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March 14, 2008 10:27 AM PDT

Behind Google's FUD campaign against Apple

Posted by Charles Cooper
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Forgive my flippancy, but I'm trying hard not to bust into giggles after reading about Rich Miner's prediction that sales of Android-based devices will outstrip sales of the iPhone.

Know where this guy can score an iPhone?

(Credit: Dan Farber/CNET News.com)

"Once you have devices out there from Motorola, HTC, Samsung, and so on, there's a much larger potential market on Android than for the iPhone," he said during a conference held at the Computer History Museum in Mountain View, Calif. He later added, "There are things I saw people doing with the first version of the Android SDK that it seems like you can't do with the iPhone at least at the moment."

All of which may be true and yet totally beside the point.

Let's call Google on what this really is: Considering how there are currently ZERO Android devices in the market, Miner is engaging in (pardon the pun) major trash talking. Maybe Microsoft became such an easy target that Eric Schmidt decided it was the right time to pump up the volume at Apple's expense. I don't think Steve Jobs is sweating any. Down the corridor from me, my colleague Dan Farber recalled correctly that Apple's following the same playbook that's served it quite well in its other markets.

It's the same dilemma Apple has faced over the years. Should the Mac OS be licensed to any reasonably qualified manufacturer? Clearly, (Jobs) has proven that he can create a great PC business with 5 percent market share.

The first crop of phones resulting from Google's Open Handset Alliance aren't expected until the second half of the year. And yes, Android will not be tied to a specific device and thus the potential for monster sales exists--at least on paper.

But I understand why Google's drawing invidious comparisons with the iPhone. Apple may yet screw this up but there's powerful momentum behind the device. One week after announcing an iPhone software development kit, Apple's registered more than 100,000 downloads.

Android may offer the more open architecture, but Apple's decision to allow third-party developers to build applications is just the fillip the iPhone needs to win converts in the business world. So if you're Google, I suppose it comes down to a matter of "why not?" A little bit of FUD at this juncture doesn't come at a cost. But words alone won't turn Android into the success its creators envision.

Charles is an executive editor with CNET News. He has covered technology and business for more than 25 years. A graduate of Queens College and Columbia University, Cooper began his career in journalism at the Associated Press before moving to technology coverage. Before joining CNET News, he worked at Computer & Software News, Computer Shopper, PC Week, and ZDNet. He received the Excellence in Journalism award from the Northern California branch of the Society for Professional Journalists for column writing. In addition to his blogging and podcast appearances, he is a co-host of the CNET News Daily Debrief. E-mail Charlie.
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Add a Comment (Log in or register) 68 comments
by theBike45 March 14, 2008 11:36 AM PDT
Creating a great PC market with 5 percent share rests totally upon the forbearance of Microsoft in allowing their Office suite to be ported to the Mac, along with their browser. Without those, Apple couldn't give away their computers. The Apple is two years behind Microsoft in most respects, something that MS obviously does not want to be widely known, lest Apple disappear and monopoly charges roll out again. MS is keeping Apple computers alive as something to point to to "prove" they aren't monopolists (of course, a monopoly exists if a company has anything over 80% share, so we are in the realm of fantasy). Anyone want to offer another explanation for a company (MS) giving a competitor (Apple) $100 million to make sure they don't fail? It's hard to figure which is the most rotten of the two corporations : MS for their monopoly or Apple for their extreme price gouging.
Reply to this comment
by andrewrm March 14, 2008 12:05 PM PDT
Giving $100 million? MS realizes that there is money to be made for sure with MS products being ported to Mac. Apple is very profitable based on its own with a total "Apple Lifestyle" of products (iMac-iPod-AppleTV). Having MS apps is good but they already have in house products that are compatible with MS and often have an easier and less buggy interface.
by BlackMicro March 14, 2008 12:07 PM PDT
Bike you couldn't be further from the truth if you tried: http://www.roughlydrafted.com/RD/RDM.Tech.Q1.07/592FE887-5CA1-4F30-BD62-407362B533B9.html
by BlackMicro March 14, 2008 12:09 PM PDT
While Microsoft positioned Internet Explorer as a primary issue in its negotiations with Apple, the real reason Microsoft agreed to commit to Mac Office and lend some symbolic support for Apple with a stock purchase was to resolve outstanding patent issues.
by MyRightEye March 14, 2008 12:12 PM PDT
They continue to make Office for Mac because it makes them more money per customer than the Windows version does, something that have admitted themselves. Windows is 2 years ahead of OS X? Is THAT what you meant? You're proof that parents need to stop smoking crack when they are pregnant.
by williamQ March 14, 2008 12:20 PM PDT
QUOTE: "MS is keeping Apple computers alive as something to point to to "prove" they aren't monopolists"

