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a16za16z Podcast | Apple and Google Won the Mobile OS War, But a New War Has Already Begun
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EVERY SPOKEN WORD
30 min read · 5,829 words- 0:01 – 4:30
Is the Mobile OS War Already Over?
- SPSpeaker
Welcome to the a16z Podcast. I'm Michael Copeland, and I'm here with Benedict Evans, um, who's actually just joined Andreessen Horowitz recently. Moved all the way from London. He's a longtime mobile analyst and an all-around smart fellow. Benedict, welcome.
- BEBenedict Evans
Hello. Great to be here at a16z.
- SPSpeaker
Z, as they say. Um, so-
- BEBenedict Evans
It makes, makes for a good band name.
- SPSpeaker
[laughs]
- BEBenedict Evans
ZZ Top.
- SPSpeaker
[laughs] Well, you have to start the band. Um, so let's talk about mobile, which you like to talk about and think about. Um, there's been a lot of sort of Windows OS, Windows Mobile sort of news out, um, recently, um, out of Mobile World Congress. But is the war for the mobile OS already over?
- BEBenedict Evans
Um, well, short answer, yes. Um, but it's not quite clear what that means in as much as Apple has about... Well, in the launch quarter, they have about ten percent of all the phones sold on Earth, and Android has another forty-five to fifty percent, um, although only about two-thirds of those are Google Android and one-third are in China and don't have any Google services. And the remaining half or thereabouts of the phone market will convert over the next three or four years to phones running smart OS's or there'll be a kind of a residue of five or ten percent of people who really can't afford them.
- SPSpeaker
Right.
- BEBenedict Evans
And, and actually, the interesting question is how many people have an affordable data plan rather than how many people have a phone running Unix or some other operating system. Um, and all the remaining growth is gonna be at super low prices. You know, it's gonna be at fifty dollars or seventy-five dollars or twenty-five dollars. And there's a little bit of skirmishing around the edges, yes. So you've got Firefox, um, you know, playing one rather, um, eccentric business model over at one side, and you have Microsoft's Windows Phone, which is now being combined with Nokia, you know, selling in fairly small numbers in a certain number of middle-income and emerging markets exclusively at very low prices. So if you look at Nokia's ASP, they're really only-- It's very clear they're only selling the low-end phones. They're only selling the five, sort of the 520 or the 530 and the 610.
- SPSpeaker
Right.
- BEBenedict Evans
Um, and they also do give, um, geographic sales, and I think they only sold five or six hundred thousand units in the USA last quarter. So for all the advertising and the buzz around the big phablets with the great cameras, nobody at all is buying those devices. All the Windows Phone sales so far have been to people arguably who don't even really treat them as smartphones. Um, so you know, that may change and, you know, there's some interesting things around what Microsoft might do with that, what Nokia's trying to do with Android. Um, but the core I think is that you have iOS and you have Android, and then you have people building stuff on top of Android to greater or lesser extents, whether that's the Chinese who are using stock Android but not using Google 'cause there's no Google in China, or whether it's Amazon who built a tablet and are probably building phone, um, on their own custom forked version of Android, and now Nokia have, have got a forked version of Android as well. Um, but that's almost like, um, I don't know, it's like looking at the Second World War and arguing about who's going to beat, um, the Italians, you know?
- SPSpeaker
[laughs]
- BEBenedict Evans
Kind of, you know, it doesn't really, it doesn't really matter.
- SPSpeaker
Right.
- BEBenedict Evans
Um, the, the, uh, uh, uh, for all practical purposes, we have two substantial ecosystems. And, you know, as things play out with the current dynamics, which aren't really gonna change in the next two or three years, we will end up with seven, eight, nine hundred million iOS devices in use on Earth. Uh, it's probably about five hundred now. And we'll end up with two, maybe three billion Android devices in use on Earth.
- SPSpeaker
Billion.
- BEBenedict Evans
Billion.
- SPSpeaker
So a factor of, you know-
- BEBenedict Evans
Yeah. Um, because there's prob-
- SPSpeaker
-five or six times.
