Profit Angle

I have read that Android's success is a direct result of Apple's iOS being a walled garden. Let's look at this statement now from two different angles. First, is the walled garden really bad? Second, is this the real reason that Google and Microsoft are actively developing their own hardware?

Is the walled garden really bad?

Apple curates the apps that are allowed into the App Store. This has demonstrably reduced malware compared with Android. Recently, a form of malware, called Gooligan, was found to be present in about 100 apps. It is present in about one million phones in the wild, and increasing at a staggering rate of about 13,000 smartphones per day. I would actually say curation is a plus. So, what is it that people prefer about the Android operating system?

Let's look at what makes Google's Android shine over Apple's iOS.

This article points to three main reasons: Android...

1. can be rooted
2. uses non-proprietary software formats
3. interface can be customized

Rooting

Talk about dubious value. Being able to root Android means (in hacker parlance) the phone can be rootkit'd. In plain English, it means that apps can enter superuser mode and obtain administrative privileges on your smartphone. Once that happens, they can reconfigure your device, redirect its output, and install their own choice of apps. In other words, you are exposed to malware that can steal your passwords, the money in your bank accounts, access your email, snapchat photos, microphone, track your location, keep logs of your text messages, listen in on your phone calls, and essentially every bad thing you can imagine. Malware on Android is a critical problem right now.

Your average consumer should never, ever root their phone. It's only for hackers, spies, and criminals to take advantage of you. What this represents is Google not looking out for you.

Now let's look at how pleasant rooting is on Android. Why should you root your phone? This article spells it out perfectly (while detailing how complicated, dangerous, and potentially undesirable the rooting process can be). The main reason that people want to root their phones is to get rid of the bloatware that's typically installed by the manufacturer (Samsung, for instance). Welcome to the same problem we had in the last millennium with PCs: shovelware. This is how they differentiate their phones from each other in the Android ecosystem -- the same way vendors used to differentiate their PCs in the Wintel ecosystem. But, in comparison, it's a fact that Apple now allows you do delete the pre-installed apps you don't want on iOS 10, without rooting your phone.

Many users want to bypass the complexity of using Terminal to obtain superuser mode on the phone's Linux kernel to change various privileges. Hey: what consumer would want to do that? So they buy rooting software to do it. Can you trust that software? No. In July 2016, rooting software was reported to have installed malware on 10 million Android handsets.

And, by the way, each manufacturer's phone has a different rooting process due to the security bloatware they've installed. Joy.

Non-proprietary software formats

This means that, unlike iOS apps, which are available only through Apple's own App Store, Android apps are available from several sources. The Google Play Store is not the only place you can buy and install Android apps. There are many alternatives, including Amazon Appstore for Android, SlideME, 1Mobile Market, Samsung Galaxy Apps, Mobile9, Opera Mobile Store, etc.

Is this a good thing? It does open up multiple sources for Android apps that run on various smartphones.

But what are the downsides of multiple app stores?

The first problem is fragmentation. Each Android smartphone has a different hardware configuration, which turns out to make the app developer's life hell. Each smartphone has a different screen configuration, for instance. Before buying an app with a specialized purpose, like using the GPS, or a game app with high demands, it's important to decide if that app will run properly on your phone. This is precisely why smartphone manufacturers have been building their own app stores -- not all apps in the Android ecosystem run on every phone.

The second problem is trust. Can you trust the app you download to be free of malware? You would like to know that the App Store you are using is checking for malware. Fundamentally, if they do not have access to the app's code, app stores cannot protect you from malware. What happens is this: you download an app, as it runs, it loads and install malware from some server somewhere. This installs Gooligan.

Nowyou find new apps simply appearing on your phone. This happens because ratings are actually steered by app companies through the use of the Gooligan software. Gooligan installs itself, initially, for the purpose of buying apps it wants you to buy, forging your approval to buy them (and possibly spend money on them) and then rating them highly. These apps can be installed because Gooligan can obtain system privileges. Usually this happens because you enter the admin password for your machine. Perhaps it's to give the app privileges to install some fontware or customization feature. These new apps it installs potentially contain the real malware, because you do not have a choice nor can you control where they come from.

