The future of digital is no longer the desktop. The infrastructure of the future is much bigger and broader— encompassing the Web, the cloud, mobile, browsers, and apps. This is interesting not only as a question of the technology, but also in the fact it has profound cultural and business implications. Think back to the battle for the desktop. Would our world be different if Apple had defeated Microsoft 20 years ago?
Will our digital communications landscape become increasingly fragmented by platforms with different apps and an inability to share or will a specific hardware device become less and less important? Will a single company control what tools and apps are available or will we have an open market that leaves all apps available? If you’re an app developer, will you be plagued by an increasingly large number of different versions of your app to build and maintain, or will the world consolidate on a small number of standard options?
There are four credible vendors I see in the fight to be the de-facto platform for the digital future – Microsoft, Apple, Facebook and Google. The pace of progress as they race forward in a massive digital land-grab has never moved faster.
Microsoft – The Former Champ
There was once a time when this battle was won at the desktop. Microsoft bested all challengers to set an uncontested ownership position over the operating system and the key applications that the majority of us use to get our work done.
Then Bill Gates and company stumbled as the Internet rose to the forefront. The browser was a universal and generic window to accessing data and applications from any device that you might like, at least on paper. But Microsoft’s strength had never been in pioneering new categories – instead they excelled at taking over categories once others had done the heavy lifting of hacking those first trails through the wilderness. Microsoft didn’t invent the spreadsheet, the word processor or the operating system, but they came to own each category unquestionably.
And it was this incredible ability to win with a “second-mover” strategy that came to their aid in the rise of the Internet age. Then came the browser wars and, for a time, Internet Explorer came to dominate the landscape.
I mention all of this to remind us that Microsoft is never down for the count. Many believe that the digital world has passed Microsoft by and that it is only a matter of time until their inability to adapt will undermine the company beyond recovery. I believe that any such thinking is premature.
Microsoft brings many powerful assets into this contest – continued dominance at the desktop and server, the dominant business application suite, strong and comprehensive enterprise application offerings, a growing search platform with Bing, and a tremendous war chest to fund new initiatives.
Recent moves by the giant highlight the challenges that they’ve had in cracking the code of the new business and application models. Cloud-based versions of Microsoft’s Office and Enterprise applications are little more than metered payment models for traditional software models and the re-launch of the Windows phone has been disappointing.
More disappointing is the lack of credible Microsoft Office apps on smartphones and tablets, allowing Apple’s iWork suite along with third-party compatibility apps such as Documents To Go and QuickOffice to own the growing mobile workspace.
At the same time, Microsoft is losing its dominant Internet browser market share with some reports putting Google Chrome as the most-used browser internationally.
All in all, Microsoft has a long road ahead to reassert its dominant market position. The new Windows phone will need to gain momentum fast and rumored Windows tablets will need to wow the early adopter set (Update: Microsoft announced its new tablet entry, Microsoft Surface, between authoring and publication). The application side will need an overhaul as well, deploying mobile-friendly versions of popular office apps and retooling many apps for a better mix of functionality and performance to make them better options for lightweight laptops and to make Internet Explorer more competitive with other browser choices.
Apple – The Early Challenger
In the early days of the personal computer, it was anyone’s guess which company would come to dominate the space. During this time, Apple was an innovator, bringing design into the mix, introducing the graphical user interface and the mouse as a user input device, as well as creating the first personal digital assistant (I’m referring to the Apple Newton here, not Siri).
As part of this strategy, Apple retained tight control of the entire experience, producing both the software and the hardware on which it ran. The result was excellent products, not plagued by the compatibility issues and component conflicts that sometimes afflicted their Windows counterparts. Apple products were and are particularly popular in education settings; a strategy intended to win the hearts and minds of young computer adopters who would hopefully carry their passion for the brand into their working lives.
All of this came at a premium, however, and second-mover advances by Microsoft dulled the impact of many of Apple’s innovations, leaving them as niche players in markets where their superior graphical capabilities could shine.
