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Android Beats Apple: Patent-Free Competition Works Best

Written by Gary North on November 13, 2013

Apple’s iPhones and iPads are popular, but they are the wave of the past. Android is the future. The reason? Android is based on public domain software, called open source. Apple is based on patent law, attorneys, and the U.S. Government’s patent office.

It is the free market vs. political rewards. The free market will win.

I predicted two years ago that Apple will lose the war for market share.

My prediction: Android will win the battle of the tablets. It will take a few years, but Android will win. There are lots of hardware companies that will use the open source software made available by Google. They will compete against each other. They will improve the product line. In the battle for market share, open source will win. It’s not patent-driven. It’s customer-driven.

This week, we learn that Android has 81% of the market for smart phones. Apple is a distant also-ran.

Back in May of 2012, I wrote an article for my GaryNorth.com subscribers. I went after Windows, for the same reason I had gone after Apple a year before.

In Asia, Windows cannot compete with Linux. Free is good. In the USA, the installed base will carry Windows for years. I am too old to shift. But the future is in Asian markets. American computer firms will not compete with old technology. Android software is free. Open Office is as good as Microsoft Office, and it’s free. The division of labor from Asia will bring innovation to the industry. There is no way that Hewlett-Packard or Dell can stop the erosion of their markets. Neither firm has shown any ability to respond by moving into new fields.

This is obvious. But investors refuse to see it. They hang on. This is Kodak investing.

The free market rewards customers. Sellers can sometimes get a break. A few get rich. But they cannot retain profits without innovation. There comes a time when innovation in an old market no longer pays. What breakthrough could restore these two dinosaurs to high profits?

This week, a specialist in new technology wrote this.

The problem is that the focus of the smartphone market has shifted east, to China, where a third of all smartphones bought globally are now sold. And to Africa and other parts of Asia. In those regions, Apple has languished in seventh place as local competitors such as Xiaomi, Huawei, Yulong, and of course Samsung win on price, with devices sometimes as low as $100.

And that is the long-term arc of the market, what we’ve been seeing for months, quarters, and years now: decreased Apple share at the expense of cheap Android devices. Lately, of course, we’ve been seeing cheap-ish Windows Phone devices too. Which means that one up quarter based on iPhone 5S and 5C strength is unlikely to change the fortunes of this war.

Apple’s not a low-cost competitor and never has been.

The free market is relentless in lowering prices. A company expands its market by lowering prices. This is a huge benefit to customers. They are served by the forces of competition. When sellers strive to gain a personal advantage by serving customers, they extend advantages to customers. The quest for temporary advantage — short-term monopoly — is challenged by others doing the same. The spread of ideas continues. The French economist, Bastiat, wrote this over 160 years ago.

Self-interest is that indomitable individualistic force within us that urges us on to progress and discovery, but at the same time disposes us to monopolize our discoveries. Competition is that no less indomitable humanitarian force that wrests progress, as fast as it is made, from the hands of the individual and places it at the disposal of all mankind.

This is Apple vs. Android. Android will win. It secures no monopoly based on government-granted patents. It is not dependent on the state. Instead, it offers short-term gains to producers based on innovation and price competition.

Android will continue to eat Apple’s lunch, byte by byte. It will do so through price competition and innovation, not patent lawyers.

The state creates temporary monopolies by means of patent law. The state’s intervention retards competition by retarding the spread of ideas. Open source software is showing the way. The customers are rewarded most when the state ceases to create temporary monopolies.

Android will win. Apple will lose. Asia will go with Android. So will the United States. Apple’s patent attorneys will join Blackberry’s. They will watch from behind, as Android’s patent-free innovation leaves them in the dust.

Continue Reading on news.cnet.com

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17 thoughts on “Android Beats Apple: Patent-Free Competition Works Best

  1. A full 66% of Android phones are selling for under $300, a market in which Apple doesn't even compete. In the high-end market Apple is outselling all manufacturers combined. Chevy and Toyota will always outsell Porsche. To infer that means that Porsche is failing and doesn't understand how markets work is nonsensical.

