Chapter 6: Case Study: Google, Apple, and Microsoft Battle for Your Internet Experience

1. Define and compare the business models and areas of strength of Apple, Google, and Microsoft.

Apple: Its business model focuses on centralized control of almost all aspects of its hardware and software. It believes smartphones and tablets should have proprietary standards and be tightly controlled. It only allows apps from its App store, that have been vetted by the company, to be loaded to its products. Apple has a very loyal user base that has steadily grown and most likely will stay with Apple products in the future.

Google: Its business model has always focused on the Internet and the Web. It began as one of many search engines. It quickly ran away from the pack with its copyrighted PageRank search algorithm which returns superior search results for Web users. It also has developed extensive online advertising services for businesses of all sizes. Google provides value to the user by using an inexpensive, flexible infrastructure to speed up Web searches and provide its users with a vast array of Web-based services and software tools.

Microsoft: Its business model originally focused on the desktop computer running the Windows operating system and Office desktop productivity applications. The company and its products are staples for businesses and consumers looking to improve their productivity with computer-based tasks. While it is trying to expand its presence on the Internet, it still must try to keep customers bound to the desktop computer.

2. Why is mobile computing so important to these three firms? Evaluate the mobile platform offerings of each firm.

This case demonstrates the fundamental paradigm shift from primarily desktop PC computing to mobile computing devices accessing services through the Internet that is currently taking place. This environment is projected to be a $400 billion e-commerce marketplace where the major access device will be a mobile smartphone or tablet computer. Each company is vying for the lead in a world of ubiquitous computing based on Internet access. The leader stands to make untold profits from advertising but in order to do that, the leader needs to claim the largest user base.

Apps greatly enrich the experience of using a mobile device. Whoever creates the most appealing set of devices and applications will derive a significant competitive advantage over rival companies.

Apple: by far the current leader in the number of apps users can download – over 250,000. Apple takes a 30% cut of every app purchased.  They use a closed proprietary system and apps that only provide “one way in.”

Google: aggressively following the eyeballs. It has introduced the Android mobile operating system for a host of non-Apple devices. The Droid system adds features that Apple devices don’t have – the ability to run multiple apps at the same time. They use an open non-proprietary system that allows users to grab apps from any source.

Microsoft: trying to partner with Apple and make Bing the default search engine on both the iPhone and Apple’s Web browser. That would provide Microsoft with a much needed boost to its fledgling search service. Otherwise, Microsoft doesn’t bring much to the table in mobile computing.


3.What is the significance of applications and app stores to the success or failure of mobile computing?

Apps greatly enrich the experience of using a mobile device, and without them, the predictions for the future of mobile Internet would not be nearly as bright. Whoever creates the most appealing set of devices and applications will derive a significant competitive advantage over rival companies.

Apple makes money on each app sold through its App store. That’s worth billions of dollars to the company. Even if an app is free, Apple still has an advantage because users must visit Apple’s App Store and the company is betting consumers will buy something else, other apps or entertainment services, while visiting the store. However, app developers have complained that making money is too difficult. Apple has blocked some apps from its mobile devices, namely Google’s voice mail management program, Google Voice. Apple claimed it violated user privacy.

Apps for the Android system used on non-Apple devices are available from many different sources. Google has worked very hard to increase the number of apps available for Droid-based mobile devices by encouraging developers to increase the number of apps. Google also makes money by embedding advertising in some of the apps used on Droid-based devices.

4.Which company and business model do you believe will prevail in this epic struggle? Explain your answer.

The mobile computing market has started to look like a galactic war of epic proportions where no clear winner can be stated till date. Although the market is still relatively young the first mover advantage is still not with a single competitor. To predict a clear winner in such a scenario is difficult however there are certain qualities in one of the players that can make it a winner in this battle of equals.

Google:  The search engine giant has a lot of positives going for it rather than the negatives. The clear positives that can make it a winner are:

1. A well-established name is something which not a lot of players can boast of but Google is one of them, although Apple and Microsoft have chartered territories of their own but Google can fight them out both as an equal if not better.
2. The Company has entered into all the three basic markets of mobile computing including hardware, operating system and the application stores. Their hardware is something which a few competitors can best , however the Android operating system has taken the market by storm and the app store which comes with it is a mean bully in itself (Android 2012)
3. Google has also bet on of the most time relevant feature of the mobile computing market, the App store, and this is the biggest advantage which the Google business model gives it and makes it the prime contender for the number one position. With hundreds of applications already online and hundreds more in the development stage Google has started to take a sort of lead on the other players in the race to be number one. And this may not be decisive right now but with Google’s recent acquisition of application developers and their heavy R&D expenditure on the same, it is just a matter of time before it will take out companies like Apple and Microsoft. (Android 2012)

Although the Google bandwagon is on its way there are certain roadblocks that it can face that can halt its march and some of them are:

1. The Google brand is big but it still lacks the appeal of an Apple product and this many say is one of the most major difference between the two.
2. The Android system although perfected to a large extent still has a few errors in the new versions that can hamper the growth of the operating system and this where a competitor like Microsoft can prevail over the Company
3. Lastly it can be said that Google’s move towards a common mobile application platform can itself backfire and could increase competition from local app players which can affect the overall profitability from this step.

Thus it can be said that Google does have a lot of positives that can help it in the market and if it can take care of the negatives and maybe tweak the one platform stance, it can just pull ahead of Apple and Microsoft in this battle of the behemoths

5. What difference would it make to you as a manager or individual consumer if Apple, Google, or Microsoft dominated the Internet experience? Explain your answer.

Right now Apple leads Google in the number of apps available to users. That gap is closing quickly thanks to Google’s improvements of the Android operating system and its encouragement to app developers. Open, non-proprietary systems historically have beat closed, proprietary systems because developers and users have a wider range of choices. Business managers must try to forecast which platform will provide the right choices for employees. Consumers must choose which platform will best fulfill their personal needs for the next two to three years. Switching costs play into both scenarios, not just in terms of phone purchases but the price of apps. Once a user purchases and adjusts to using a certain platform it’s difficult and expensive to switch to a whole different system.