Marketing Memos

Android is the next MS-DOS.

I am not consigning Android to the landfill of technology history.  In fact I am predicting that Android may well become the de facto personal computing architecture of the (near) future.  My prognostication are not divine nor demented, nor are they a technologist’s religious rhetorical report.  This is pure marketing led by the second most important part of the marketing mix:  the people that provide product.

In this case, programmers.

Repeating myself – as I am too fond of doing – people buy operating systems to run applications.  Applications achieve things and the OS exists for no other reason than to facilitate applications.  Thus platform wars are won by having a large set of applications that work well together (or at least don’t drop-kick one another into inoperability) and thus increase the likelihood that any end user will find the solution/application for which he/she/it is looking.

Microsoft and Oracle knew this.

I maintain that Borland made Bill Gate rich.  In the early days of MS-DOS, there were few applications because compilers cost a couple of thousand dollars … in 1980’s money.  Many compiler vendors changed royalties for whatever you invented, getting money up front and a piece of your future action.  Then along came Borland who put a royalty-free Pascal compile on the market for $49.  Within hours, the MS-DOS market was overrun with applications from full-blown accounting systems to barely passable shareware.  Indeed the problem was not a lack of application, but the burden of shifting through numerous resources to find which app worked well enough (remember, these were the dark days before the web and consumer reviews).

Oracle was the instigator for UNIX.  On its own, UNIX was encouraging developers to build for HP-UX, AIX, Solaris and other mutant variants.  However, Oracle accelerated the process by providing (and encouraging others to provide) a consistent DBMS language and middleware stack.  Proprietary OSs began dying faster than Budweisers at a Raider’s tailgate party.

Now developers are targeting Android.

The numbers are big, and Steve Jobs should be worried.  A full 72% of polled developers think Android is “best positioned to power a large number and variety of connected devices in the future,” though a mere 25% think Apple’s iOS has the same cachet (webOS and BlackBerry OS rack-up a meager 16% each). Worse yet for Apple is that Android’s appeal for coders is growing about 10% a quarter.  Not even Oracle suing Google is deterring developers from writing apps for Android.

He who has the most apps wins.  Thus he who wins the interest of developers wins.  Microsoft proved this.  Oracle proved this.  Now Google is repeating history, with the next and larger wave of personal computing.

That last part should catch the attention of the industry and investors.  One analyst group predicts that over 1,000,000,000 people will have wireless mobile devices within three years (about three United States worth of shaved apes will be madly punching their handsets searching for the closest source for a good latte).  As smartphone technology continues to commoditize, this figure will grow.  Whereas a family of four might get by with one personal computer, they will “need” four smartphones and possibly four pads/tablets.  One person, one-two devices each.

And Android has been anointed by developers as the prime moving target.

The marketing lesson herein is that the application is sacred and drives all other decisions.  It decides who is writing apps, which in turn decides what apps are available to users, which in turn decides which OS they users use.  Start with the buyer’s end goals and expected outcomes when developing your marketing strategy – everything else becomes de facto.  Google knew this when the bought Android, not wanting to be in the OS business but definitely wanting to own the next phases of personal computing – web and mobile.

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America used to beg for immigrants, because the joint was big and there was plenty of room and opportunity to go around.

Kinda like the Android market.

IDC caused Steve Jobs to dance a jig (not a pretty sight) when they predicted that the smart phone market would grow by 55.4% this year, a full 10% more than they had last prognosticated.  Steve could hear cash registers ringing at every Apple store with thoughts of iPhones flying out the doors.  IDC then caused Jobs to change underpants midday when they also predicted that Android and Windows phones would lead this surge in sales through 2014.

Cachet casts a short shadow.

IDC thinks Android smart phones will comprise nearly 25% of units within two election cycles (and can we just call them ‘phones’ since they will be the market by 2014).  Windows phones are estimated to take a relatively paltry 9.8% share, which is vastly superior to their current and enduring abysmal numbers.  This future estimate of Windows mobiles also indicates that medicinal marijuana sales are soaring in Framingham.

In the wake of two key competitors rising, IDC also expect Apple to fall, from their relatively lofty 14.7% to a near single-digit stance at 10.9%, just above Microsoft.  In short, the market is growing strong and Apple will have a smaller piece of the larger pie.  Apple’s unit sales will be up, but their dominance and leadership brand will sink faster than the Sri Lankan navy.

(rounding out the roster, RIM stays steady and Sybian declines though they maintain overall leadership)

One need not ponder long why Android is winning.  Like MS-DOS and Windows, Google is making sure that everybody who wants to make a smart phone has a good (enough) operating system and that developers can get started on the cheap.  Microsoft made their billions by being ubiquitous and the common technical currency.  With no profit motive in the OS itself, Google assures that Android becomes the Windows of smart phones, though without the need to reboot your handset every hour.

Verizon is helping.

Selling handsets is a mixed game, with incestuous finances between manufacturers and carriers.  Verizon champions Android not only because being shut out of the iPhone phenomenon left them in a snit, but also because they see opportunities not open to others.  Verizon’s app store is an example.  Getting iPhone apps involves going through Apple, which for various reasons restricts what is available.  It also keeps carriers from making money on apps, which is a lucrative and rapidly growing business.  Since Google’s goal is to be ubiquitous, expanding the total app count and perpetual app availability is essential.  Thus they don’t care, and possibly even encourage, that other app stores exist (they only created and sold Nexus One handsets to seed the market).  Google may some day shutter their Android app store for lack of interest.

