iPhone vs. Android: History Repeating Itself

Includes: AAPL, GOOG
by: Paul Kedrosky

It is happening again.
- The Giant, in "Twin Peaks"

In some recent interviews I explained my take on iPhone (NASDAQ:AAPL) vs. Google Android (NASDAQ:GOOG) in light of Google's Nexus One announcement yesterday. In short, what is happening here is similar to what happened in the early days of the PC industry: Microsoft (NASDAQ:MSFT) introduced a key product, Excel, that helped make Apple successful, and then launched its own more open ecosystem to compete with the closed (but elegant) Apple environment.

It is happening again.

Google's support of Apple's iPhone helped make a great and innovative Apple product more successful, and now Google is doing a Microsoft and driving its Android environment hard with new hardware and a more open approach that will create an entire ecosystem of incented hardware makers, software providers and carriers to make Android successful.

The two products will appeal to different constituencies, to some degree, but Apple is going through the same experience it did in the early days of the PC industry: It legitimized a more elegant approach, and now looks set to stake out a somewhat marginalized position, if a highly profitable one.

Two other quick but related points:

  • This makes me more bearish than ever about RIMM. How are they not the CP/M sellers of mobile?
  • Microsoft looks dead-er in the water than ever on this announcement. That Microsoft has been hanging around with Win Mobile for this long only to be put in this position should be cause for firing current management and selling assets.

[Update] Bill Gurley has a similar view here.