In recent years, Apple has held to the core of much of this same strategy and has struck gold in the device market first with the iPod and its variations followed by the iPhone and now the iPad. The control of the end-to-end experience served them well in creating devices that delight, and has thus far allowed them to retain an innovation advantage that justifies a pricing premium. At the same time, sales of Apple computers grew, particularly Apple’s laptops and Apple moved into some other joint hardware/software/service opportunities such as their media center play – Apple TV.
Singing Apple’s iTune
Apple has long realized that the future of digital won’t live in the form factor of traditional computers tied to a desk. They have robust cloud storage options, inter-device synchronization through iTunes, and the largest library of available apps and media available on any platform.
Apple has demonstrated its market muscle, dealing a serious blow to Adobe’s Flash platform by keeping this once ubiquitous technology off of iPhones and iPads. As more and more of the mobile connected experience relies on apps rather than the browser, platform incompatibilities have the potential to get in the way of their dominant mobile position. Today, nearly all app builders create their apps for iOS first, but with the growth of Google’s Android, that may not be the case in the future. Apple also tightly controls what apps are available to iOS users through iTunes, limiting innovation in some areas and frustrating many developers.
On top of that, Apple lacks credible plays in a number of key areas of the digital future such as social networking and search and still has a small footprint in enterprise apps and servers. As the competition heats up in the mobile arena, Apple is currently working to relieve its dependencies on competitor Google, announcing recently that it will be launching its own mobile mapping platform to replace Google Maps which is less functional on iOS devices than on Google’s own platforms.
Apple’s challenge now is to determine what it’s going to be in the future and a great many questions lie before them. Will there still be a place for an organization that’s become a device company, or will they need to gain credibility and momentum in the enterprise? Can they maintain their position in the mobile space against Google and Microsoft? Can they maintain their innovative edge without iconic CEO Steve Jobs or will they backslide as they did after Job’s departure in the mid-80’s?
Facebook – The Social Butterfly
Born from a dorm room, Facebook has grown to become the single most dominant destination on the Web. Facebook boasts 850 million active users and more than 100 billion friend connections. On a daily basis, more than half of active users check in, logging a staggering daily total of 2.7 billion likes and comments. The net effect is an average of roughly 7 hours spent on the site monthly per user.
The real value in Facebook isn’t in all of this activity but what it means behind the scenes. Facebook has a tremendous chest of virtual assets. Contact information for hundreds of millions of people backed up by what they like and who they know. It’s pushed Facebook into aspects of our lives that we hardly think about. Our smartphones automatically populate and update address books from Facebook. Thousands of sites use Facebook as their trusted security authentication provider.
Facebook has been only modestly successful at monetizing all these assets. Sure, $3.7 billion is nothing to sneeze at, but that’s only about $4 per user for all of 2011 during which time each one of those users spent some 28 hours on the site. Meanwhile, brands have questioned the value of their marketing investments with Facebook, highlighted by General Motors announcement that it would pull all of its Facebook advertising due to its ineffectiveness was painful from a public relations standpoint if not significant from a revenue perspective.
The Net(work) Outcome
The recent IPO debacle at Facebook has distracted us all from the broader question of what they’re going to do with their public status. There are lots of reasons to go public, of course. Providing liquidity to investors and option-wielding employees is what’s been on everyone’s minds, but having publicly traded stock also gives Facebook a powerful currency to make acquisitions and access to raise capital to fund new initiatives.
Early indications point to Facebook following Google’s post-IPO path to greatness. Rumors are swirling that CEO Mark Zuckerberg is eyeing an Opera acquisition to get into the browser business and is considering launching a Facebook phone.
Zuckerberg’s goal is to secure the end-points to guarantee their position at the center of the digital universe. What would a Facebook phone and a Facebook browser mean to all of us? It would seem that the goal is to have Facebook BE your Internet rather than just that place on the Internet where you spend most of your time.