- BEBenedict Evans
Well, there's probably three and a half to four billion mobile phone users on Earth. There's quite a lot more SIM cards, um, but lots of people have multiple SIMs, especially when you go to markets like India or Africa, um, for coverage and for also to get on-network pricing deals and so on. So you've got three and a half to four billion people on Earth who've got a phone. You probably only really, as a, as a developer or a technology company, um, it's probably the top two billion to two and a half billion are the people who are really spending money, and the other half it's, you're looking at people who are spending a dollar, five dollars a month, two dollars a month, one dollar a month and buying a twenty, thirty dollar phone, which is where the half of the market is now. Um, and so the question is, well, what happens on top of that platform?
- SPSpeaker
Right. I mean, have we seen this play out before in the PC landscape, for example, and, and-
- BEBenedict Evans
Well-
- SPSpeaker
-are there analogies that we can point to to see where we're headed next?
- 4:30 – 8:45
Why the PC Analogy Doesn't Hold
- BEBenedict Evans
Well, this is, so this is the question. Um, Apple will top out. You know, so there's an ov- a very ob- there's a very obvious argument that says that the biggest ecosystem has a gravitational pull that sucks in the developers and sucks in the usage, and that becomes self-fulfilling, that it's got the best apps, so that's where the consumers who want the best apps go, and so, um, that's where the developers go, and it's a sort of virtuous circle. And that's certainly what happened with Microsoft-
- SPSpeaker
Right
- BEBenedict Evans
... twenty, 30 years ago. Um, the problem is that there's a professor at my old college at Cambridge said, "The only thing that history teaches you is that something will happen."
- SPSpeaker
[laughs]
- BEBenedict Evans
And, you know, the dynamics of the PC industry were so different that it's really quite unhelpful to, to draw that comparison. For example, at the, kind of the critical period of the PC industry, most of the sales were corporate.
- SPSpeaker
Right.
- BEBenedict Evans
And corporate buyers wanted, uh, fifteen hundred generic boxes, um, that they would put under people's desks. So they didn't care what they looked like. They didn't care how easy the user interface was 'cause they were never gonna be reconfigured, and they were gonna run one app. And they wanted a quote from five vendors, and they'd pick the lowest quote. And so Apple didn't have product market fit, and Apple, Wintel did, uh, Microsoft and Wintel did.
- SPSpeaker
Right.
- BEBenedict Evans
Um, that's clearly not how phones get bought.
- SPSpeaker
Mm-hmm.
- BEBenedict Evans
Phones get bought by individuals on fit and feel and the user experience and design, and they're not by and large sold on specs. At least they're not sold on... They're sort of sold on some of the experiences that some of the specs can provide, but they're not sold on RAM. Um- And so Apple now does have product market fit. It's selling exactly into the kind of, um, buying environment that suits what they've been doing for 30 years. Um, but I think there's a, there's a sort of broader point, and you know, the sort of the specific ecosystem point. Um, as I said, if s- presume for the sake of argument that there are winner-takes-all dynamics around smartphone mobile operating systems as there were with PCs-
- SPSpeaker
Right
- BEBenedict Evans
... that that's where everything is, so that's where everything is. Well, Apple's gonna have 800 million users before there's time for those effects to kick in.
- SPSpeaker
Right.
- BEBenedict Evans
Um, now imagine you are Marks & Spencer's or Target or Bank of America or Carrefour or, um, Aldi or, um-
- SPSpeaker
Or Walmart. You've mentioned Carrefour, but we're, we're... You're in the United States now, so we're gonna say Walmart.
- BEBenedict Evans
Yeah, well, any, yeah, any re- but any retailer.
- SPSpeaker
Right.
- BEBenedict Evans
Um, and it is a like, you know, a specific point here, it is actually a country-by-country issue. Um-
- SPSpeaker
Right
- BEBenedict Evans
... if you are Carrefour in France, right now you have an Android app and an iOS app. Do you have a Windows Phone app? Probably not because there's no Windows Phone users in your country, and the people who do have Windows Phone, um, you know, it's too small to be worth bothering with. But you're not gonna pull the iOS app, the iPhone app, because that's only a third of the subscriber base.
- SPSpeaker
Right.
- BEBenedict Evans
You're not even gonna pull it if it was to drop to a quarter or even 10% of your subscriber base. And actually, if you were to look at share of value right now, it's probably three-quarters of your basket size.
- SPSpeaker
And does it-
- BEBenedict Evans
And so the market share number, um, doesn't work in quite the same way. You know, when you're-- If you were a software developer 30 years ago, when you were saying, "Right, we're going to invest $10 million making an application for Windows. Do we inest- invest another five making it for Mac?" And there's no offices, none of our target customers have bought a Mac.
