IE Focus | By Ricardo Perez, Professor at IE Business School
Apple and Google go head to head in the race for mobile dominance. Apple is pushing for pay-per-click services while Google defends flat rates.Apple and Google have been making the headlines with revolutionary product launches these last weeks. American news programs once again held Steve Jobs up as as a champion of innovation, design, envy, advanced technology and anything else you might like to name.
Meanwhile, the boys at Google haven’t been idle. They have launched their own telephone to compete with the iPhone and Nokia and RIM (Blackberry) intelligent phones. What started out as a close collaboration and agreement between companies trying to “reinvent the game” in their respective markets is now morphing into direct competition. Their view of the growing convergence of communication networks, technologies and social behavior leads to collisions in key markets like content consumption, mobile technologies and entertainment. Let’s analyze their collision courses.Google has managed to dominate the online advertising market with a technological platform that combines a brilliant, fast and efficient search engine with an outstanding automated system for advertising. What’s more, it has positioned itself with its acquisition of Youtube as a rival in free content. The open question for their business model is still how will we use our telephones for the internet in the future, and who will emerge as the sector’s leader in terms of content and advertising. Hence Google’s push for an advanced and open market and their launch of Android, an open operating system for mobile phones which permits Google to use their open standards to maintain their dominant position in mobile internet.
Apple, on the other hand, also has an excellent software (and hardware) platform, which is closed and controlled. Their great achievement is to have accumulated more than 140,000 applications for the iPhone and iPad, of which only a handful have been developed. And the fact that their clients pay for their content through iTunes, and will continue to do so.
Both companies know how to manage the new competitive tools of the technological world: Technological platforms, be they open or closed, add value for clients and members, by accumulating services, attention, buyers and the capacity to innovate.
Now they are on a collision course, fighting to be the standard in mobile telephony inside and outside the home. What is at stake here is the way we will buy content, the kind of advertising we will receive, and how we will access services like the weather forecast or the latest news. Up to now, the rest of the players in the industry have been acting as mere bystanders, but that’s a whole other story. Meanwhile, the winners are the clients: more and cheaper options, sooner.
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