Customizable interface

Really? Can't you customize the interface of an iPhone? You can customize the wallpaper and the lock screen photo. If you want to go further, you can use customization apps like Pimp Your Screen, Call Screen Maker, iCandy Shelves & Skins, Pimp Your Keyboard, and so forth.

On Android, you should ask yourself how much you want customization. After all, it might come with malware.

Oh, cost!

One of the main reasons that people prefer Android is the cost of the phone. Which really has nothing to do with Android. Actually, cost is normalizing because deals with carriers are being made that pay for the phone up front, in exchange for locking you into the carrier for two years (usually). But this applies to all phones now. So, cost is not as much a reason as it used to be. But the plain fact is that, without a carrier deal, Apple's iPhones do cost more.

Why Google and Microsoft are developing their own hardware

Second, is that even the reason that Google and Microsoft are developing their own hardware? No, it isn't. The real reason is profit envy. The price of software has been dropping quickly since the App Store was created. This means it's harder for software-only companies to keep operating margins high. Think Microsoft, who has gone to subscription software to guarantee upgrade revenues, amidst unpopular OS upgrades, like Vista. The profitable niche, mobile devices, must look pretty good to them. Should they merely license OS to hardware manufacturers, like Windows? Will that work? No. Google gives Android away for free: upgrades don't cost anything. So nobody will buy Windows Phone if it costs money. Also, hardware and software both need to be upgraded.

The real reason is that, given that software is becoming essentially free, to make the profit you must make your own hardware. Also to make the hardware work best, you must develop custom software. In fact, the best features require both hardware and software to make them work.

This tight vertical integration is why Apple reaps well over 90% of the profits in the smartphone industry year after year. They sell their own hardware. That, and their profit margin is about 40%.

Value proposition

So, why are people willing to pay a premium price for iPhones?

As always, the price is paid based on the value perceived. The value of better user experience on iOS, easier installs, significantly better privacy and security, and great design is huge. It leads to unprecedented user satisfaction ratings and loyalty. People pay for this, and enjoy the rewards.

Apple devices, on the whole, are more up to date than Android devices. Here is a chart of Android OS versions as of September 13, 2016 and their share on smartphones. It clearly shows the latest version, Marshmallow, at 18.7% installs. And on iOS? As of November 27, 2016, 63% of iOS devices have upgraded to iOS10, 29% are running iOS 9, and 8% are running earlier versions. Get the latest stats on Apple's App Store page.

Clearly Apple's customer base upgrades significantly faster.

General comparison

Consider this article on iPhone vs. Android as a near-complete analysis of the subject.

The Nail That Sticks Out

There is a rule in conformist societies (and companies) that implicitly limits their evolution: the nail that sticks out gets hammered down. This rule almost single-handedly leads to stagnation.

Why Hammer It Down?

When a civilization is structured, the nature of specialization helps to build an intricate machine of the society, where individuals must do their specific part to keep society going.

And when various winnowing forces such as feudal warfare, disease, or sequestering on an island keep a society's population constant, or force it to grapple with a shrinking base, the structure of society must be tested and tempered. The machine that society has become must operate in lockstep to survive. The pressure on an individual to carry on his parents' trade and role models becomes very strong indeed. An individual with new thoughts, swerving from traditional roles and creating disruption, cannot be tolerated. And such rules are born.

Culture thus evolves to accommodate and sustain this pressure on the individual.

However, this doesn't happen quite as easily when a civilization's population is sufficiently large during its structure-formation stages. When services can be performed by a small fraction of the population base, there is actually pressure to move away or to do something different. Progress is rewarded, not squelched.

For the same reasons, competition also leads to progress.