Thanks for the best laugh of the day!
by jbyron00 March 14, 2008 12:32 PM PDT
Wake up, man. I think you are still living in the 90s. It may be true that M$ promised to develop Office and pumped in $100MM just to keep Apple alive, but that was 1997. Today, MS continues to develop Office for Mac is simply because it's a profitable business for them. Saying "Apple is two years behind Microsoft in most respects..." is a total ignorance. Just look at the mobile market. MS may have started developing Windows Mobile for handsets many years ago, but today all Windows Mobile devices combined trails iPhone in market share. Oh, there is something called "Zune". Would you say Apple is also two years behind this MS baby?
by scratchss March 14, 2008 12:39 PM PDT
I'm willing to give another explanation.

Windows source code used code from Apple's quicktime. To settle this lawsuit, (which was basically another time microsoft broke the rules and it did not matter because by the time the courts deal with the issue the item stolen is obsolete) paid apple $150 million dollars, and agreed to put Office on the mac, which apple used to survive. So Mac OS code is in every copy of windows, as is unix code.

for a reference.. http://en.wikipedia.org/wiki/Notable_litigation_of_Apple#Apple_v._Microsoft.2C_Intel.2C_and_San_Francisco_Canyon_Company

I'd also propose that the 5% market share of apple users represents a disproportionate share of microsofts income, since they don't pirate as much... http://www.microsoft-watch.com/content/business_applications/microsofts_big_mac_sales.html
by madmacman March 14, 2008 12:49 PM PDT
Seriously, are you living in this century. Yes, MS "allows" Office to be used on Mac's that is just sound fiscal sense. As to the Browser IE is no longer a part of Apples software package, hasn't been for years. Two years behind..... what are you smoking my man. Vista is at least 5 years behind OS X 10.5, when it works. XP the preferred choice of PC users (because Vista sucks), is at least 7-10 years behind OS X 10.5, and both XP and Vista are cheap knock offs of the aforementioned OS X. Finally the $100 million, was given to Apple for the reasons mentioned in other replies over a decade ago. At which time, it did not save Apple, contrary to popular belief. Apple actually had roughly 4 billion in the bank, and despite dismal sales, was never in any real trouble. Today they have over 18 billion in the bank (cash reserves), and are once again the driving force in the computer industry.
by setgo March 14, 2008 12:53 PM PDT
It wasn't a gift, it was a loan that they paid back. At the same time Apple also dropped the lawsuit against them for stealing their GUI. You don't know much do you bike45? You just type whatever comes to your head.
by rcrusoe March 14, 2008 1:14 PM PDT
Congratulations, theBike45, you are the most successful troll I've seen on this site in quite some time.

"Don't argue with a fool. The spectators can't tell the difference." -- Charles J. Nalin
by tucker_india March 14, 2008 2:05 PM PDT
bike45,

you think the moon is made out of cheese don't you?

go on, admit it. it's made of cheese right? right?
by edgedesign March 14, 2008 2:24 PM PDT
I will admit that without Office, Apple would feel the crunch. I also agree MS may have helped keep Apple alive during the late 90's to help fend of more antitrust problems. However, the rest of your observation is waaaayy off.

Apple two years behind Microsoft?!?!
The only time MS was ahead of Apple MAY have been around 1995/96. MS has been copying Apple interface and technology for years. Licensing their shoddy OS to any hardware company (many of whom make lower quality, cheap, styleless boxes) is what garnered their large market share. OS X is way ahead of Vista. That's why many are now switching over to Mac.

Apple for their extreme price gouging?!?!
Compare an equivalent hardware/software combo and you'll find Macs are not
'extremely overpriced'. In fact, in several instances, they're less expensive. Now figure in ROI and hassles with viruses/bugs - you'll find Macs are much cheaper if you value your time and work.

BTW: MS didn't get into trouble on both sides of the pond just because they had such a large market share. They got in trouble because of their shady business dealings - withhold their OS when vendors wanted to pre-install third party apps, disabling media players in favor of their own, integrating their browser into the OS in a way other could not compete. Etc, etc, etc.
by james913 March 14, 2008 3:00 PM PDT
> [Apple] rests totally upon the forbearance of Microsoft in
> allowing their Office suite to be ported to the Mac, along
> with their browser.