Facebook has been building out its Facebook pages, which are used primarily by businesses and other organizations in an attempt to make them a serviceable destination for consumers interested in your brand. The site is also expanding the ways that brands can connect with fans and other consumers through Facebook messaging and innovative ad delivery strategies.
Despite beginning this race with the strongest core consumer engagement and some unique assets, the social network has a long way to go to secure the end-user experience. Despite more than 400 million active daily mobile users, Facebook’s own mobile strategy can generously be labeled anemic, which is a serious threat to their core revenue model. The social networking giant also has little experience providing solutions to the enterprise outside of advertising, a turn they’ll likely need to accomplish to tap more corporate dollars.
Still, it’s hard to believe that they won’t be a contender as we move forward.
The Search Giant – Google
When we think of Google, we think first and foremost about search. Google continues to be the dominant roadmap by which we find our way around the internet and the single largest player in the online advertising game.
But Google has become so much more than just search. They have, step by step, worked their way into nearly every aspect of our personal and professional lives (or at least have offerings that could even if you don’t use them all). Google has built a robust set of platforms that could effectively be the operating system of the future – The chrome browser and the Android mobile device operating system. Google has created the Chromebook, a lightweight laptop designed for those working exclusively through a browser.
Even when they don’t own the operating system, Google has incredible reach. By running just about everything through a browser interface and storing information in the cloud, Google has largely decoupled its applications from the devices on which they’re accessed. Windows? Mac? Linux? iPad? Android-powered Internet refrigerator? You can get to Google.
On the consumer needs side of the equation, Google’s search platform, YouTube, Picasa (photo sharing), Maps, and Gmail represent some of the most heavily used destinations online. On the business end of things, Google is equally well positioned with Google Analytics, Docs, Calendar, Voice, Talk, and its new payment system, Google Wallet. Google also has a strong foothold in the social space with Google+, Blogger, Google Groups and Google Reader.
Google’s clearly in the driver’s seat for the platform of the future. They have more of the requisite pieces for a consumer to “Go Google” in the way that many people used nothing but Microsoft products when they used a computer. While many of Google’s critical tools are not currently in a single, dominant position in their markets, most have the momentum to get them there. Chrome has surpassed Internet Explorer as the dominant Web browser globally (although not in the United States) and there are more Android mobile phones and tablets sold each month than any other platform.
But Google has some work to do. Google+, the firm’s most recent attempt as a core social network offering, has made progress but is still a niche player. Google also has little or no footprint in enterprise business applications outside of Gmail and Docs. Google is also making moves to BE your Web by pulling critical pieces of information from websites into search results. This strategy is taking a step forward with the merger of Google Places and Google+ Business Pages into Google+ Local, but it’s still too soon to tell if this will be the catalyst to transform Google into an information destination rather than a digital phonebook.
Still, it has the tools, the architecture and the user base to become the platform of the future. The challenge now is if Google can continue to outpace its competition to secure its fledgling lead.
And the Winner Is?
Google currently holds the momentum if not the dominant position. On the other hand, Apple has the most active mobile devices and a significant lead in the number of apps available. Facebook’s IPO stumble makes them look far more vulnerable than they are, and they’re left with a need to prove that they’re worth the asking price. Microsoft appears to be gearing up to attack these new critical markets as they once did at the desktop.
In other words, it’s still anyone’s game.
Today, the proverbial pie is still growing so fast that there’s room for everyone. At some point, that growth is going to taper off and then the scrap between the survivors will really begin. In the meantime, I anticipate that we’ll see more consumers start to rally around one of the players – going “all Google” or “all Apple” in their device choices, applications, and the like. App developers are left making platform choices or duplicating efforts.
And for now, that’s OK. What this range of services means to consumers is still evolving and a strong competitive landscape means more innovation and competitive pricing. And if all goes well, in the long term, we all win.