On an island there is practically nowhere to go, since the barrier to moving away is essentially life in exile. But consider for a minute the case study of San Francisco, where the population has held nearly constant since the 1950s. There it is possible to move away but sweeping changes are still difficult to accomplish. Yet culture continues to evolve. Mass transit was developed. Even urban renovation continues.

Cultural forces can also promote or prevent stagnation. San Francisco's culture has changed over the last few decades significantly, and this has prevented stagnation. Pockets of culture remain and provide alternatives to what could have been a regimented, conformist society. Particularly after the 1906 earthquake and two world wars acted as winnowing forces.

Culture and Its Influence

Culture can also be a force that leads to societal stagnation because culture provides us with laws, through morality, and peer pressure, and thus imposes its will on individual behavior. When culture is too regimented and strict, this can lead to suppression of new ideas. In the middle ages, Copernicus' views of a solar-centric astronomical neighborhood were suppressed in favor of an established view. Even Galileo, whose views were provable in ten minutes with common everyday objects, had his views suppressed.

Culture can come from religion, this is true. But it can also be influenced by war and other external forces. After a war, for instance, a local culture's survival can be threatened and so the pressure of sticking around to keep the culture alive can become paramount.

The conformist society also promotes a rigid class structure with despotic rulers. The fear of being hammered down is constantly reinforced by this.

Copying

So, what does a structured, conformist society do when it is presented with external forces that threaten to overcome it?

It evolves.

But it does so by examining the advantages of its external threat and duplicating them. In this process the society applies its machine-like efficiency to survival. The society is already efficiently shaped for the purpose of retooling and adapting. Feudal warfare and the constant advances of weapon-making have shaped the society to this task.

What a society must never do is to kill off its talent, and thus its greatest advantage. It is this capability that keeps it alive during times of adversity. It is the talent that keeps a society mobile and adaptable.

Disruption Then

But there are inherent adversarial forces that even the talented cannot surmount: disruptive forces.

Technology can provide disruption like no other force.

I have talked about disruptive technology before and its effects on brick-and-mortar, the dissemination of information, the replacement of old gadgets by new ones (cameras, televisions, games, and music media).

I have also talked about the disruption of fossil fuels and their eventual replacement by battery energy storage.

Disruption Now

Right now there is a disruption in mobile technologies that is challenging the old guard of desktop systems. This is a serious problem for the old guard. Either they must embrace the change or they must use disinformation to fight it. And the second option only really postpones their inevitable death. Adapt or die. Never was this more at issue than at Microsoft.

Their core talents were in the desktop Wintel paradigm, which is quickly fading. Megalithic applications like Office and Word are quickly being replaced by the lighter mobile applications, which can be sold over the air. The advantages of an adaptable, mobile enterprise are obvious.

Now Microsoft is being criticized for implementing two different interfaces in Windows 8, provoking some usability researchers to declare that users should just wait for Windows 9.

As for the advantages of the mobile enterprise, consider for a moment the Apple store and the Microsoft store.

Here's a YouTube video contrasting the traffic of the two stores on Black Friday, the massive shopping day after the American holiday, Thanksgiving.

Microsoft copied the spartan wood tables and lighter ambience of the Apple store, yet their inability to embrace mobile point-of-sale systems seems to be costing them.

At Apple stores, the salespeople help you one-on-one, and use an iPhone with an integrated credit-card reader to complete your transaction. You even sign for the credit card transaction on the iPhone. The first time I visited an Apple store, I got the sense that it was the future of the in-store buying experience.

Let's contrast that with the Microsoft store experience. A friend of mine went to a Microsoft store to buy a Surface tablet. He was directed to a single place where the sales took place (sounds a bit like a cash register doesn't it?). The point-of-sale system crashed, complicating the transaction significantly.

While Microsoft stores might start using iPhones with integrated credit card readers, it seems improbable that a Microsoft employee would actually suggest that. Perhaps there is a Windows 8 Phone alternative? Well, if so, why aren't they using it?

