By Erik Christiansen
People who are really serious about software should make their own hardware.
In many respects, Apple had it right from day one. There is a feeling of uniformity and consistency from hardware and software developed in conjunction that is like no other. The operating system doesn't feel "in the way." Things are more responsive. There is a smoothness and elegance that doesn't exist on other platforms. The experience is immersive... just as it should be.
The quote at the top of the page is from the famed computer scientist Alan Kay, who pioneered graphic user interfaces and object oriented programming. The quote speaks to those who approach technology from an engineering perspective, a user experience perspective, and a business perspective. Kay felt that developing hardware and software in concert led to a better overall experience.
However, Apple was the only major company that took this approach. As we are all aware, Microsoft held a firm monopoly over the computer industry, by licensing software to original hardware manufacturers (OEMs). Microsoft's immense success temporarily convinced industry experts and analysis this was the "best" business model. Apple (and companies like them) were in the minority - only appealing to a small, but dedicated, user base. But, the landscape of the current market has changed. And we're not going back...
I would argue that every major technology company is moving toward the "Apple" model - integrating their hardware, software, and web services. The astounding second act that Apple has experienced has single handedly fueled interest in this business model, and has proved to the world that a high degree of market share and profit can be achieved.
I'm not the first person to make this argument. In point of fact, many technologists have alluded to this trend. But, only now are we witnessing this transformation.
Considering its significant media attention, I don't feel the need to rehash Apple's success. In a nutshell, their entrance into the post PC market, with the iPod, iPhone, and iPad (in conjunction with their extensive integrated services and ecosystem) made them the world's most valuable company - and recently the most valuable brand. Now, their competitors are quickly trying to catch up.
Google has often been referred to as an "open" company, where Apple is generally considered "closed." Unfortunately, open and closed are extremes in a broad spectrum. Open has its roots in open source software - whereby anyone can have access to raw code, and either add to a project (by finding bugs or adding features) or by modifying the original (also know as "forking") to make their own. The best example of a major open source project is Linux, which still stands as the largest collaborative computing project in history. Closed referred to companies that use proprietary technology, so they don't have to rely on third parties. Google is placed in the "open" category because it give users a lot more control over their data, and has historically supported open technology standards.
But, to the dismay of its supporters, Google is moving away from this model. Android (the mobile platform), which is technically open source, is not "owned" by Google. But, Google does own the ecosystem that makes it so robust and attractive. OEMs must sign deals with Google and join the Open Handset Alliance to gain access to the Google Play store and use Google apps. Google hangouts (which replaced its "Talk" messaging service) no longer uses XMPP (an open technology) as its operating base. Rather than being just a software company, it is slowly entering the hardware business - partnering with OEMs like Asus, HTC, LG, and Samsung to make its Nexus devices. Hardware and software developed in concert. It's not surprising then that the Nexus "experience" tends to be the most seamless.
Amazon, which uses Android for its Kindle Fire tablet line (though renames it to "Fire OS") builds its hardware in-house, and maintains a smaller, but very popular, ecosystem which includes an app store, ebook service, and a media store.
Samsung, which for better or for worse most people associate most heavily with Android, is primarily a hardware manufacturer. But the term "Galaxy" has come to mean a lot more than its phones. Services like S-Voice (a Siri and Google now clone), translation apps, and its app and media ecosystems all signal its move toward being more of a software and services company. There is a strong possibility that Samsung will begin to disassociate itself with Google, and move to Tizen, yet another Linux-based mobile OS.
Now, the following companies (Apple, Google, Amazon, Samsung) compete almost exclusively in the mobile space. (Apple is a slight exception since it still has a large computer business). But, what makes this trend toward hardware-software integration more interesting was when Microsoft joined the bandwagon.
Microsoft is now officially a "devices and services company," since its recent reorganization. This isn't a complete surprise considering it recently entered the hardware business with the Surface tablets (or ultrabooks, depending on how you define them). Microsoft has always offered excellent stand-alone enterprise and professional software, but now its also a cloud services company with the introduction of Skydrive and Office 365. It has an app ecosystem for Windows 8, Windows RT, and Windows Phone 7/8. Its phone and Windows app stores will soon be combined. The real kicker, however, is Microsoft's purchase of Nokia - its most notable handset manufacturing partner. When rumor spread that Nokia might abandon Windows Phone, Microsoft swooped in and bought the failing Finish company for relatively cheap. $7.2 billion to be exact. Microsoft has always built computer peripherals, but never before has it been a major device maker. Now it is, and its future strategy is clearly aimed at the mobile space.
And one can understand why Microsoft feels the need to shift its business. It has missed every major post-PC era trend. It was late to the music business with Zune (with barely competed with iPod). Windows Phone only came onto the market in 2010, three years after the iPhone! This is a lifetime in the technology industry. It was two years late to the tablet business, only introducing the Surface in 2012. And while its mobile OS' are compelling, and Microsoft deserves full credit for creating what many consider to be the most elegant mobile interface ever conceived, it doesn't really matter if you can't get it to market in a timely fashion. They've been playing catchup to Apple for a decade. If this wasn't bad enough, its cash cow - the PC industry - is shrinking year over year, and its most recent version of Windows is already flailing.
As I previously touched on, Apple's clear success is a direct result of its ability to seamlessly integrate hardware and software. But, just because this strategy works for Apple doesn't mean it will produce the same riches for its competitors.
Few companies have the resources to pull this off. In the case of Apple, it required not only very close coordination between its various internal development units (something which Microsoft absolutely doesn't have) and supply chain management. For instance, Apple can afford to make its products out of beautiful brushed aluminum because it bought so much of the world's supply. Small teams, tight deadlines, specific objectives, and an expertly coordinated supply chain have been the unmentioned recipes of its success.
Regardless of the success rate, the unified approach tends to produce products with a higher degree of intergration (obviously), optimization (important for performance and battery life), timely updates, and better support. Customers like good user experiences.
So what does this all mean? The short answer is I don't know. The long answer is more complicated.
We all know mobile is where things are headed. There is little question about that anymore. I see hardware and software becoming more integrated as time progresses. This will either lead to a world of incompatibility (a contemporary version of 1990s Windows-Mac incompatibility) or a world of increased inter-platform communication. I really hope it's the latter.