- SPSpeaker
Right.
- BEBenedict Evans
The answer was no, and that became completely self-fulfilling. But if you are, as I said, a supermarket or a bank or a movie chain, movie cinema theater chain, or any other modern, you know, service that feels like it needs to be engaged with its customers online, you don't think, do that kind of calculation. You think, "Okay, where are our customers? Where is a significant number of our customers? What are the touch points? Where do we need to be?" And Windows Phone and BlackBerry are locked off the bottom end of that.
- SPSpeaker
Right.
- BEBenedict Evans
But, you know, there's a vicious circle here and also a virtuous circle. You know, it's extremely hard to kill an ecosystem as long as the product's good and the customers keep buying it, you know. The way that BlackBerry killed its ecosystem, in effect, was by having a, a, a product that was no longer competitive. Um, but I don't think anyone would look at an iPhone and say, well, it's not a competitive product. It might s- it would cease to be a competitive product if there were no apps for it.
- SPSpeaker
Right. Y- so-
- 8:45 – 12:51
iOS vs Android Value and Apple as BMW
- SPSpeaker
you mentioned value, and th- it has been the case for a long time that iOS has sort of the value has accrued to iOS far more than to Android, that ecosystem. Do you see any shift in that, you know, just by sheer footprint and/or by Google in some sense catching up or-
- BEBenedict Evans
Well-
- SPSpeaker
... or those people who are using Android catching up?
- BEBenedict Evans
I think it depends. Um, so there's a couple of ways to look at this. The first is that consumer behavior is often shaped by self-selection. That is to say, what is the kind of person who goes out and buys a $600 phone? What is the kind of person that goes out and buys a $100 phone?
- SPSpeaker
Right.
- BEBenedict Evans
And that's different in different markets. So in the US, you can get a Galaxy S3 for free, I would imagine. I'd have to look at the pricing. You can get a good mid-range, a good mid-range smartphone for free. Um, so why would you buy a $100 smartphone? The only people who are buying $100 smartphones are people who actually genuinely don't care.
- SPSpeaker
Right.
- BEBenedict Evans
Whereas in Indonesia, somebody who's bought a $100 smartphone saved up for that, and they care a lot. Um, but then you look at a Western European market, there's a, you know, pretty clear correlation between people who buy high-end phones and the amount that they're interested in and engaged with all the things that you could do with them, and the people who buy low-end phones don't. And when you then look at the market share of high-end phones, it's half, two-thirds, three-quarters iPhone, and the rest goes to high-end Android phones. Um, and then, you know, the problem with looking at those, you know, the value sizes is that effectively Apple's only got the good customers.
- SPSpeaker
Right. [laughs] Right.
- BEBenedict Evans
Um, Android has all the customers.
- SPSpeaker
Uh-huh.
- BEBenedict Evans
So it's got some good customers. It's also got some moderately good customers. It's also got grandma, who went to the store and said, "I need a new phone."
- SPSpeaker
Right.
- BEBenedict Evans
And they gave her a $100 Android phone. And so within that-- So you've got a much lower average for Android. Concealed within that, you've got a big chunk of people who are worth having.
- SPSpeaker
Right.
- BEBenedict Evans
Um, but then when you add that up, you get to, you still get to, you know, a, an actual basket size or an e-commerce transaction or, you know, a payment rate on Android that's half what you see from iOS. And that's, as I said, it's really just a function of price. You know, the corollary of that, of course, is that if Apple was to make a $150 phone-
- SPSpeaker
And do you think they will?
- BEBenedict Evans
... their average would collapse-
- SPSpeaker
Right. And so-
- BEBenedict Evans
... 'cause they'd be getting loads of people who don't care.
- SPSpeaker
And so that's why they're, they're not going to do that. I mean, the, the iPhone 5C is as, as far down market as they go.
- BEBenedict Evans
Um, no, I don't think that's true. I mean, you have to think about, as I s- sort of make the maths a different way, but you have to think about the average and the absolute. Um, that's to say there's a billion Android users, off the top of my head. Maybe 100 million of them have got five and $600 phones.
- SPSpeaker
Right.
- BEBenedict Evans
And those guys are worth having.
- SPSpeaker
Right.
- BEBenedict Evans
Um, but if you apply that to the average, the average is crappy.
- SPSpeaker
Right.
