Microsoft and Google’s platform problems

on September 18, 2014

Microsoft and Google appear to be moving in different directions when it comes to their platforms and first party hardware, as I’ve written about before. However, in some respects they’re fighting the very same battle when it comes to platforms — they’re struggling to set apart their services on platforms increasingly controlled by others.

Microsoft: winning on competitors’ platforms

Microsoft is moving towards a model where it provides its services without preference on third party platforms and away from its historical model of preferring its own Windows-based platforms. Just this week, Microsoft released a version of OneNote that works on Android Wear smartwatches as well as on iOS. Perhaps the most striking example of the new attitude toward third party platforms was the release of Office on the iPad a few months back.

However refreshing as this change may be, Microsoft is, in many of these areas, going to be competing head-on against the companies on whose platforms it seeks to establish itself. OneNote goes up against Google’s own Keep note taking service on Android, and Office on iPad goes up against Apple’s own iWork. Microsoft may not feel too threatened by either of these products, since its own versions are arguably much more fully featured, but there are other important considerations.

First, Microsoft’s core products and services are increasingly competing against free products which provide much of the same functionality, as the chart below shows (the business model framework may be familiar to some readers from this previous piece):

Microsoft competing against free

In short, where Microsoft seeks to charge for Office, Windows or other products, Apple and Google give them away for free (albeit for different reasons: Apple as a way to add value to the purchase of one of its devices, Google to generate data, ad revenue or a channel to sell its other products). For this reason alone, Microsoft faces an uphill battle in selling many of its third party products, especially on platforms controlled by its major competitors. OneNote is an interesting exception: arguably one of Microsoft’s most compelling products, it’s available for free outside of the classic Office bundles.

Second, Apple in particular and Google to a lesser extent favor first party products and services through deeper integration into the operating system. In other words, though OneNote may reside as an app on iOS, it will never be integrated into the core functions of an iPhone in the way that Apple’s own Reminders app is. Though Google’s Chrome is available on iOS, it can never be set as the user default browser. And so on. Apple’s and Google’s apps will always come preinstalled on their operating systems while Microsoft’s will never be, and that further disadvantages Microsoft as it seeks to compete.

Third, Google and Apple have increasingly broad ecosystems of devices running their respective platforms. Apple, with about eight hundred million devices running iOS and OS X and Google with well over a billion devices running Android (and to a much lesser extent Chrome OS), compared with about 1.25 billion Windows PCs in the world and a much smaller number of Windows Phones. Whereas Microsoft’s installed base of devices once dwarfed all others’, that’s simply no longer the case, and both Google and Apple have arguably been better at seeding users with their core products and services running on those devices than Microsoft has been. Almost all the services Microsoft offers on third party products are add-ons on its own devices too, rather than coming built-in. As such, Google and Apple are better able to create and stimulate demand for these products and services than Microsoft, especially on a cross-device basis.

In short, if Microsoft is to compete effectively on a third party basis, its services on competing platforms have to be so good they can overcome the price/business model disadvantage, the lack of integration, and its far smaller mobile device installed base. As of right now, Microsoft simply doesn’t seem to have any products or services that can do that successfully and this should be a key area of investment. In the meantime, it’s being successful largely with products it’s unable to monetize from most users, such as OneNote and Skype.

Google: regaining control over its own platform

Google’s problem is similar but different. It – nominally at least – owns a platform in the form of Android. But it’s a platform it’s increasingly lost control of, in two ways:

  • Full Android licensees such as Samsung have overlaid so much of their own stuff on top of stock Android that Google’s services and the core of the operating system are buried
  • The AOSP version of Android is so heavily used both by third party forks like Amazon’s Fire devices and by Chinese vendors in particular who have built their own service stack on top of it.

Google competes both on the platform it owns, though has lost control off, and on third party platforms (mostly iOS, to date). But it suffers to the same extent as Microsoft when it comes to its lack of integration on iOS, where its apps are popular but will never be as tightly woven into the core experience as Apple’s equivalents. At the same time, Apple has been slowly removing Google in a variety of ways from its products. This has a very public and obvious side – the removal of the YouTube and Google Maps apps from iOS – and a less public and obvious side: using Bing as the default search engine behind both Siri and the new Spotlight features.

At the same time, many of Google’s core services are duplicated by its own OEM licensees and to an extent carriers too, even on Android. It’s not uncommon to use an Android phone which features three different pre-installed apps for video, one each from Google, the OEM and the carrier, and the same goes for many other features too. Although certain core Google services like search, email and maps are already well established, it’s that much harder for Google to establish new services to the same degree when Android devices are so heavily customized by both OEMs and carriers.

For all these reasons, Google has now started to reassert its control over Android in a variety of ways. This was a major theme at its I/O developers’ conference (though it never said so explicitly). Android One is an attempt to get stock Android back in the game in emerging markets, while Android Wear, Android Auto and Android TV offer non-customizable versions of Android for three new domains. It’s as if Google has realized its mistake and is retaking control as much as it can, step by step.

Apple continues to be different

Though Google and Microsoft share some of the same challenges, Apple continues to stand out in this regard. It controls its own platform from top to bottom, and doesn’t seek to compete on third party platforms. The only software it does provide on third party platforms (these days, essentially iTunes) is intended to add value to its own devices, not compete on its own merits. As both Google and Microsoft struggle to compete on platforms they don’t control in the pursuit of massive global markets, Apple continues to pursue its target niches with a very different model.