Office is indeed very important, and you're right that it was in Microsoft's interest to keep Apple afloat. However Microsoft's browser is a different story; the vast majority of Mac users use Apple's browser, Safari.

> Apple is two years behind Microsoft in most respects

Nonsense. The Mac operating system is widely considered equal or superior to Windows in many respects. Even PC Magazine (www.pcmag.com) has said so in recent reviews.
by March 14, 2008 3:50 PM PDT
I don't know anyone that uses a Microsoft browser on a Macintosh...
by ewelch March 14, 2008 3:53 PM PDT
Man, are you out of touch. Microsoft is years behind Apple. As much as Apple needed Office, Microsoft needed Apple to show they're not a monopoly that should be broken up.

The $150 million Microsoft invested in Apple was a miniscule part of their operations at the time. Apple has sold those non-voting shares. To imply Apple needed that money to survive is ludicrous and only proves you don't know anything about what Apple is about.

Oh, and OS X is years ahead of Vista, and their market share is growing right now at four times the rest of the industry is.
by tomzer1 March 14, 2008 4:00 PM PDT
Man, you really are out of touch. First of all, Microsoft stopped making Internet Explorer for the Mac several years ago. That hasn't seemed to hurt Apple at all. Apple's success doesn't hinge on $100 Million given over 10 years ago. They are a multi-billion dollar company, even then. And as for prices, a Mac is always cheaper than a comparably equipped Windows Machine...The hardware prices are close, but the licensing and maintenance costs of Windows over time always make the Windows machine more expensive. It's not 1996 anymore.
by JuggerNaut March 14, 2008 7:40 PM PDT
Dude, MS Office was pretty much born on a Mac. MS Word and Excel (previously named Multiplan) was first on Mac, then on Windows. PowerPoint was also a Mac first application that got ported over to Windows. Apple got Microsoft into the software application business because of the Mac. All Microsoft did during the early days was programming languages and a sorry excuse for an operation system called DOS. Apple has never been behind Microsoft in the realm of innovation. Heck it took Microsoft a decade to catch up to Apple and at least two decades to catch up to Commodore!
by sebastianlewis March 14, 2008 8:06 PM PDT
I guess the fact that they are growing faster than the rest of the market in personal computers and the fact that they have overtaken Dell in laptops in higher education sales (an important market since graduates who become entrepreneurs tend to use the same computers in their professional lives) means little to you? Don't be fooled by the show and tell that Apple and Microsoft had in 1997, Apple wasn't at risk of dying but press sites like the one I'm typing on liked to overplay the "beleaguered Apple" bit until it became "common knowledge" or better known as popular opinion, that Apple was basically dead. They weren't in good shape but they definitely weren't dead and still had plenty of cash to keep on going on.

If Apple were in horrible shape, $150 million wouldn't have done much to stop it. What Microsoft was more concerned about was the patent disputes that Apple was suing Microsoft for, and of course Microsoft's very profitable Mac version of Office (although using it to push IE further was a nice cherry on top for MS).

Also your knowledge is a little out of date, Microsoft stopped development for IE for Mac after Apple started developing the Safari web browser and the WebKit browser rendering engine, they ported this same software to Windows fairly recently to try and push adoption of WebKit and web standards, though I think this was unnecessary since Firefox is doing a brilliant job of doing this by itself, it'll make web developers happier when they're doing testing and also gave them a way to test iPhone site compatibility when they built their MobileSafari optimized websites, and really it's just not natural having the menu bar built directly into Safari running on Windows (iTunes did this a little better by adding it to the title bar), nor is it as nice as Safari on Mac OS X.

Sebastian
by jaypres March 14, 2008 10:21 PM PDT
I thought I was reading a 1997 news report from CNET. Got to check the date to make sure I am reading correctly. Man, this guy is plain ignorant.
by pabugeater March 15, 2008 8:22 AM PDT
"Anyone want to offer another explanation for a company (MS) giving a competitor (Apple) $100 million to make sure they don't fail?"

As another poster noted, MS pirated early Apple core operating system code (1983), and was later called on it. MS had access to this code because Apple was one of Gate's first customers and MS had no experience writing mouse-driven applications.

In 1997, Apple resolved its complaints against Microsoft in a deal involving Office, Internet Explorer, and that $150 million.

You are reading history as you want it to be, not history as it actually was.
by Antixo March 16, 2008 2:59 AM PDT
Oh you gotta be kidding. You're talking about the Apple that was in trouble last decade and yes MS did come in with money then. But things have changed from that.