- BEBenedict Evans
Um, whereas Apple has only got the $600 phones, so their average looks really good, and they've probably got two or three times more high-value customers than are on Android. Or maybe they've got the same number, you know-
- SPSpeaker
Mm-hmm
- BEBenedict Evans
... depends how you an- analyze it. So you have to be careful sort of thinking about the mass of the average versus the absolute. Um, looking at the 5C, um, I mean, kind of analogies get horribly overused, but it is kind of useful to think about Apple as BMW in, in a bunch of different ways. First of all, BMW does not sell as many cars as Toyota sells, um, mopeds. They probably don't consider that to be a major existential problem.
- 12:51 – 15:48
The War Moves to What Happens on Top
- SPSpeaker
Right. So let's talk about the, if, if the sort of OS war is over, the mobile OS war is over, does the war shift and-
- BEBenedict Evans
Yeah, it's all about what happens on top.
- SPSpeaker
And so-
- BEBenedict Evans
Yeah
- SPSpeaker
... so what does that mean, and, and who else gets to play in that, that landscape?
- BEBenedict Evans
Well, there's, there's a big war and a small war. There's a small war, which is people trying to build stuff on top, build platforms on top of Android, which is Amazon and Nokia and perhaps Microsoft in the future. And in that case, it's, it's a lot easier to see what problem they're solving for themselves than what problem they're solving for the consumer, frankly. Um, but the more interesting thing is when you look at what it means to say a smartphone or to say the mobile internet. Um, I mean, if you think about how the desktop internet worked, we've really all had this conversation where you explain to somebody that the internet and the web are not the same thing. But for all practical purposes, they were.
- SPSpeaker
Right.
- BEBenedict Evans
You know, there were a few things like Spotify and Skype around the edges, but basically for 20 years, the web, the, the internet and the web were the same thing. Um, and that's not the case on mobile. The, on the desktop, you had this box on the screen, and everything happened in that box. Um, and there was a little bit of fighting 15 years ago about who got to make that box, and the Andreessen in Andreessen Horowitz has some opinions about that.
- SPSpeaker
[laughs] No doubt.
- BEBenedict Evans
Um, but frankly, all the innovation was happening inside the box. And you go to mobile, and the browser is just one of a dozen different things that you could be doing, or two dozen different things that you could be doing on that device. And none of that's settled yet either. Um, I mean, if I was to say that I installed a app on my Android smartphone in five years' time, I don't know what any of those words would mean. I don't know what installed would mean, 'cause is that a web app? Is it something happening within a messaging system? Is it a card that's being loaded dynamically by the operating system as I hold my phone up to a, a menu outside a restaurant? Has that been installed? I don't know what app would mean for the same reason. I don't know what Android's going to mean in five years' time. I don't think anybody knows what Android is going to mean in five years' time and how that interacts with Chrome and how that interacts with Google Play services and where the innovation and the, the levers of, of, of interaction will sit on that platform. Um, and of course, there's also, you know, wild card about what you mean by phone. You know, we may be sitting here, um, waving our hands in the air or looking at watches or looking at, you know, smart, smart glasses and, you know, the thing that's really missing in that space is more silly acronyms, you know?
- SPSpeaker
[laughs]
- BEBenedict Evans
Samsung, Samsung gave us the, the phablet, but we really need to be talking about the smatch and the wablet as well to kind of go with it.
- SPSpeaker
I hope not. I'm wearing a, a Swatch smatch. Anyway, d- just to poke a little bit o-on that theme, do you, um, do you think that, um, the control goes away from Google and, and Apple in that sense? That like, you know, if there's all these different players, if we don't know... Like, who owns the relationship? Or are you seeing signs that the relationship is, you know, sort of shifting? I mean, Apple certainly has a tight hold, but in the Android world, does Google get to have the relationship, or is it something else?
- 15:48 – 19:15
What Apple and Google Actually Want
- BEBenedict Evans
Well, it's an interesting question about what Google is try- And there's a Facebook story in here as well, of course. But there's an interesting question as to what it is that Google and Apple are trying to do. Um, and I think in a sense, these-- The problem with the people have looking at these businesses is they're actually, in a sense, much simpler than people think. Um, Apple makes three, four, $500 boxes with circuit boards inside with a great experience.
- SPSpeaker
Right.
- BEBenedict Evans
They're not gonna buy an airline so they can replace the in-flight entertainment system with iPads.
- SPSpeaker
Right.
