Are Apple and Google, the giants of mobile, ready to declare war?
Apple likes control. While nearly universally agreed upon, this is an understatement. Like saying Mussolini had a thing for trains.
The Cupertino, Calif. company is notoriously patent happy, and in October 2009 (months before the Quattro acquisition announcement, but while the tech powerhouse was admittedly pursuing AdMob, which it lost to Google), it applied for one that raised eyebrows in mobile circles. According to the U.S. patent and Trademark Office, Steven Jobs et al. of Apple Inc. are listed as the inventors of what amounts to an A-Bomb attack on pop-up blockers and those who refuse to look at ads. The patent outlines a system that not only describes the process of "determining whether a user pays attention to the advertisement," but also for disabling the device should an ad not be noticed. Just a stones' throw across the valley in Mountain View, Calif. things couldn't be much more different. Google presents itself as relying on the innovation of others to maximize the use of its products. The public face of the company is nearly socialistic. For instance, it's almost impossible to tell from titles alone, except at all but the highest levels, what the internal hierarchy of the company is. Googlers beat the open source drum with a consistency that can be numbing. When asked for comment on the mobile strategies of the two companies a Google rep said only, "We believe that open is the only way for the Web to have the broadest impact for the most people. We're technology optimists who trust that open benefits everyone, and we will fight to promote it every chance we get." (An Apple rep said, well, nothing.) To toe the party line Google created the Data Liberation Front, a dot-org dedicated to making "it easier for users to move their data in and out of Google products" and boasting a comical logo comprised of a Gonzo fist breaking chains.
Contrast this with Apple's approach to allowing users to move data. Difficult, because Apple doesn't have one. Or if it does at all, it could be boiled down to this: Buy a hard drive.
When Apple acquired the cloud-based music service LaLa in December 2009 the move raised the long held hope that it might be transitioning iTunes to the cloud, a development that many felt was long overdue. Of course, that nagging suspicion that Jobs could just be eliminating a threat to the iTunes model rankled. LaLa had never worked on the iPod or iPhone, and the acquisition came just a month after LaLa enabled users to upload their music libraries to their accounts and announced an app was on the way. The app never materialized, and in April 2010 Apple pulled the plug and shut LaLa down.
"Apple and Google are two very, very different companies," says Josh Lovison, gaming and mobile practice lead at IPG's Emerging Media Lab. "Their goals are very, very different, but they're playing in the same sandbox."
And they'll continue to clash, Lovison asserts. "We've seen Android being enough of a threat to iPhone that Apple has taken an offensive stance with its lawsuits against HTC. Apple is definitely very concerned about Google, and similarly Google is concerned about Apple. Both companies recognize that the frontier is mobile." Google's strategy is to have the most devices out there, and Apple's is to have what they deem the best products. That has been its differentiating factor.
But both companies are zeroing in on mobile, and Google is ready to defend its online turf. "They see that mobile's going to be a primary computing platform in the very near future, and that if they want to retain dominance in the online market in terms of ads, they need to also have a very strong footprint in mobile," says Lovison.
Honesty may be the best policy, but open source isn't necessarily. "Android is completely open source, so actually it doesn't put Google at much of an advantage at all," Lovison argues. "You have instances like the Samsung handset on Verizon, which actually removed Google from the search results and was using Yahoo to power search. Because it's open source it can be customized. In fact, to combat that, there's a bunch of rumors that Google has treated the handset manufacturers as publishers. So, whenever there's an Android handset that actually says Google on it, Google is sharing the advertising revenues from those handsets with the manufacturers."
By contrast, even while not the top seller of devices, Apple is the No.1 revenue generator in the mobile space, thanks in large part to a sweetheart deal with AT&T which is rumored to net Apple double the amount per device any other handsetmaker gets from AT&T. And after a consumer walks out of the store, the device continues to make Apple money (many times more than any single device currently nets Google), because of the tight controls it has on the app market and utilities.
"Apple certainly has the advantage in terms of usage," points out Lovison. "If you look at even AdMob's numbers: 50 percent of all the ads that are being shown in the U.S. are on Apple devices. Just the volume of impressions is definitely in Apple's favor right now." Though those numbers are surely not rock solid.
There is a quaint red-brick bank in a slightly rural area of eastern Long Island, N.Y. The ATM sits next to the main entrance, shrouded behind low shrubs. A driveway to the parking lot in back runs long the right side of the entrance, and a cement path leads from the street through white pillars to the ATM. People coming to withdraw their fast cash are faced with two options: The nicely landscaped main walkway, or pulling up illegally in the driveway and short-cutting by jumping through the shrubs. The open and closed source options, if you will. Needless to say, a path is trampled through the shrubs.
"Apple makes a beautiful product, but Jobs' fundamental flaw is his insistence on a closed ecosystem. This is the reason that Macs are only 5 percent of computers worldwide," says Andrew Ettinger, vice president of interactive media at RJ Palmer. "Taken to the mobile market, this will ultimately mean less developer interest. Developers don't want to be hassled by Big Brother. With Android, they will be able to make what they want more easily and get it to market faster."