These days MS most certainly have nothing to do with keeping Apple alive. Having Office on Mac is no more a lifeline than it is necessary. Oh btw.. Why would anyone in their right mind use IE on a Mac. Actually it hasn't even been ported to Mac for a long time. As I said you're talking of a time long since gone.
by humble_developer March 17, 2008 6:23 AM PDT
Gads...
After spending untold hours trying to fix Vista problems you will have a hard time convincing that Apple is two years behind. It feels like MS has taken that step...and it continues with confusing developer and customer choices.

That investment was a shrewd move at the time for antitrust reasons and customer support reasons, but Apple hardly needs that now with about $18B in the bank. From what I can see they have among the highest margins in the business, and we have seen a lot of growth in corporate conversions. It started early last year - I wouldn't call it a big trend yet but it is clearly happening.

About price gouging - just open up the case on a Mac Pro and compare it to any traditional PC box - it looks like the difference between a Lexus and a lawnmower. Now I realize that the physical box does not make a better system alone, but it's all part of the build out cost. I'd much rather spend my bucks on an Apple than the HP's and Dell's we just bought. I can only teel you what we see in supporting approximately 1000 PC's and about 300 Mac's - the Apple products require roughly 10% of the support time. Generally we put them in and seldom hear much, but we can count on support routinely on the MS systems(fortunately!).

Opening up the iPhone platform to outside development is bound to create many corporate apps, and I think it exposes those developers to a BSD/Unix environment. That is bound to have some follow on to the rest of the OSX platform.
by Buttercup1993 March 14, 2008 12:11 PM PDT
Anyone want to offer another explanation for a company (MS) giving a competitor (Apple) $100 million to make sure they don't fail?

Yes. Two words: Industrial Espionage. And, of course, getting caught at it.
Reply to this comment
by Galaxy5 March 14, 2008 12:49 PM PDT
I'd like to clarify that Apple caught Microsoft stealing code from QuickTime through a contractor and reusing it in Windows Media Player.

And this, during the antitrust investigation. Luckily for Microsoft, the fed looked the other way, and Apple got Office for "the forseeable future" (it's been ten years and four versions now), along with that $100 Million non-voting stock "investment" - which was worth ten times as much in public relations as dollars.

Bike45 clearly has many assumptions about the Apple-Microsoft relationship that were formed in the crucible of the mall arcade over bags of Doritos.
by chris_d March 14, 2008 12:51 PM PDT
The iphone has great software and the new SDK means great apps, but there are two problems. The first is at&t (formerly sbc). Their coverage in many areas is horrible, and they reserve the right to cancel your service if you use extended network too much. Also, they're (at&t) just a really terrible company. The iphone SDK looks really good though. It's a shame it's tied to a crappy network.

The other problem could be apple's control of the device. They're being just like verizon is with phones. Verizon controls which apps go on the phone, and how you'll use it. When you get a verizon phone, you pay for it, but verizon still owns it. Apple intends to do the same. At least you'll be able to get freeware apps for no charge. But still, no emulators, no java, unless apple says so.

The android platform has the potential to be bigger than iphone since you'll see it on CDMA networks; probably sprint and verizon. If it offers uses great software with more freedom, it could give iphone a run for its money. I wouldn't count it out.
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by grossph March 14, 2008 1:13 PM PDT
well since AT&T is the largest cell provider...I think it makes sense they went with them...Business 101.....and the fact that GSM is pretty much the defacto standard thoughout most of the world....again business 101
by sebastianlewis March 14, 2008 8:18 PM PDT
Count the lack of Java as a blessing, not a curse, same goes for Flash. I can't stand either, Java apps on the client side being slow as hell and Flash just being downright annoying in the browser (and SLOW/BUGGY).

But regardless, Apple's maintaining control of the device to maintain quality and reliability, though I do worry about potential conflicts of interest (apps that will compete directly with the apps Apple already has). For example one of the complaints is that 3rd party Apps can't run background processes, the reasoning behind this is you have maybe 76 MB of RAM to work with after you factor in RAM allocated for the system, this is quite a bit compared to other mobile devices but that's still not a lot to work with. If you allow 3rd party apps to overload this with their own background processes it's going to drain the battery and slow the device to a crawl. The workaround for this is to save the state of each application when you quit it (which happens when you hit the home button) and then cut down the start time to as close to nothing as possible, which isn't hard since there's not much to load into to begin with so only essential services will startup in RAM. The reliability of the device is of much more importance than a dozen different background processes from a dozen different apps running at the same time.