- BEBenedict Evans
They're not gonna buy a TV company. They've got-- They're not gonna buy a mobile operator. They're not gonna buy a f- an air freight business. Um, they make boxes with circuit boards in, and they try and make them the best boxes they possibly can.
- SPSpeaker
Right.
- BEBenedict Evans
And Google is a vast machine learning engine that spent 15 years stuffing the, stuffing itself with data, and web search is an expression of that, just as, you know, buying books is an expression of Amazon as a logistics platform.
- SPSpeaker
Right.
- BEBenedict Evans
Amazon isn't a books company. Um, and web search is an expression of Google's machine learning platform, so is Gmail, so is Maps, so is Now, so is the advertising platform that pays for it all. But those are all applications that sit on top of, you know, maybe not in a literal sense, but in a metaphorical sense. They're all things that sit on top of an underlying machine learning project.
- SPSpeaker
Right.
- BEBenedict Evans
Um, and so Google is not in the hardware business. You know, it's-
- SPSpeaker
Well, $12.5 billion later, and then selling Motorola again, but yeah.
- BEBenedict Evans
Yeah, well, it wasn't 12 and a half 'cause they s- it was nine and a half with cash, and then they sold the cable business. So-
- SPSpeaker
Okay
- BEBenedict Evans
... but yeah, I mean, that was a, basically an enormous patent infringement fine as much as anything else. I think... No, but the, but the issue is, you know, just as, you know, Apple is not a cloud company, although it would sort of like to be sometimes, but it's only a cloud company in as much as it needs to be a cloud company. And there's a question for the, you know, coming back to our point about ecosystems. The poison pill for Apple is not only having 800 million active devices. Is Google doing something in the cloud that Apple can't do that means you have to buy a not Apple device?
- SPSpeaker
Right.
- BEBenedict Evans
But it's hard to see how Apple, you know, to my point about what, what Google's trying to do. You know, Google is not in a one-to-one fight to the death with Apple. You could argue it's in a one-to-one fight to the death with Facebook.
- SPSpeaker
Mm-hmm.
- BEBenedict Evans
Or even potentially with Amazon. But Apple is a channel. You know, for Google, Goo- the objective is reach. Reach so that people can use its search, can see its advertising, also reach so it gets information back into that learning engine. And of course, that's what Google Plus is about. You know, Google Plus is not a search engine, social network, for heaven's sake. It's about indexing the users. It's PageRank for the users.
- SPSpeaker
Right.
- BEBenedict Evans
Um, and so for Goo-- the, and that means the sort of the, as I, as I said, the platform war ended, and Google and Apple both won 'cause Google and Apple both got what they wanted, but they wanted different things. And everybody that goes out and buys an iPhone is using Google Search and Google Maps as long as Google Search and Google Maps are good.
- SPSpeaker
Right.
- BEBenedict Evans
And Google's problem is making sure that Maps and Search are good. And for Apple, if you're using Google Maps or Google Search on iPhone, that's not a problem as long as you're buying an iPhone, and you'll buy an iPhone as long as the iPhone is good, and that's Apple's problem.
- SPSpeaker
So, so let's shift gears a little bit. And, you know, you mentioned Facebook, but if you are an entrepreneur and somebody who wants to insinuate yourself into this ecosystem, you know, how do you do it these days? And, and going forward, how do you, I guess, preserve your own leverage in, in, you know, in the face of this massive footprint by Google and Android and, and Apple and iOS?
- 19:15 – 21:34
Opportunity for Entrepreneurs: Scale of Mobile
- BEBenedict Evans
Well, I think there's, there's two ways to think about this. One is that a smartphone is a richer and more complex and more sophisticated platform than the web, and it's also a vastly bigger platform than the web. I mean, we kind of threw away-- threw around some big numbers earlier. But, you know, the-- there will be, as it might be, three billion smartphones on Earth with a massive range of, of income and capability and so on-
- SPSpeaker
Right
- BEBenedict Evans
... and income of the users. Um-
- SPSpeaker
As massive as there are people, right?
- BEBenedict Evans
Yeah, exactly. It will effectively be half the population of Earth will have a smartphone. And, um, that compares with something like one point five billion PCs, and those PCs are either shared at home or locked down at work and don't go anywhere. They're not really portable. And so you have twice the number of devices. Those devices, as I said-- And those then devices are in everyone's hand all the time as opposed to being in a desk or in a study or shared with your brother or something. And so the size of the internet gets two or three or four or five times bigger just as a consequence of the shift from PC to mobile. And it still baffles me. I get flamed by-- for daring to compare smartphone sales to PC sales. So people think that, that smartphones are like... Still, still think that smartphone is a toy. They're not.
