The fight for mobile dominance is a fight for platform dominance. A good analogy is the dominance of Microsoft (NASDAQ:MSFT) on personal computers. At a critical mass, like what happened with Windows, a single platform can effectively become a universal standard. Everyone builds for it because everyone uses it, and everyone uses it because everyone builds for it. The king of the PC era was not an equipment manufacturer, it was a software producer, and the same is bound to hold true for mobile.
This is the showdown between Apple and Google (NASDAQ:GOOG) right now. They’re on opposite sides of a fence pointing lawsuits at each other, doing everything in their power to grow market share. For the three months ending in August, Google’s Android platform represented 52.6 percent of the market, according to ComScore data, an increase of 1.7 percent from the previous three-month period. Apple’s share of the market grew 2.4 percent to 34.3 percent.
Together, that’s 86.9 percent of the market, and Google has a nearly 20-percent share lead. The reason for this is that Google has focused its efforts on building and distributing its platform, making it as easy as possible for manufacturers to build for. On the other hand, Apple insists on tight control of its product and software ecosystem. As a result, everyone from Samsung to Amazon (NASDAQ:AMZN) is building on the Android platform, pushing it toward critical mass, while Apple is left to fight the entire market by itself.
Apple’s “lone wolf” strategy has internalized profits and helped it grow, but it’s also clearly harmed it. Production and supply issues are right now undermining sales and as a result earnings expectations are being slashed – no small part of the stock’s recent decline.
The company has positioned itself in such a way that it needs to not just outperform a single competitor, but the entire market in which it operates. At the end of the day, it’s asking too much from a single company.
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