My point is this: Microsoft has almost 100,000 employees. They should have some fraction of those employees building apps for their Windows 8 Phone ecosystem. They can't afford to catch up by attracting developers at this point! That would take precious time. They should already have such a point-of-sale system in their bag of tricks. Don't these guys think ahead?

My suspicion is that somebody probably wanted to do just that, but he got hammered down.

New ideas and new concepts replace old ones. Many of the trends that shaped the progress on the desktop simply do not work in the mobile computing space. Even Moore's law seems outdated, as I mention in one of my more recent posts Keep Adding Cores? It's clear that computers are simply built differently as a result of this disruption. When you consider that batteries are the power source, then power management becomes central. Efficient and targeted computation becomes highly desirable, rather than general processor computing.

What Disruption Comes From

Disruption comes from people.

People with new ideas.

New ideas whose value can easily be demonstrated to a large number of people.

If everybody sees the value then they want it.

When everybody gets it, this results in significant change.

Change in how people spend their time. Change in what people buy. Change in how people think.

So disruption comes from that nail that didn't get hammered down: an individual with radical new ideas and a conviction that his or her ideas can succeed like nothing else.

Post-PC

On June 1, 2010 at D8 Steve Jobs proclaimed that we were entering the post-PC era. This was quite a shock to some, but not terribly surprising to others. He had just introduced the magical iPad on January 27 and on April 3, Apple sold 300,000 iPads on the first day in the US. Still, when Steve mentioned that the post-PC era was coming, I totally got it.

He didn't mean that the desktop was dead, just that fewer and fewer people would be using them.

My take on it was that you could carry your digital life around with you wherever you went. On June 1, I was already using it for email, web browsing, and my calendar. I knew that this constituted much of what people do with computers. Yes, I figured the vast majority of users could do what they needed on an iPad.

On day one, the iPad was activated by connecting it to iTunes on your desktop, tethering it to your PC. But, on October 12, 2011, with iOS 5's release Apple rectified this by allowing you to activate your iOS devices over the air. They cut the cord. This was done synchronously with the iCloud release, which enabled users to sync their data to the cloud.

So, last year I was thinking, who needs a computer?

Well, that thought really only occurred to me in passing, because I used a desktop computer quite a bit for computer programming development. I wasn't your typical user.

But, for the average user, a desktop or laptop might not seem necessary at all. And this is the essence of the post-PC transition. This is evidenced in the cannibalization of desktop PC, laptop, and netbook sales by iPad.

With every release of iOS, the notion that you don't need a computer is becoming clearer and clearer. Recently, Apple released iPhoto for iPad and iPhone, and I can tell you it is quite effective.

Naysayers

It wasn't at all surprising that a few people were attempting to debunk Steve's point-of-view immediately. Take Steve Ballmer, Microsoft's CEO. I imagine they would have everything to lose if Steve Jobs' proclamation turned out to be true. So what did he say?

At the same conference, D8, two days later, Walt Mossberg asked "Is the iPad a PC?" and Steve Ballmer answered "of course it is". The buzz was that the iPad was for consumption of media and that Windows tablets would be appropriate for creation.

Of course, history shows that Apple came out with iWork and most of iLife on the iPad very quickly. And now iPhoto is available. These are all creation apps. And now there are many, many creation apps on iPad for bloggers, artists, composers, and others.

Another of my favorite incorrect predictions was from Microsoft's chief research and strategy officer, Craig Mundie in March, 2011, when he said, when referring to iPads and other tablets, "personally, I don't know whether I believe that that space will be a persistent one or not". And he continued with "Today those things are primarily being used in a consumptive model, because they're not very good for creating stuff".

So it's not surprising that Microsoft, with everything to lose, has applied a full court press to the iPad. What's surprising is that they have had so little effect.

It turns out to be hard to make a tablet that is as good as the iPad.