- SPSpeaker
Right.
- BEBenedict Evans
It's like thinking a PC is a toy, and then real men need mainframes, for God's sake.
- SPSpeaker
[laughs]
- BEBenedict Evans
You know? But smartphones are the dominant computing platform and the dominant internet platform, um, and will completely supplant PCs in importance. And they have a much more rich and much more complex set of options and opportunities and ways of engaging with users and, of course, ways of gaining users. And you can see that in a very small way in the acquisition of WhatsApp, which was like a fantastic case study of everything that's going on online. And one of the things it illustrated is just how big you can get if you get really lucky with the right idea and-
- SPSpeaker
Right
- BEBenedict Evans
... execute really well. You know, ten years ago, um... No, let me put it another way. In the time of the first internet bubble, you know, a prototypical startup, an archetypal startup, you would have 100 people, and you'd have raised ten million dollars, and you'd have a million users.
- SPSpeaker
Right.
- BEBenedict Evans
And now-
- SPSpeaker
If you were off to the races, yeah.
- BEBenedict Evans
Yeah, exactly. And now you'll have raised one million dollars, and you'll have 10 people, and you'll have 100 million users.
- SPSpeaker
Right.
- BEBenedict Evans
So the whole thing's been completely turned on its head, and mobile is a big part of that. Um, so that's one sort of point about scale.
- 21:34 – 23:37
App Discovery Is Still Pre-PageRank
- BEBenedict Evans
I think the second point is that we're kind of in a pre-PageRank phase for how people discover and engage stuff online. That's to say an app store now looks a lot like, um, it looks a lot like Yahoo-
- SPSpeaker
Right
- BEBenedict Evans
... 20 years ago.
- SPSpeaker
This sea of, of-
- BEBenedict Evans
I mean, it fe-- it always sounds like I'm do- trying to do a comedy routine when I describe this. It's like there was a website that listed every website that there was, and you could scroll through them all.
- SPSpeaker
[laughs] Right.
- BEBenedict Evans
And it was news when there was a new website. You know, it would like-- You'd go to Yahoo, to-- You'd go to... I swear to God, you'd go to Netscape's What's Hot page, and it would say, you know, "The, um, the Morningwood Arkansas Elementary School has got a website."
- SPSpeaker
[laughs]
- BEBenedict Evans
It was like that was on the front page of your browser when you loaded a browser.
- SPSpeaker
Right. Well, you know.
- BEBenedict Evans
And, you know, you see the... So to me, my point is that's what an app store is now.
- SPSpeaker
Right.
- BEBenedict Evans
You know, you can browse every app that there is, but there's a million apps.
- SPSpeaker
So we haven't, uh-
- BEBenedict Evans
We haven't moved to the point where we discover, "Okay, how do we know what's going on?"
- SPSpeaker
Mm-hmm.
- BEBenedict Evans
And part of that is some sort of manual curation. Part of it is better search in the app stores. And it's, you know, it's a generic problem for both Apple and Google. They've got a million apps in their store.
- SPSpeaker
Right.
- BEBenedict Evans
Um, but I don't think that is an execution problem in a kind of... It's not a question of improving the execution of what they're doing now. I mean, to me, you know, a startup that says, you know, "We made an app, and it's in the App Store, and it can't be discovered," is like a writer who says, "I wrote this book, and it's in Amazon, and no one can discover it there." It's like, well, they've got 25 million SKUs.
- SPSpeaker
Right.
- BEBenedict Evans
They can't put your book on the homepage necessarily.
- SPSpeaker
Right.
- BEBenedict Evans
So it's up to you. And, and yet when you say it's up to you, well, but there's no SEO, there's no SEM equivalent. It doesn't follow that the answer is that Google will do better search or deep linking or any of these initiatives is the answer. But clearly, we lack an answer, and we lack an answer also in a much, much more complex world because, as I said, it's not just about apps in the App Store. You know,
- 23:37 – 24:55
Messaging Platforms and the Swirling Soup on Top
- BEBenedict Evans
if I was to send you a restaurant review in a messaging app, um, it probably shouldn't arrive as a dumb URL string, as a piece of text. What should happen is that the restaurant review should appear on your phone screen, and you should be able to interact with it, and then you should be able to save it to your home screen. And then you say, "Whoa, whoa, whoa, what's just happened? Have I just installed a native app? Does it matter?"
