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The Value of Competition: A Microsoft, Apple, Google Analysis
July 24, 2011 11:27 AM

A fundamental economic theory is that a monopoly is a bad thing. When one company, website, or brand dominates the market, consumers are left with unfair pricing, mediocre to poor quality products, and an inability to choose an alternative. In order to prevent this, the U.S government has a myriad of laws to protect us. Unfortunately, natural monopolies tend to form no matter what, and for much of the technology boom of the past century, that company was Microsoft. However, times have changed, and with Apple’s growth and Google’s steady rise to dominance, the Windows manufacturer began to face serious competition. Looking at the relationship between these three corporations, I will explore how one monopoly has died, why Apple’s is now becoming one, and more importantly, the implications for the future.

Microsoft Owns, Apple Grows

Relatively uncontested for much of its early years, Microsoft was–and still is–the most popular operating system in existence. Crushing Linux and Apple for decades, Microsoft was essentially a monopoly. Left unrivaled, this led to minor updates in their software, but little to no innovation.  Unfortunately, computer users were left with buying each iteration of Windows 95, 98, ME, CE, XP, and so on because there was no true alternative. Microsoft rested on its laurels and continued to turn profits. However, with the arrival of the 21st century, that all changed.

The iPod, the popularity of the MacBook, and/or Mac OS 9/X are just a few unique factors that allowed Apple Inc. to become a real contender in the technology war. However, they all share one thing in common: creativity. All of these products came from great ideas that were properly executed and finally gave consumers a choice. Microsoft’s response, unfortunately, came in the form of Windows Vista which was buggy and copied ideas from its fruit-named competitor (Apple’s beach ball and Vista’s color wheel being my favorite one). The lack of any real substance caused Windows to falter, and in early 2010, Apple officially overtook Microsoft in terms of market value. It would seem that the monopoly was over.

Apple’s War On Two Fronts

However, what is most peculiar is how the future seems to be a little bit different and yet shockingly similar. Looking at Apple’s two operating systems, the iOS and the most recent OS X Lion, the company is definitely adopting the idea of updating their software that gave the Microsoft of yesteryear consistent profits, but unfortunately, innovation is starting to be slip away. iOS was revolutionary in its inception, but four iPhones and two iPads later, the operating system is no longer changing the game. Moreover, OS X Lion adds a large list–about 250–upgrades that are supposed to allow the desktop operating system to merge seamlessly with their post-PC products together. However, they have been updating OS X since 2001, and many of the new upgrades are cool but not really worth shelling out the extra thirty dollars for a few new perks. I am left wondering why they can’t create a new operating system instead of building on something that is almost 10 years old. It seems that Apple is now just polishing the jewels of their company rather than going back to work on creating a new gem. Sound familiar?

In contrast, Microsoft is now on the defensive. They are realizing that they cannot mimic their competitor and must now innovate in order to maintain market control. Although Windows 8 is not out yet, it certainly looks to be a very different user experience than anything PC users know. Yes, it is similar to the UI of their Windows Phone, but what is key is that they are stepping away from what was once normative and are choosing the possibilities of uncertainty that could lead to a great, new product.

On the phone front, Google is attacking Apple’s previous monopolization of the smartphone market for less than half a decade, but because their OS is being incorporated into so many different phones, consumers can now choose exactly how they want to experience Android. The fact that Android has grown so quickly and is outselling iPhones is a testament to consumer’s desire to stop investing in a slightly upgraded version of their old iPhone. Although many might argue that this is simply because  there are more phones that use the Android OS, I believe that is a weak point of contestation. After all, if Android chooses to make their OS available on Thunderbolts, Incredible 2′s, and Echoes this means that the consumer is given a choice to get the perfect Android phone for them.

Bottom Line

Microsoft seems to be aware that they need to change their business and R&D model if they want to excel, and thankfully, they are. Windows 8 seems to be a new experience that really steps away from 7, Vista, or the 90′s family of operating systems. Google is also growing as a creation machine. With the recent launch of Google+, I believe that Android phones will possess a huge edge in integrating social media elements once Google+ inevitably becomes the next legitimate rival to Facebook. Moreover, because Google owns Android, the Menlo Park based company can begin limiting iPhone accessibility to Plus features like Hangout. Although, this could create another shift allowing Google to start walking a path toward monopolization as well, but only time will tell how Google, Android, and Google+ will grow as a trifecta.

Currently, the torch is being thrown to Apple. Over the years, they have become what Microsoft once was. Gate’s company failed miserably with Windows Vista, which allowed Apple to capitalize, but they are too content with their success. Unfortunately, this is again leading to more style over substance and the iOS developers are banking on their fanboys to continue to support them. However, when Microsoft reached this point, the MacBook and iPod arrived to take them down from their pedestal. Now, Apple faces two critical battles, and I hope that they will announce the release of OS 11 or something truly innovative from their camp because time is ticking. They need to realize that they must create to stay relevant in the game.

Links: Microsoft | Apple | Google

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