Having been around at the time, I can say it took years to modulate Mac OS X into iOS (yes, that's actually where it came from). So moving a huge boat anchor like Windows onto a tablet is going to be quite fun to watch. And, by the way, I wouldn't hold my breath waiting for it if I were you.

For Windows users, all the news is bad. First off, the interface is totally different. Second off, it can't run your Wintel applications. Third off, Microsoft is not building their own tablet, so it's just going to be a comedy of errors when it does come out. Oops, scrolling isn't smooth. Ooops, the baseband is too slow, and bogs down the processor. Ooooops, did you say you want pictures on this thing?

What I can't understand is why Microsoft hasn't fired Ballmer. Microsoft has lost position, profits, and prestige in both the smartphone and the tablet markets, all under Ballmer's watch.

But it gets weirder still.

When Steve Ballmer brought in Bill Gates to check out the ill-fated Courier tablet, Bill had "an allergic reaction" to the content creation side of the device, questioning the logic behind such a positioning.

So it's just possible that Ballmer's decisions were simply influenced by Bill Gates' bad call on tablets.

And it is also possible that Microsoft has gotten too large and entrenched in Windows-desktop-centric Office-using views to mobilize itself against the threat of the iPad, which they probably still will downplay using obviously stupid and childish observations until they become the purveyor of dead OS's.

Well, I'm not the only one to think this, apparently. Goldman, Sachs saw the iPad as a serious threat to Microsoft, and downgraded them in October 2010.

Multitouch Revolution

The thing about iPad and iPhone both is that they employ a radically new way of interacting: multitouch. This is as easy as using your fingers to type, scroll, browse the web, and pretty much everything else.

Really, as soon as the iPhone came out in June, 2007, competitors worked to duplicate the multitouch experience. Before the iPhone, smartphones were all keyboard. Buttons everywhere.

Perhaps its RIM with their Blackberry phone that has had the most difficult time, since typing on glass is pretty easy, and requires less movement of fingers. I don't have any problem at all typing on an iPad, especially if I am using the smart cover to tilt it to an ergonomic typing angle. Again, email is a pleasure on iPad.

But the main thing about multitouch is pretty clear: everything is going that way. All the laptops are going to multitouch, and it works pretty well.

Gadget Requirements

There are other things that make gadgets easier to use than desktop computers. The portability aspect makes it possible to take pictures of things you see. This is a big one. The integrated GPS makes it possible to find your way, check traffic, and even check in to social media sites like foursquare.

Battery life is a big issue with gadgets. Never mind changing the battery, If you have to carry an extra battery, the gadget simply isn't as useful as when it lasts all day.

Slow devices aren't useful. Scrolling must be seamless. Movies must be real-time. And, most importantly, it should turn on instantly. This implies that plenty of flash memory, essentially solid-state disks (SSDs) are a necessary feature.

Connectivity is key in any gadget. Without it, the device might just as well be an expensive paperweight. So, the more kinds of connectivity, the better. I'm talking about wi-fi, 3G, 4G, and LTE.

My point is that you can't just have one or two of these things. You have to have all of these things.

Where Is It All Going?

My take is that multitouch is here and it will continue to pervade everyday life. Pretty soon cars will have multitouch control panels (check out the Tesla Model S). But don't expect multitouch to make its way onto your desktop screen. Holding your hand up to the screen is just plain unergonomic, and becomes quickly tiring.

But touchscreens for common tasks like getting directions on the subway will be highly desirable.

Gadgets will have to replace wallets also. Use your iPhone to buy stuff at the grocery store and it debits your account. Walk into a restaurant and get the menu on your iPad. Near-field communication (NFC) technologies like RFID seem a likely option.

Apple shows us with Siri in the iPhone 4S that voice command technology is quickly maturing. I find it useful for dictation, when I want to write an email or speak a text message.

Several pundits are predicting that Siri will make its way into other common everyday objects.

The march of technology is relentless. And it's accelerating.