- SPSpeaker
Right. Do we know? Yeah.
- BEBenedict Evans
"Does it mean anything to talk about HTML5 versus-
- SPSpeaker
Right
- BEBenedict Evans
... native code?" Not really. What matters is, you know, how does it get onto your phone? How do you interact with it? And all those questions, frankly, are still wide open. And to some extent, those are in the hands of Apple and Google as the platform owners who can make kind of elemental changes in, in what can be done on the, on the platform. But they're also in the hands of Facebook. They're in the hands of WhatsApp. You see companies like Line and WeChat in particular being very aggressive in trying to turn their messaging systems into, um, social platforms, application platforms, engagement and identity platforms, um, on top of a smartphone OS and neutral to whether you're on iOS or Android. So there's a sort of swirling soup of interaction and engagement and user acquisition and identity and payment sitting on top of iOS and Android that Apple and Google have some control over, um, in that they can offer new options But they don't really direct-- control the direction of it.
- SPSpeaker
Right.
- 24:55 – 26:58
Browser Wars Analogy and Apple Moving Down, Google Up the Stack
- SPSpeaker
So, so it sounds like what you're saying in some ways, and this relates to Yahoo, is that, you know, this war is over. Going back to Yahoo, Yahoo won that war, but it turns out there was another war to be fought, and, and PageRank won that.
- BEBenedict Evans
Yeah, it's like talk- it's actually, it's like talking about browser wars.
- SPSpeaker
Uh-huh.
- BEBenedict Evans
You know? It's like I don't think, um, Mark Zuckerberg spends a lot of time thinking about Internet Explorer ver-versus Chrome versus Safari versus Firefox.
- SPSpeaker
Right.
- BEBenedict Evans
You know? It kind of, you know, by the early 2000s, it just kind of became irrelevant. And yes, you know, it might have gone another way, but it didn't. And I think, you know, to a degree, you could suggest that smartphones sort of might go in that direction. Now, they might not if Apple or Google or both, um, you know, extend their plat... depending on how they continue to extend their platforms in terms of what you can do on the device. But, you know, and clearly Apple in particular is being very aggressive. Um, I mean, here's the thing. There's, there's another sort of an interesting contrast to draw here. So if you look at what Apple is doing in the way that they evolve their platform, because they own the whole stack, they're doing lots of stuff that's quite hard, that you can only do if you know what Bluetooth chip is in the phone.
- SPSpeaker
Right.
- BEBenedict Evans
So you see AirDrop, you see, um, iBeacon, you see a lot of the local disco- wireless discovery things. You see thing- incidentally, you also see things like using the M7 motion processor to reduce battery life, which again, is really tough if you don't make the whole stack.
- SPSpeaker
Right.
- BEBenedict Evans
Um, and in contrast, of course, you see Google lifting all their innovation up the stack into the cloud, into Google Play services, into Now, into Maps, into Plus, and so on. And so Apple is moving down the stack, and Google's moving up the stack, both of them, of course, into their comfort zone, into a place where it's hard for the other to follow them. So you do have this kind of interesting contrast as to what's going on in, in iOS and what's going on in Android. Um, but on top of it, beyond that, you know, you know, as a third party, where you've got these two big platforms, there's a lot of common denominators between them. There's some interesting stuff on some that's not on the other, and vice versa. Um, but by and large, you know, as a generality, there's one point four, one point five billion people on Earth who've got one of these things today.
- 26:58 – 27:21
Wrap-Up and Future Topics
- SPSpeaker
Well, Benedict, I, I wanna thank you, um, for this discussion. It sounds like one war is over, and, and like you said, there's all sorts of things swirling around, um, and there's another war afoot, um, as we speak.
- BEBenedict Evans
Yeah.
- SPSpeaker
So we will be talking more about that, and I would love to sit down and, uh, have you untangle Amazon for us, for example.
- BEBenedict Evans
[laughs] Yes, I'd-
- SPSpeaker
So Benedict, thanks very much, and, uh, we will be doing this on a regular basis.
- BEBenedict Evans
Great.
Episode duration: 27:22
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Transcript of episode UvPlLT5VsDs
