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I opened one of the first computer stores, Microdigital in Liverpool, in 1978. So I was in a good position to see the rise of Apple (NASDAQ:AAPL) to dominate the personal computer (PC) market. I even visited Apple in Cupertino in California and was offered the UK distributorship. So this put me in the front row as they built up to own the market, then threw it all away.

Apple computers were well made, came with excellent documentation and were easy to use. All of which was not necessarily true of the competition. Apples were also expensive but were worth the extra. They became a bit of a cult, a fashion item, as well.

The big strength of Apple computers was that the software and the hardware came from the same company, so they worked. The resultant dominance in the early 80s was such that other PCs might as well not have existed. Apple had a virtual monopoly. Then along came Microsoft’s (NASDAQ:MSFT) MSDOS and changed the rules. Here was a standardized operating system (and consequential applications) that would run on machines from many hardware manufacturers. So the hardware manufacturers had to compete against each other on price and features. And it was war.

The result of this war was the survival of the fittest, rapid evolution that improved the breed. And Apple was left well behind looking underpowered and overpriced; they could not even vaguely get near competing with the MSDOS machines. So Apple’s market share collapsed and they fell back to serving niche markets such as pre-publishing. In just a couple of years they went from near monopoly to sideshow.

And history could very well be repeating itself. Substitute Personal Computer with Smartphone. And substitute MSDOS with Android. Otherwise it is the same. Apple dominates the consumer smartphone market with the iPhone. The hardware and the software come from the same company and it works. It is a fashion item, a bit of a cult. Android, however, is available to all hardware manufacturers. Most of them are developing models that use it. So they will have to compete against each other on price and features. It will be war with rapid evolution improving the breed. Already the Samsung (OTC:SSNLF) i7500 looks better featured than an iPhone.

Some may think that the tens of thousands of applications on the App Store make the iPhone entrenched. But remember that these were put together in a little over a year, so Android can do the same in a year. Just as Apple’s dominance of PC application software was quickly overcome when the MSDOS computers arrived on the scene in big numbers.

Of course Steve Jobs and Apple, having been there before, may have the answer this time. They need to entrench their position, which they are doing by going to multiple air time providers in each territory and by going to new territories. But Android will be doing all this too. They need to very rapidly advance their hardware technology. There is plenty of room to do this; the iPhone has a rubbish camera and no OLED screen, for instance. And the iPhone operating system has lots of room for improvement. But Android will be doing all this too.

Apple are moving on from the iPhone with a tablet device and probably a home console. Maybe this is their strategy. Don’t compete, move on.

The one saving grace that Apple has here is its brilliant marketing. In fact, to me, Apple is a marketing company first and a technology company second. Compare and contrast that with Google (NASDAQ:GOOG) who has a trail of great products that have failed due to poor, almost non existent, marketing. But Android is different because it doesn’t need Google marketing, it will be marketed by all the handset manufacturers and air time providers. Companies like Vodafone (NASDAQ:VOD) , Sony (NYSE:SNE) Ericsson, Sprint Nextel (NYSE:S), Samsung, Motorola (MOT), LG (OTC:LGERF), Toshiba (OTCPK:TOSBF) and Garmin (NASDAQ:GRMN). Formidable, isn’t it?

Now for the gaming perspective. The iPhone and App Store have produced the biggest flowering of gaming creativity in history. In terms of range of products they have left every other platform behind. However the business model employed here is easily copied. So we are moving into a new age where the iPhone game publishers will maximize their profitability by going multi format. Develop for Android, iPhone, PSP, DS and possibly PC simultaneously and reap the marketing benefits. It makes sense.

Source: Apples to Apples: Will History Repeat Itself as Android Gains on the iPhone?