The Consequences of Platform Wars

In my previous post, I predicted that the newly named iPad OS and Apple’s strong commitment to evolving the iPad into a full productivity machine, will bring forth a new platform war between PCs and iPad. Now, although we often talk about platform wars, we rarely think about what the consequences are. Here I would like to dig into this subject a bit deeper.

Platform wars involve different values and business models

Just like in the real and bloody wars where thousands to millions of people get killed, platform wars often involve a difference in fundamental beliefs and understandings. More often then not, they are more than just some companies battling it out for more market share.

Take the traditional Windows vs Mac war for example. Windows machines, or the IBM PCs that came before, were built for businesses. They weren’t about innovation or changing the world, but instead were about mass-adoption of technologies that had already been somewhat established but for a limited audience only. Whereas Steve Jobs talked about a “bicycle for the mind”, Bill Gates talked about “a computer on every desk and in every home”, and it was the differences in these two values that characterized the Windows vs Mac platform war.

In the iPhone vs Android platform war, Apple’s position again was to expand the possibilities of mobile computing. Instead of entering the market with a low-powered device similar to what had come before, the iPhone was a full-fledged UNIX system with a powerful web browser. It was bringing PC capabilities to a cellphone form factor and thereby significantly widening the horizon of what could be done on a mobile device. On the other hand, Android was focused on bringing a copy of a successful device to the wider market. It began life as a BlackBerry look-alike and after the announcement of the iPhone, Google quickly changed course and decided to copy the latter. Android was targeted at customers who could not own an iPhone due to either price or that their carrier of choice did not yet sell them. Here again, we see a platform war between a company that valued expanding the possibilities of technology, and one that was more interested in broadening the reach.

The Browser wars too were fought between two companies with different interests. Netscape wanted to make the browser into the next computing platform, and evolved its Communicator software to include not only web browsing, but also email, address books, web editing and news groups. Netscape was OS-agnostic and distributed software for use on Windows, Mac and UNIX. On the other hand, Microsoft integrated Internet Explorer into Windows and rebuilt Windows for the Internet era.

The examples above show that we tend not to see platform wars between companies with similar vested interests, market positions and business models. Instead the competitors are very different and as a result, the platform that wins ends up defining the values and business models for the future. Just as World War 2 ended up dividing the world between the two victorious ideologies (capitalism and communism) and ending fascism, platform wars in computing similarly define the mid-term fate of technology.

The Windows vs Mac platform war

The Windows vs Mac platform war was decisively won by Windows. Although the Mac did not go out of business and survived in a tiny niche, Windows held 90% market share and dominated business and home use alike.

Because the values held by Microsoft were about spreading computing as widely as possible, the focus was on reducing prices and making this as affordable as possible. As a result, what followed was cutthroat competition among hardware vendors and perpetual cost cutting with razor thin margins. Innovation between hardware vendors ceased and product differentiation increasingly relied on what CPUs were placed on the motherboards. Hence the era of dull and boring beige boxes.

People often blame the lack of innovation on the maturity of the market, saturation, and the paucity of new and worthwhile things left to do. I argue that this is not the case and instead, what causes stagnation, is the value system of the victors of the preceding platform war. That is to say, whoever wins the platform war and their value system defines subsequent innovation.

The iPhone vs Android platform war

The iPhone vs Android platform war ended up in both sides getting what they wanted in the beginning but not much more. That is, iPhone won the customers who are willing to pay significantly more for high-value products, and Android won those who were not. Although Android ended up with more than 80% market share, the minority iPhone users tended to be more affluent and even with less then 20% market share, the number of users were still massive. Therefore we see the value systems of both companies still having a strong influence on the market.

This is why, even though the market has saturated, we still see significant innovation on the vendor side and even rising average selling prices (ASPs). Because Apple leads the market with very expensive phones that rise in prices, Samsung and other Android vendors can also follow suite and develop high-end, high-priced phones which included innovative technologies. Apple keeps raising the bar on what high-end flagship phones should be capable of and what they should cost, and this provides Android vendors with an umbrella under which they can invest in their own innovative ideas.

If iPhone had decisively won this war, then we would probably be seeing a landscape where touch-based smartphones would still be a premium product benefiting the minority. If Android had won, then we would probably be seeing cutthroat competition with a dearth of innovation. We are lucky that the current landscape is a good balance between both, and that innovation is being enjoyed by all.

A future iPad vs PC platform war

As mentioned above, the PC vs Mac platform war was decisively won by Microsoft Windows, and as a result, we ended up with a situation where vendor innovation almost ceased to exist. With the iPad coming from a different value system and igniting a new platform war, this will usher in a new era where we will see many new ideas and concepts.

In fact, we have already seen this happen. The popularity of the iPad has given rise to PCs that fold and detach and which have become much more mobile. There are even rumors of ARM-based Windows devices, which will hopefully allow even more mobile designs with longer battery life.

We have also seen the premium-priced iPads helping PC vendors command higher prices. Although entry-level iPads are priced very competitively, the high-end iPad Pros are expensive and so this has provided an umbrella allowing PC vendors to innovate with designs that were not cheap.

In the future, as iPads evolve to become even more competitive against PCs, we can expect to see even more innovation come out from PC vendors. We might even see companies like Samsung integrate innovative technologies like folding displays or something even more exotic. We are currently severely lacking in an OS that can fully contend with iPad OS, but even this may not be so far away. The new iPad vs PC platform war has and will continue to spark innovation in a previously stagnant market, and although the PCs of tomorrow may no longer look the same as the ones that we have today, there is much to look forward to.

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