Not only that, but these devices aren't even comparable to Verizon's POS BREW. These are desktop class applications running on a device that makes everything else on the market look like last century.

The Android has potential on paper, it might be more popular than the iPhone, it might not be. I only hope that it eliminates what's left of Palm and destroy WinCE as an option. The real competitor Apple might need to look out for is Nokia, but I hear those N95s don't offer much in the way of battery life which means that Nokia is prioritizing features over usability and reliability which as Microsoft has proven (regardless of their market share), is just not a good formula and makes for a crappy product in the end. I still hold out hope that they will be a competent competitor to Apple if they re-prioritize usability/reliability over features or are saved by some miracle in batteries, and leverage Ovi with a cut down product line.

Sebastian
by ArtInvent March 14, 2008 12:54 PM PDT
It amuses me that the iPhone - which has so far garnered what? like maybe a tenth of a percent of market share in cell phones? - is considered some kind of untouchable market leader. Yes. It's an innovative and compelling and cool device. It's got wonderful touch screen nav. All of the JesusPhone accolytes have failed to explain exactly what it does that other devices can't and won't be able to do. It's a little portable computer thats most impressive feature seems to be web browsing in your pocket. That's neat, but last I checked there was no patent on this. Apple has a god-awful long road ahead of it before it even reaches 5% of the market, and even that is hardly a given. Get a grip and realize that Nokia alone will likely sell close to a half billion - that's with a B - phones this year.

All those other phone manufacturers out there will be keen to equal the iPhone in functions if not in absolute slickness. Apple isn't going to license their software to them, period. Google will. And you can bet that Google's apps and search etc will probably be pretty nicely integrated - along with anything else any developer in the world would like to add to that. I'd say the potential of Android is huge, unless it completely sucks or something.
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by grossph March 14, 2008 3:11 PM PDT
well you obviously haven't kept up...the iPhone has bout 21% of the smart phone market and blackberry has about 48%...so I would say that is pretty good for a product that has not been out for even a year.....Android has nothing....yet...and it is a platform...Windows is a platform and their are horrible computers out there....
by sebastianlewis March 14, 2008 7:48 PM PDT
Problem is they don't focus as much on usability. When something has 10x as many features as any other device on the market but almost all of them are barely usable, does that make for a killer product? The iPhone took away almost everything and presented developers with a canvas, they offered location services that will be less of a drain on battery life, they offered a somewhat behind the times but still decent always on connection and backed it up with WiFi when that is available to you, and they offered only a screen and an accelerometer for the User Interface. Using the APIs available, developers will be able to do A LOT with the iPhone. By not having any hard buttons on it, the iPhone is actually less restrictive in what you can do because it gives developers a little more freedom to play with the UI, especially in immersive applications.

To get into the business market, they did the simplest way they could: they licensed ActiveSync and built it into their pre-existing apps that correspond with Exchange, and when you go home and don't want to be bothered by work, there's a simple switch to turn it off. They also played off their iPod brand by building the best portable media player software into it. On paper, many other devices can provide some or all of these features, but while features look good on paper, if they're frustrating to use or come at a significant sacrifice of usability (or worse, battery life so the whole thing is unusable until you recharge it), then it's worthless.

Sebastian
by BIGELLOW March 14, 2008 1:17 PM PDT
I don't understand... you basically say that the guy is "trash talking" but then go on to say that everything he said is TRUE. Look, the guy was just stating facts. You admit these are facts. You say "All of which may be true and yet totally beside the point." Beside WHAT point? The only point he was trying to make is exactly what he said and exactly what you agree "may be true." It seems to me that the only one with an alternative point to prove is you, and you aren't proving it by countering his facts... you're just proving by saying "neener neener neener." I'm just not understanding the point of your article, but that's totally beside the point. ;)
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by charlie cooper March 14, 2008 2:07 PM PDT
ha. well, in my old neighborhood, that's trash talking. when you count POTENTIAL noses, it looks good on paper. but first let's see them execute on the plan. maybe they'll live up to advance billing. but until then, i'm not buying the hype
by sebastianlewis March 14, 2008 7:42 PM PDT
It's beside the point because there are zero phones on the market running Android.