There are three interrelated marketing lessons herein.

1) Today’s new and expensive toys becomes the commodity of tomorrow.  iPhone features will be in nearly every pocket by 2014, though not iPhones.  Attempting to live on mere cachet is, in the long run, impossible and unprofitable.

2) Forcing such commoditization is a way to make big money … tangently.  Google doesn’t earn meaningful lucre from Android licensing (it is, after all, a Linux derivative).  But they do earn ubiquity and such massive scale of adoption leads toward making money in other ways.

3) Open markets drive commoditization, and thus encouraging people to make the small bucks (app fees) creates a market place that is bigger and more varied than your walled-garden competitors.  As Microsoft proved, that strategy makes real money in the long run.

Now, if the analyst at IDC will put down their bongs and put their hands against the wall …

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Google is proving an old joke right, and in the right way.

The joke was that UNIX is the original computer virus, spreading like an epidemic to every conceivable computing platform.  Geeks used to laugh at this line … until Linux was first spotted running side-by-side on both a surplus x86 desktop and an IBM mainframe.  It then leapt onto cell phones, into routers, and I think there is a Linux application for my toaster.

It may in your next television.

Samsung – whose cell phone division likes Android in the same way sumo wrestlers like cheeseburgers – let slip that they are considering baking Android into televisions.  This is no meager moment because Samsung makes more idiot boxes than the public school system makes viewers.  In fact, Samsung make more boob tubes than any other enterprise, and is single handedly responsible for most of the traffic on Best Buy’s web site (Samsung offers 82 different sets at BestBuy.com, with Sony running a distant second with a trifling 27).

Threatening to put Android on Samsung TV’s is a significant market trend event and a significant marketing move.

With few details, we can only speculate on what an Android TV might be (but it won’t be Google TV).  Google and Samsung are wise enough to learn from other people’s mistakes, including Microsoft’s WebTV, Wink and Open TV, and thus avoid doing the same dumb things (like Google TV).  Each of those forgotten offerings was either a disaster or a mere calamity, depending on how many worthless shares of incentive stock you held.  Each product attempted to merge functions of interactive computing with the completely non-interactive purpose of television.  Each company discovered – in exquisitely painful ways – that people watch television to avoid interaction – interaction with computer, spouses, children or anything else annoying.  Thus interactive television was doomed from the conceptual start.

Which partially explains your set top box (STB in the industry lingo).  Have a look at that gizmo.  Internet ready.  USB ports on the back.  A keyboard we call a remote control.  CPUs with more horsepower than your cell phone, which is a multitasking general computer.  Your average STB has more computing power than my first four personal computers combined.  This is because the cable and satellite industry understood the power of digital media, and needed to put computers on your TVs in order to deliver goods above and beyond basic cable.

Which is why Samsung wants to put the computer in your TV.

A major shift is occurring in video entertainment media.  The old means of consumption are approaching an evolutionary epoch ahead of a rapid decline.  Once digitized, content becomes portable.  Your laptop can stream off of Hulu.com.  Netflix and Amazon can stream movies to your gizmo enabled monitors.  You can watch reruns on your iPhone, and no doubt some criminally insane zealot is developing a video watching app for a Microsoft cell phones (which shows even tiny markets attract developers).   We are steadily shifting from a nation of people who shared televised moments (who didn’t watch Johnny Carson and joke about it around the water cooler the next day) to a species that consumes content then Twitters about it to share asynchronously.

Which means broadcast television as we know it is doomed.

This is one reason Samsung is considering baking an embedded computer into your electronic baby-sitter.  Television is all about content, and content is now escaping the traditional distribution channels.  By the time a television program reaches you today the production company, television network and cable company have all eaten a piece of the profit.  Steve Jobs first figured out that digitized music needed a more direct path to consumers, and cut out the record store and wholesaler.  As musicians taught themselves digital production, they started to cut out the record companies.

Samsung will help make possible cutting out Comcast (hmmm, why did my Internet connection disappear when I typed that?)

Like many things visual, Netflix showed the way. Once broadband penetration was wide spread enough, Netflix stared streaming movies to your TV set via a proprietary box.  They could easily do the same with an Android app inside of a Samsung television.  So could Paramount pictures, who might want to cut Netflix out of the profit chain.  So could Demented Dave’s Demons, the local punk band who wants to distribute concert footage to people in Mongolia.  Samsung is accelerating a trend to flatten content distribution.  Any middle man will be on the losing end of the equation.

This includes Steve Jobs.

Shift happens, and the market for video content is shifting to a direct model.  Ignore the economic efficiencies of delivering a movie directly from a web site to a million televisions and eliminating DVD manufacturers, packaging companies and the postal service.  Do imagine the producers being able to cut the price of a movie rental in half and still double their profits.  Do imagine the long tail behind any episode of any television program being rentable from now until really jazzy trumpets start blaring overhead.  This trend is unmistakable and the largest maker of televisions in the inhabitable world and Canada knows it.

So does Google, who will be able to cross index your Internet searches, mobile locations, lunch break food preferences as well as your television viewing habits … and sell your detailed demographic profile to advertisers.

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