What might accelerate the change is the coming revolution in bandwidth. The majority of phones will be smartphones likely sooner than you think. "The only reason you have a user in the U.S. turning in their phone today and not walking away with a smartphone is because they don't want to spend another $30 a month for their data plan," says Lovison. "But with a 4G network, like the one Verizon is going to have to 100-million people by the end of this year - the LTE - that network is by default a data network, and voice actually runs as voice over IP. So, the idea of data as a separate charge goes away. Once that happens, I have a hard time imagining almost anyone going into a wireless handset store and not walking away with a smartphone."
"Ultimately, buyers need reach," says Ettinger. "If Android can get more phones to market - at a cheaper price point - then those apps would be better suited for large campaigns. Apple may have a better product, but people will accept less than perfect for better pricing."
Chris Cunningham, cofounder and CEO of mobile advertising company Appssavvy, sees developer satisfaction hinging on Apple's strengths. "The two primary distinguishers between the Apple and Google platforms are 1.) The application approval process and 2.) The allowing of Flash," he says. "While Apple's approval process has certainly caused some frustrations to date, there hasn't been anything severe enough to cause a mass developer migration. This can partially be attributed to the market-share Apple has - which Android is rapidly gaining on - but more so this speaks to the direct monetization engine Apple provides: iTunes." Cunningham, for one, can't be surprised Apple killed LaLa.
In the Cold War in which Apple (the U.S.) and Google (the Soviet Union) are currently engaged, they have seemingly found their Cuba: Adobe.
The Adobe Video Crisis of April 2010 bore this out. April saw the launch of the iPad, with more than a million of the tablet devices shipping and the announcement of the iAd, with its $1 million price- tag and $10 million premium on being among the first brands in. The new ads function with the platforms of the various i devices in core ways, offering brands premium mobile spots. And Steve Jobs let the world know, in no uncertain terms and in a strangely personal open letter, that premium rich-media content does not mean Adobe Flash.
An Adobe spokesperson told OMMA, "Apple's moves to block Flash and other technologies are designed to protect a business model that locks developers and consumers into a single, proprietary stack ... Adobe is working with every other major hardware manufacturer, as well as our media and publishing customers, to deliver the best content, applications and experiences across a range of screens. We will deliver the public preview of Flash 10.1 for Android devices within the next month, and look forward to the general release in June. In the end, we believe the multi-platform world will prevail." Viva la revolucion.
Jobs also played an Orwellian "War Is Peace" game with the notions of open and closed source in his letter. "Both companies are open and closed," says Zeh Fernando, senior developer, at advertising and design shop Firstborn, referring to Adobe and Apple. "Jobs' letter was only referring to one specific technology that Apple uses - HTML5 - and he was comparing that to what Adobe does. The reality is that much of what Apple does is also closed. The truth is both companies use a number of open and a number of closed technologies."
Whatever case one wants to make for Adobe, Flash is inarguably a closed and proprietary system and it wasn't ever something Apple wanted living walled-off in its own ecosystem. "It's not really a technical issue; it's a business issue. Apple wants to be protective of what they let people run. They don't want anyone to control what kind of platforms they have for publishing," says Fernando. The Adobe rep put it declaratively: "Any attempt to position this solely as a technology issue is a smokescreen."
"Our clients' biggest priority for mobile - across all devices - is first ensuring the site is accessible on those platforms. We are able to create a rich user experience in DHTML without Flash," says James Gardner, cofounder and CEO of CreateThe Group, for whom, with such Apple-friendly luxury brand clients as La Perla, Marc Jacobs, and Donna Karan, dealing with iPad and iPhone eccentricities is a part of life. And when Flash is required, says Gardner, there is always an HTML back-up. Some though, such as Brooklyn-based Huge, have taken a zero-tolerance policy toward Flash. "Founder and ECD David Skokna made it part of Huge's design philosophy to eschew Flash literally a half dozen years ago," says a rep.
That said, like a stubborn Castro holding out under embargo, Adobe Flash is not likely going anywhere soon.
And as Apple sets off fireworks in June and July, rolling out iAds with splashy lifestyle brands, it will be declaring its independence from the ad nets (and Google). "A lot of the publishers complain about the AdMob, Jumptap ecosystem where there are these very, very low CPMs, because there's a greater inventory than there is demand," says IPG's Lovison. "Publishers just don't make very much money off the in-app ads."
"What works for Apple when it comes to advertising will only work for a handful of brands - à la Nike, which was the example used in the iAd announcement - that share Apple's innovative brand heritage, captivating product suite and passionate customer-base," says Aaron Goldman, managing partner, Connectual. "For the rest of us that don't have such power brands, it will be hard to make a $1-10 million investment pay off ... iAd, albeit elegant, is just another interruptive ad model."
At least it will run on time.