Sebastian
by zmonster March 14, 2008 1:43 PM PDT
What irritates me is that Eric Schmidt is on Apple's board of directors! First of all why did Google come out with a cell phone platform in the first place? Schmidt became a director of Apple well before the iPhone. Why is a director of Apple producing products that are in direct competition with Apple? Did Google steal any iPhone ideas for incorporation into Android? I personally hope Apple protects their intellectual property and sues Google if applicable. This whole thing stinks as far as I'm concerned.
Reply to this comment
by sebastianlewis March 14, 2008 7:51 PM PDT
That's irrelevant to Google, and Google is going to do what's in the best interest of his own company. You can be assured that it's not in their best interest to steal anything from the iPhone though because they're more interested in services over software licenses or hardware sales. They have nothing against the iPhone because it serves as a trojan horse for many of Google's services already (Youtube, Google Search in Safari, and Google Maps are right on the iPhone), but at the same time it's better for them to get on as many different handsets as possible to maximize their bottom line and if that means creating a competitor to the iPhone then so be it. Actually I believe Android was bought by Google, but that's beside the point I guess.

Sebastian
by Olu070 March 14, 2008 3:25 PM PDT
"It amuses me that the iPhone - which has so far garnered what? like maybe a tenth of a percent of market share in cell phones? - is considered some kind of untouchable market leader."

The iPhone had the 2nd largest market-share (>20%) of smart-phones in 6 months (US market). They aren't trying to compete with the billions of basic phones out there, so overall market-share means very little.

" Yes. It's an innovative and compelling and cool device. It's got wonderful touch screen nav. All of the JesusPhone accolytes have failed to explain exactly what it does that other devices can't and won't be able to do"

By calling it the JesusPhone we already know where you stand but I'll bite for s&gs. Just like most Apple products, the user interface and product execution allows users to use almost all of it's functions seamlessly, with little to no foreknowledge. This applies to newbies and tech savvy users.
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by ewelch March 14, 2008 3:55 PM PDT
Apple has 28 percent of the smart phone market, and 71 percent of web browser user of the Internet by cellphones. Your numbers are not only wrong, but spectacularly wrong. They are outselling ALL Windows Mobile phones combined.

As for the iPhone vs. Android, they are complementary. The Android is for those who won't want iPhones. And both together will divide up the smartphone market very nicely. That's how Schmidt can be on Apple's board and not cause problems.
by samkass March 14, 2008 3:51 PM PDT
Android will never have 5% market share in cellphones. Neither will iPhone. So the whole comparison with Apple's computer market is a red herring. Apple has 80%+ in music players and is #2 in smart phones. They're also nearing 20% in US home computer market share. Sure, if you count every computer sold on the planet they're in the 5% range, but who cares? Apple's making money hand over fist, they're making customers very happy, and they're growing faster than the industry in every market they play in.

Besides, most folks aren't going to buy a cellphone because it has a better or more open development environment. As long as the phone has what's right for the user and the dev environment is "good enough" for the developer, they'll sell all they can build very profitably.
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by manoftheisland March 14, 2008 9:57 PM PDT
http://gizmodo.com/gadgets/smartphones/iphone-greedily-eats-north-american-market-share-334516.php

27% of current smart phone marketshare.... its only matter of time... the iPhone will have over 5% market share with in the year... its almost a sure thing. the Google phone has alot of ground to make up and it hasnt even shipped yet... and who is going to make the hardware for it? I mean the software will be good b/c its google but who will make the hardware worth buying?
by Understarsidream March 14, 2008 4:41 PM PDT
I think some of the comments are hilarious - do these people not realize the cell phone market is NOT the smart phone market? They are correct in thinking Apple will never make a major dent in the total cell phone market but they don't care. It's about selling an entire package - the iphone, itunes, macs and tying them together all nice and neat. They've done a pretty good job at it so far. The iphone isn't perfect but no cell phone ever will be.
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by eldernorm March 15, 2008 3:55 PM PDT
Absolutely. Its good to see that at least a few of these readers have good sense. (Or are not MS paid trolls. ) :-)
by john55440 March 14, 2008 5:09 PM PDT
According to IDC, Nokia sold 437.1 million phones last year.

iPhone gets mountains of press, but its comparative sales are miniscule.
Reply to this comment
by sebastianlewis March 14, 2008 7:56 PM PDT
But it's profits are very real, and it's potential is there. What you're forgetting is that Apple hasn't yet launched worldwide yet but there is already a large market for unlocked iPhones in other countries, just imagine how sales will grow once iPhones launch in those territories. In addition Apple is making money off of the service contract itself, which no other hardware maker (except RIM who operates the server side of their Push Email services) is getting. Apple also makes part of the money Google gets from ads in Google search results done from the browser, and click-to-call services from Google Maps, and 30% of revenue from all music and software sold through their App and Music stores (well the App store isn't until June but you get the point, or at least I hope you do).

