Google recently announced that they would launch Chrome, the OS. Then followed analysis of whether this was the right thing for GOOG to do or not (related post from thecatalystcode). It might be helpful to take a step back to see the undercurrents behind GOOG's decision.
This post attempts to shed light on the strategies being pursued by Google, Apple, Nokia and Microsoft to subsume as much value for the ecosystem.
Thin is in: Google is focusing on getting the market to go thin, use the cloud and cloud-based resources. In so doing, it can use its ad-support freemium business model to skew the advantage in its favor. It gets the end-users hooked on free and thin, by being the purveyor of thick. The thickest client that exists on most of our machines is the browser. Therefore, Chrome, the Browser.
These days, browsers have subsumed so much of the value of the software layer, it is getting easier to commoditize the OS. However, for the browser to be in charge of its own destiny, having control of the OS is desirable. So we have Android and Chrome the OS.
Google in charge of the browser and OS, in an ad-supported freemium world, takes in most of the value and chokes off oxygen (aka revenues) from most everybody else. In such a world, it is a slow bleed to lower ASPs and commoditization. Ask anybody in the value chain who sits below or above Google, and they will attest to this.
App Store is the platform / Thick is it: Apple's strategy is to enable the app developers to leverage investments in cutting-edge hardware, design and usability. Innovation by the third-party developers / value-added service providers helps increase the relevance of iPhone to the end-users. In so doing, Apple can command a larger ASP, have a direct channel with end-users and commoditize the MNO (e.g., AT&T). Additionally, thick client is part of Apple's platform strategy as iPhone native apps help keep the iPhone differentiation front and center in the minds of end users. A corollary to the above strategy of Apple: Hardware is not a commodity. Use the platform to extract premium for the hardware. Apple's vertical integration of the stack comes in handy, as well.
Nokia: They have as good a vertical story as any in the mobile space. They control the hardware (Nokia the OEM), the OS (Symbian), Browser (based on open source WebKit)... They have an App store as well (Ovi). In many parts of the world, Nokia has a direct market presence (unlike the US, where the telco offers the phones to consumers). However, they find themselves in unfamiliar territory. Downloadable apps and value-added services was the domain of their partner, the MNO. Though Nokia has a vibrant 3rd party developer community (Forum Nokia), consumers getting to a mobile app was largely dictated by the MNO's on-deck decision. Though it was possible for side-loading an app and folks like Handango have been active in the 3rd party mobile apps marketplace, loading mobile apps after you got the phone was an exception. Please note that this behavior has very little to do with SMS, 2G, 3G..., or with the purchasing capacity.
Why is the App download problem important to Nokia? Up until the iPhone came along, all of us were happy with our phones the way they were. In a post-iPhone world, the local relevance and the global connection seems diminished if the phone does not have an easy way to get apps and utilities, however trivial they may be.
What is Microsoft's strategy?. As they do not have hardware, the Apple App strategy has limited value for MSFT. As App stores have become a business imperative, MSFT has its version. The ad-supported freemium model is one which they have been trying to crack for a while now. They have the cash flow to ensure they have runway space while they attempt to take off. For sure they are the incumbent, even in a Google's Thin is In strategy. Will Bing get them down this path is a billion dollar question. MSFT's strategy on mobile devices seem to be weak and their PC story is flailing. Only time will tell, whether MSFT's irons in the fire will result in anything meaningful to change their trajectory and destiny.
Do you think that hardware can be commoditized, and that platform is the key to migrating value?
Inserted 26th July 2009: I took a related survey recently (please let me know the name of the site as I do not recall the name) which complements this post:
What is the future of mobile?
Google is right Web apps will win against native 22%
Google is wrong App Stores will still be big 39%
Apple will win Native apps will trump web apps 20%
I dont care : 17%
Total Votes: 4213
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