Oct 30, 2010

The Open-Economics of Technology-1

While I was studying engineering, there was a huge fan-following towards this Open-Source / Open Standards in technology.. I guess thats still there.. Microsoft is/was seen as the villain.. Linux was the holy grail of computer science folks..

6-8 years have passed by after that .. Now, the villain is Apple , with its tightly controlled iOs,Appstore ecosystem.. And the perceived open-angel is Google with its Android ecosystem. Steve Jobs in his various interviews and talks insists a profound point about this open-ness. "Ultimately customers are not bothered about whether the product is open or not..They are bothered about the experience with the product"...

There is this nice NYTimes article that I came across recently.. They are comparing the Mac-Windows phase with iPhone-Android 'battle' now. In the quest for perfection in experience, Apple has largely kept a close-knit system. In the quest for economies of scale, Android has taken a lot of manufacturers into its fold. For Google, achieving economies of scale matters a lot..Mobile Ad-revenue is a space that they really want to dominate. And to do that, they really need to make a large user-base on Android..

Is this really a head-on battle as analysts have been speculating ? Apple's goal is to create break-through products that gives a compelling user-experience.. Google's goal is to dominate Ad-revenue share from Search.. If we look from these two contrasting perspectives,Apple shouldn't ideally bother much even if Android installed base is gets much larger than iPhone base.. As long as there are enough App-developers making good Apps for iPhone, they should not really be bothered even if Android installed base is high..

Right now, making an App on iPhone is far more profitable than making an Android App.. But if the scale-economies turn the developers too towards Android, Apple should start to bother.. But the customer segment using iPhone is affluent. And, they are really not going to turn to Android for a fad towards open-technology anytime soon.. For them, its just the experience that matters.. I guess Jobs has figured that out.

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