Apple is a dominant player in today’s business world. There’s no question that the tech company has managed to become a behemoth in multiple industries through a consistent vision of creating simple to use, beautiful products. This ability to focus on both hardware and software is the key to delivering on their brand promise, but is it possible that one component is more important than the other?
Dell, HP, Lenovo, and other prominent laptop manufacturers are well acquainted with the challenge of competing against Apple’s holistic approach to desktop and laptop computers. The mobile phone industry is also growing familiar with those challenges. Microsoft and Google however, Apple’s largest competitors, are just now starting to realize the advantages that Apple’s strategy provides. Essentially, it’s well known that Apple is willing to outspend on creating superior hardware and that Apple customers are willing to pay a premium, but when it comes to software, it’s difficult to differentiate value through additional R&D and then translating that cost over to consumers.
This is not the case for Apple. Apple is able to absorb the costs of developing premium software solutions into the hardware costs of purchasing their products. Microsoft first experienced this when Apple revealed that the OS X Mavericks update would be available for free. This seems like a negligible detail, especially when the previous version went for $20, but consider that Microsoft competed (at the time) exclusively in the operating system space with profits all being derived from their system and software. Microsoft could bundle the cost into a device with an OEM like Dell with no problems; however, the incentive to release an update at no cost to the consumer was low, because they did not also receive the revenues from the device sale. An operating system that traditionally cost as much as $200 was crippled by a well differentiated, premium competitor that could also compete on price.
Microsoft first experienced this when Apple revealed that the OS X Mavericks update would be available for free.
Fast forward to today and the same effects seem to be taking Google in grips. A company that has long offered their software for free in exchange for peddling data to advertisers has very little hardware to offer. A simple look at the Android market share might seem to reveal this is more of an existential threat; however, Google has a number of offerings on Apple’s devices because of the significant market share iPhones occupy and iPhone users are notoriously more likely to spend and react to advertising campaigns (read: suckers with more money).
With the launch of iOS 9, Apple officially sanctions ad blocking apps, a direct shot at Google’s primary revenue model. Google’s dependence on advertiser revenue has led to compromises in user data security, as Apple has been quick to point out, and with nearly 50% of the mobile phone market in the US, the move is certainly a credible threat to Google’s bottom line. Apple even went so far as to dedicate a section of their website to their stance on privacy and how they utilize user data.
Looking more toward the future, rumors abound that Apple is working on an electric vehicle. Both Microsoft and Google, failing to learn from their past, have focused on software that can spread to other car manufacturers. Apple has created a system, CarPlay, that will integrate into other cars, but you can be sure they will offer an integrated system that makes the imitators envious. Still, the markéd departure from the walled garden strategy with CarPlay shows that Apple is approaching the auto industry cautiously.
However this plays out, I’m excited to see how Apple will respond to their competitors now that they’ve grown the balls to compete. The Nadella-Cook-Page triumvirate will definitely be an era of innovation from all sides. And one thing is for sure: when companies fight over consumers, we all win.
By: Marlon Stevenson