While typically only shareholders care about these, since you're concerned about market share and handset sales, I assume you must be an investor somewhere in this market. (No I'm not an AAPL shareholder)

Sebastian
by hypermark March 14, 2008 6:03 PM PDT
Ironically, in a recent post that looks at the potential of the iPod touch as the first mainstream Wi-Fi mobile platform, I anticipated that friends Google and Apple seem destined to become frienemies (ala Apple/Microsoft years back) given the market dynamics.

This is the relevant blurb from the article:

This is a major storyline to watch for the year ahead; namely, in an industry where the once impenetrable walls between media, mobile, PC and Internet are crashing down, seemingly only two companies ? Apple and Google ? have figured out how to ?Think Different? enough to play the disruptor role across all of these segments.

Given their respective mammoth ambitions, are ?friends? Apple/Google destined to become ?frienemies? ala Apple/Microsoft (circa 1990), and if so, when?

Check out the full article, ?iPod touch: take two? if interested:
http://thenetworkgarden.com/weblog/2008/02/ipod-touch-take.html

Regards,

Mark
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by sebastianlewis March 14, 2008 8:30 PM PDT
Not quite. Android doesn't really compete with Apple because Google has an interest of getting their services on as many handsets as possible, Apple already features them prominently with Google Search in Safari, Google Maps, and Youtube. Android is Google's trojan horse onto other handsets while trying to give the industry a common base, the only thing I'm hoping from it though is that it cleans WinCE and Palm out of the market.
by shadfurman March 14, 2008 9:31 PM PDT
ok, opinions aside this guy started off being sarcastic about googles optimism regarding androids "sales" (maybe I don't understand... but how are they selling an open source platform?) The author points out that apple only has 5% of the pc market. The ipod market is really the only TRULY successful product apple has released since the 80's (by #'s). The iphone hasn't yet proven it's staying power, it's not even out of it's fad phase yet! So far its just REALLY COOL! Now GOOGLE has built a billion dollar industry off of a search engine in only a decade (how long has apple been around?) almost all of their "gadgets" have been well adopted. AND they are offering $10 MILLION DOLLARS in a contest to attract innovative applications! It was enough to put a ship into space and dozens of other companies to try! I think they'll end up with one hell of a competitive product. I got a huge sh..crap list on apple... what does google have? tell me... I'm interested.
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by rattyuk March 15, 2008 8:16 AM PDT
Shame Apple are only offering $100 Million Dollars in development funding then/
by eldernorm March 15, 2008 3:58 PM PDT
Gee you seem to like raw numbers with out understanding what they mean. Does this mean that mankind should end itself cause cockroaches vastly out number us. They must be the rulers of this world cause there are more of them??? LOL

iPhone = fad phase. Guess you have NO idea what an iPhone is. Google 120 months = iPhone 8 months, yep pretty good comparison.
by Morison_morgia March 14, 2008 9:33 PM PDT
Here one great conspiracy of media is flashed out.

What is in there in iPhone? And what is not in Nokia N-series or E-series phones?! I think a bigger screen and a touch screen are the only advantages of iphone. But you can get everything in better way in nokia phones. For example iphone has only GPRS with 48Kbps data transfer where as new nokia phones have HSDPA with 3.5Mbps data transfer.

But the main problem is media support. Apple does a PING and it goes to people as BOOOM! only for the blessings of media! When people will compare the features of the products , they will certainly realize what they are missing.

At least in the other part of the world people are not that biased by media. Think about japan , china and other countries in Asia (I don't know much about what's going on in Middle East or Africa).

Second thing that comes out in comments is the control of the cell phone companies over people. People are bound to the cell phone companies in terms of using connection and features of the cell phone. It is really preposterous!!
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by sebastianlewis March 14, 2008 10:04 PM PDT
If you wish to criticize the technical aspects at least get them right.

1) The iPhone has EDGE, but it can fall back on GPRS/GSM if that's not available which offers approximately Broadband level speeds (220+ kbps or so). But a wireless connection is only as strong as it's weakest link (for example my Airport Express gives me a 54 Mbps connection with actual throughput being around 36 Mbps but my DSL connection is only 3 MBps) and AT&T throttles their HSDPA network (BroadbandConnect) down to 700 kbps or so.

