open.

Guess which one I believe is true.

Herding Cats

On the fringe of implementation, there is a certain degree of chaos. Here is a sample support thread regarding Android. A Samsung Galaxy S owner from T-Mobile couldn't do the same things that a Verizon owner can with the same phone and operating system version. Since Google doesn't give a damn about the phone, except for how well the mobile ads are working, it is happy to let the cellular or handset people create all kinds of inconsistencies.

Summary: We have a mobile operating system being developed by a company that sells ads. It then allows full customization by vendors as long as it doesn't interfere with Google's services that are tied to the operating system. Finally, the handset and cellular people want to distinguish their phones from the competition and limit the phones as they see fit (usually to protect their own services, just as Google does).

While many people can pretend that the many-headed beast led by Google will make the Android great, it is easy to see Jobs' point of view that too many cooks will spoil the soup. The truth is that Android phones will continue to sell well, but that doesn't change Apple's strategy.

Apple's Strategy: Unity with Diversity, not Division

When Apple entered the market, people laughed that at the thought that it would ever sell 10 million phones a year. It now sells 14 million iPhones a quarter, not to mention its strong iPod touch and iPad sales, which use the same operating system as the iPhone.

Apple is fighting for market share. Whether it gains market share from Nokia, RIM, or a herd of Android phones, it is going to continue growing and earning money hand over fist.

The herd of Android phones has its own challenge to face: The more each OHA member makes its own implementation different, the more fractured the Android market becomes. People can say all they want about choice, but here in America the fact is e pluribus unum. They need to work together and not just rely on Google.

Apple clearly has a product strong enough to outdo a disjointed effort.

The funny thing is that Steve Jobs has thrown it in Google's face that Microsoft did a better job working with multiple sources to get Windows working identically on a much wider variety of hardware.

In other words, Google sucks more than Microsoft. And for the people at Google, that has got to sting.