You have to do something pretty crazy to inspire a techno-bromance between the head Steve’s at Apple (AAPL) and Microsoft (MSFT).
Bloomberg is reporting that the tech heavyweights are in talks to have Microsoft’s Bing replace Google (GOOG) as the default search engine on the iPhone, and I believe it. There had to be a reason Microsoft released a Bing app for the iPhone, and with the benefit of 20/20 hindsight, it looks like it was a test drive.
So I thought long and hard this morning about what Google may have done to tick everybody off, and there’s only one conclusion:
They give away too much stuff for free.
This wasn’t a problem in the past because Google’s best free applications – like Search, Analytics, and Docs – didn’t step directly on the toes of Microsoft’s and Apple’s core businesses.
The success of the Android smartphone operating system changed that. As of this past November, Android-powered smartphones had 27% U.S. market share, according to AdMob. That number that will surely go higher with the release of Nexus One, as well as the countless other Android phones being planned by mobile-phone makers.
The ramifications are simple. Microsoft’s Windows Mobile is dead in the water. Android is the new ‘commodity’ smartphone OS. And it’s pretty damn good. And oh yeah, it’s free! What phone company wants to pay Microsoft for a lousy product, with the word Windows in it no less, when they can get a better one for free?
Google’s Chrome OS, which is coming to a netbook near you, is another problem for Microsoft. PC sales skyrocketed in the fourth quarter of 2009, with netbooks contributing a sizeable portion of the growth. Microsoft surely can’t be happy about Chrome-powered netbooks, which will take share in the booming low-end market.
On the Apple side, the best Android-powered phones are finally providing the iPhone with some competition. Yes, the iPhone is still the best phone on the market. Forget nonsense like screen resolution, LED flashes, and processor speeds – the iPhone touchscreen and user interface are the most user-friendly to regular people, and that’s what puts dollars in the cash register.
However, the equation shifts when you factor in AT&T’s (T) cruddy network. For many people, a Motorola (MOT) Droid running on Verizon’s (VZ) more-reliable network may offer a better user experience, just because of the reliability factor.
Thus, Google is dangerously close to damaging the iPhone franchise. And that’s a major problem when you consider that iPod revenues fell 12% last year. The iPhone was the perfect cannibal for the iPod because of carrier subsidies. It’s great business for Apple to get $500 or $600 for a phone that the public pays a couple hundred bucks for.
I’m still ranking Apple as King of the Hill in smartphones, but it’s paranoid for good reason.
Related posts:
{ 1 trackback }
{ 0 comments… add one now }