Google, Microsoft and HP vs. Apple: The Smartphone OEM Nightmare

Rob Enderle

I've been talking to a number of people in Silicon Valley lately, and it is clear that not everything is rosy in the world of smartphones. Apple continues to attract more new customers and the alternatives from Google and Microsoft each have almost polar opposite problems, making them less than ideal. HP bought Palm to get around these issues, but that might not work, either, leaving each of them with an Apple nightmare they can't seem to wake up from. Let's explore that today.

 

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Apple: Perfect Storm?

 

Apple's iPhone/iPad offerings seem to be that perfect storm of product application store and marketing that is increasingly defining smartphones. It's experiencing massive increases in sales volume, revenue and profitability as a result. Its only weaknesses -- and they are significant -- are a tendency to be overly rigid in application approval for the application store and the use of AT&T, arguably the most disliked of the major carriers, as its networking partner. So far, its advantages have overwhelmed the disadvantages and the company constantly is held up as embarrassingly far ahead of its competitors.

 

Microsoft: Great with OEMs, Not So Good with Product


 

While the OEMs often complain about Microsoft, it's actually pretty good at managing the relationship and giving the OEMs plenty of heads-up on changes. In addition, it seems to listen to OEMs to some degree about new products. Microsoft tends to be very rigid about where each platform goes, however, and has so far has been unwilling to create a true alternative to the iPad. It did have Origami, which anticipated the iPad, but it failed to finish the platform or promote it adequately.

 

The problem is there is no real consumer buzz for Windows Phone 7 and no application store to drive initial interest. Microsoft tends to hold off on demand generation before there is a new offering and, to date, hasn't been able to field a offering that has anywhere near the excitement of a Google phone, let alone an Apple phone.

 

Google: Lots of Buzz, but Sucks with OEMs

 

Google is almost the polar opposite of Microsoft. It's more flexible about platforms and clearly more attractive to users, but its treatment of OEMs leaves a lot to be desired. It provides no clear roadmaps, and OEMs face constant surprises with regard to technology changes and a passive/aggressive approach to platform choice on tablets.

 

It allows OEMs to use Android, but gives them almost no support because it prefers that Chrome OS be used instead, although that operating system clearly is not ready. Google doesn't market Android or the Chrome OS at all, leaving that to the OEMs who are used to Microsoft carrying, albeit poorly, much of the funding load. As a result, OEMs aren't able to use Android to build a product that can compete effectively with the iPhone.


HP and Palm: Better Idea or Train Wreck?

 

This led HP to buy Palm, gaining a similar level of control to Apple and providing the potential to build an iPhone-like product that addresses both Apple's strengths and shortcomings. Potential is not reality, however, and word here is that Palm has been bleeding key hardware design and software talent to Google and Apple. Voodoo, the gaming company HP bought and then shut down, increasingly is being held up as the likely future for Palm, and that is making employees increasingly unwilling to ride out the merger. Most of Voodoo's employees were laid off.

 

HP could end up with little more than the Palm brand if it loses the key people that made the company capable of building competitive hardware and software platforms. Also, the application store for Palm substantially lags both Apple's and Google's, and HP doesn't have a recent history of working with third-party developers. Given that the Palm Pre underperformed expectations significantly, most developers who initially were on that platform have moved on to Apple's or Google's.

 

Finally, most of HP's top marketing talent has retired or gone to Lenovo recently, suggesting that it might struggle to maintain its high performance of recent years.

 

Wrapping Up: Things Look Good for Apple

 

Apple's only true competition might be RIM, which is bringing out a strong refresh for its smartphones and its own tablet. But RIM doesn't have the resources and size to compete effectively with Apple.

 

It is interesting that each company is torpedoing its own competitive efforts, and their collective unwillingness to truly step up appears to be giving Apple an overwhelming victory. Too few resources and too little marketing are hurting Microsoft and Google, though differently. HP is not effectively retaining key employees, and RIM needs to partner to get the necessary resources to fully counter Apple. This is like watching a sports event where one team is training hard and the others are hardly training, so the outcome seems preordained.

 

I wonder how long it will be before one of them truly steps up and says, "Enough!"



Add Comment      Leave a comment on this blog post
Jun 25, 2010 10:43 AM a. asdf a. asdf  says:

It's amazing how customers are literally throwing money at Apple, and the only real alternative being offered (Android) is from a internet search company. Unreal.

Before the iPad came out, a new tablet was being announced daily almost hourly. Now, 80+ days later and 3 million iPads sold, nothing.

We got a software monopoly/powerhouse/cashcow getting into the game 3+ years too late. And we have PC maker paying $1.2 billion for a smartphone OS that's already been rejected by the market.

The smartphone and the tablet markets don't make sense to me anymore.

Reply
Jul 4, 2010 2:01 AM User1821818 User1821818  says:

Customers are spending and switching carriers for iPhone4. Although apple admitted that iPhone4 has a problem with its antenna design but still customers are demanding iPhone4 and accepting the fact that phone has a defect.

Reply
Jul 5, 2010 10:30 AM dave barnes dave barnes  says:

Rob Enderle as an Apple fanboy.

Wow.

Never thought I would see that day.

Reply

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