2) The Media overreacts to everything, that's expected because the media is often wrong and often stupid. Regardless it's possible to filter it down to something more reasonable by using your own brain, my advice is to read multiple points of view, find the actually reliable sources and try to get your info directly from the horses mouth.

3) The iPhone is indeed a huge potential platform. It's a canvas, it has the best toolset and APIs of any mobile device in the world. The reason the iPhone is a big deal and worth getting excited about is because sales are strong, the current numbers don't even reflect how they will sell worldwide once Apple has all the biggest markets ready and more importantly: it's users actually LIKE using it. When you have a case of featuritis like Nokia and the N95, you end up with something that has a poor battery life, what's more important in a mobile device? A longer lasting battery with 95% of the features you want or all the features crammed in but a short battery to go with it? Think about it, do you believe design doesn't matter when it comes to the user interface? It's not about it being pretty, it's about usability at the same time, and that's something most phone manufactures don't get. They think cramming a T9 onto a J2ME phone and a faster radio will solve all their problems, but it doesn't, instead it confuses their product lineup and overruns the market with a lot of worthless phones. The cellular "phone" market is going to wither up and die within 20 years, maybe sticking around for the holdouts and the elderly at that time, pocket computers are the next generation.

4) Apple is working with the carriers to get looser restrictions, granted this isn't always as successful as they'd probably like, the end result is a lot better than before (they're making data plans a focus here since the iPhone pushes a lot of it).

Sebastian
by g15host March 14, 2008 10:32 PM PDT
IPhone's big splash seems have prompted a lot of people besides Apple to lose all sense of balance and say anything from any angle possible just to get attention. Every tech company expects the personal electronics technology and market to evolve, and Apple and Google are no different, like everyone else, just doing what they think they need to do to put themselves in position to keep making money in the future. Every company in related field inevitably competes one way or another. Apple builds really solid products, in an elegant way that appeals to enought people to create a royal following to keep them around. I am guessing 80% of iPhone owners will never care to hack their phone and will be please with it. Also I'm betting as Apple's position gets stronger through consumer base the iPhone will be more 'open' in terms of carriers and apps. Hackers who get tired with iPhone will then switch to the Gphone. That may be a good thing or a bad thing. Even Apple recognize the corporate interest is important in order to compete with BB, Palm, and WinMo that together still dominate the business arene. Google apps so far has not become the corporate business platform. Google rules as a 'go-between' to connect customers to companies with online tools, and I think they will focus on that aspect of the mobile market as well at least in the beginning. The free Android OS+SDK is just a donation/investment to device manufactures to get on the hardware. So the iPhone really will not be in direct competition with Android. Being a free and open platform will entice developers, but you are also counting on those developers to make or break your reputation. Lots of free and open software originally developed on Linux are great, but they still have not made Linux a common desktop OS. The problem is, a free and open OS does not give the different handheld makers in the Open Alliance any competitive edge over each other. So beyond the 'free' stuff, you still rely on your in-house developers and customization and hardware innovation and design to make your particular phone and platform more desireable than others. Google did not simply rise on existing free OS & S/W. It made itself from building the best search engine from the ground up from within, and then attracted the fans and following revenue. There are already Linux OS on mobiles right now. How many people have them and when did they last made headlines? We'll all have to wait and see whether consumers will take to a Google OS on their handset. it's hard to get people to change their habits. That's one reason for the Windows dominance. Even if half the people who bought an iPod also eventually buys an iPod Touch or iPhone, those sales will be phenomenal. As long as people can still access Google's online services from any phone, will they really need a Google OS?
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by DS9Sisko March 14, 2008 10:35 PM PDT
Funny, all of these comments about how Acme company's device has A, B, C, and D advantages over Apple's, as if by declaration alone the Apple product will fail. I recall similar comments have been and continue to be used when comparing Widmore-Hanso-Dharma MP3 players to iPods. it's always been true that Apple didn't make the first or the most feature rich MP3 players; they only made the best. Methinks the iPhone falls squarely within the same category.
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by maxcarmage March 14, 2008 11:27 PM PDT
c'mon. Remember the hype that Apple/Jobs stirred up over the iPhone 18 months before its release? Is Google doing anything that Apple hasn't done in the past; absent the throngs of people at MacWorld? Give GOOG a break, man. They aren't doing anything that hasn' t already been done. And from what I've read about the SDK release it's years behind the M$ smartphone. No ability to run apps in the background? Hmmmm. Reminds me of my old IBM PS2 circa 1989...
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