Let’s Stop Talking About Winners and Losers

No winners or losers

Enough already. The debate over Android, iPhone,  and occasionally Windows Phone as winners and losers in the smartphone market, being pursued with vigor in the comments  at Tech.pinions as well as nearly  everywhere else in the tech world, has become a hopelessly sterile argument. Worse, the whole discussion is based on the incorrect premise that someone must win and someone must lose,  with the loser doomed to shrivel into insignificance.

This paradigm seems to date back to the turn-of-the-21st-century tenet that technology markets, unlike the markets for anything else, were winner-take-all. This assumption was based on a belief in network effects: The value of a device–a PC in those days–depended on compatibility with like devices. Once a platform had achieved critical mass, it’s rivals were doomed because everyone would want to move to the dominant platform.

Fundamental flaws. This analysis, which continues to shape how we look at markets today, was fundamentally flawed in two ways. First, its bedrock assumption that Microsoft’s Windows had defeated Apple’s Macintosh was simply wrong. Second, it turned out that the platform that really mattered wasn’t the hardware or the operating system, but the internet, which made most compatibility issued go away as it matured.

Let’s look first at what actually happened in the PC market. From the day that the IBM PC overtook the Apple ][, Microsoft software dominated the market. The Macintosh, introduced in 1984, never challenged MS-DOS or Windows for dominance. But Apple never lost. Even through the second half of the 1990s, when Apple was turning out thoroughly mediocre products and was saddled with an increasingly obsolete operating system that it could not overhaul successfully, the Macintosh hung on to its most critical markets. The only time actual failure was a possibility was in 1997, when the company was in danger of running out of cash. A timely investment–more a bailout of sorts–from Microsoft and the introduction of the revolutionary iMac by the returned Steve Jobs put Apple back on its feet and prepared the Mac for its revival in the new century.[pullquote]Today the Mac, once written off as a loser,  totally dominates the high–and profitable–end of a shrinking PC market.[/pullquote]

Other rivals to Microsoft did indeed lose: Novell’s DR-DOS and IBM’s OS/2 operating systems disappeared, along with Netware, Novell’s once-dominant office networking system. But Apple hung on. Today the Mac, once written off as a loser,  totally dominates the high–and profitable–end of a shrinking PC market. Meanwhile, the dominance of the Internet means that the choice of platform is almost entirely a matter of preference, not necessity. Yes, there are some applications that are only available on one platform or the other, but these are mostly niche products and probably have little affect on share, especially among consumers. (I suppose there are some customers who will choose a Mac just to get
Safari or Windows just to get Internet Explorer, but there can’t be many of them.)

No clear winner. The phone business is even less likely to yield a clear winner. Without going over market-share numbers that have already been discussed ad nauseum, I think we can all agree that the iPhone and Android both hold substantial share in all important markets and that both are likely to continue to be important players. As in the case of PCs, your choice comes down to a matter of preference; whether an iPhone 5s or a Samsung Galaxy S 4 is “better” depends on what you want. Unless you depend on a app that is available only in iOS or only in Android, it is unlikely that either would fail to handle any conceivable task.

Phone platforms do fail. Palm died with the help of its would-be savior, Hewlett-Packard. BlackBerry appears to be headed for breakup or liquidation; at best, it appears unlikely to hang on as a hardware platform. Nokia failed to survive as an independent software platform or, ultimately, as a handset maker, but the strength of its brand is giving Windows Phone a fighting chance, especially in Europe.

Analysis of market trends for mobile platforms, especially iOS and Android, is important and useful. But we have to stop thinking about this as a war that one or the other will win and that the loser will ultimately go away. The simply is no reason to believe that markets work that way.