  2. Phillip the Bruce says:

    If you want a Porsche (or a Lamborghini) buy it. Most of us can't afford to. Luxury items are not a growth market in a stalled economy where the middle class is disappearing. I don't own a smartphone of any type. But when price competition makes it affordable to do so, it won't be an iPhone.

  3. Sorry to correct you, but Open Source is not the least bit the same as Public Domain. There is a patent applied to all true Open Source software called the General Public License (GPL, GPL 2), and the Lesser General Public License (LGPL). There are a few others that are used much less. But, the GPL has been tested in Court, and come out victorious over those who have tried to violate the License. These licenses may be read at: http://opensource.org/licenses/ The gist of the GPL is that anyone may download the source code, and modify it if they please, and use it; but, all modifications must be made available to the general public without cost so that they can see for themselves if anything nasty has been incorporated. Also, every contributor to a piece of code "owns" that section of code, and the credit in the comments of the source code must be preserved. There's more. Please read it. It's one of the most wonderful and successful models for cooperation ever written. Just as Linus Torvalds, the creator of the Linux Kernel.

  4. Until Android can protect against all the viruses that are devastating but don't seem to plague apple products, I can't take Android seriously.

  5. Sorry to correct you, but GPL is a license, not a patent, and it is based on copyright law, not patent law. Anyway, Stephan Kinsella explains why the creative commons license is better than the GPL at mitigating the disastrous effects of copyright law which is just as bad as patent law. Google him.

  6. I used to have lots of respect for your opinion, Gary. This causes me to question your judgment. Apple creates a total environment where you are protected from viruses and other problems. iOS is seriously secure, unlike Android. Apple quality is worth paying for. Intellectual property rights are real rights. Calling patents "temporary monopolies" is really goofy.

  7. Opinions are like assholes-everybody's got one.

  8. LiberalsRCommies says:

    As an inventor I object to this article. The only thing that stops wealthy people from ruining this country is the patent office. As it is Big companies try their best to take someone else's idea and profit from it. Some are ethical most are not. To say that patents are not part of the free market is absurd. They are the hallmark of it. Picture America in a sea of Chinese knock offs. Get the picture? Its already bad and the only thing that keeps those cheaply made knock offs from taking over is the patent office. I dont think Gary North has ever invented anything. Next time try interviewing some from the opposite side of your slanted argument.

  9. You are missing the point. Chevy and Toyota are not Open Source. His point is that the patent/lawyer free technology will win because of lowering of price and competition among developers to make better products.

  10. Stop believing the FUD. Android "viruses" are virtually non-existent. To get one on your phone, you have to voluntarily take several steps (which you will be warned about) that allow a virus in.

    I worked for several years as Level 3 Tech Support for a major US carrier. I was an Android expert. Not ONCE did I encounter a virus. None of the people I worked with did, either. Android viruses weren't even something we were trained on, or that we ever discussed. Because we just didn't see them.

  11. LOL see my above post. Stop believing the FUD about Android viruses.

  12. You miss my point. They are not winning. Price isn't a factor. Apple doesn't compete in the area where Android is strong and Android loses to Apple in the area where they do compete. Apple has stated plainly that they don't and won't compete in the under $500 market. That is the only place that Android holds an edge.

  13. I've always bought Macintosh computers (and paid the hefty premium) since the 1980s, because I used those to make money.

    However, smartphones & especially tablets are primarily consumption devices, not normally used for productive purposes.

    Considering those functions that are used for productive purposes, there's little difference between Apple & Android phone/email/voicemail apps, except for the price of the hardware you're using.

  14. Cliffystones says:

    I have yet to see where Apple products are in anyway "better" than those of their competitors. Their stuff is manufactured in the same slave-labor camps that the rest of the Chinese companies use. The only difference I see with Apple is folke who believe their product is somehow better simply because it costs more. Oh! and folks who buy "Apple" to look cool. My $50 MP3 player works just as well as a $300 IPod, but alas, no cool factor.

  15. If you can stand a Windows interface on your phone, go for it. Sadly, I gave in to the hype & traded my iPhone for a samsung droid. I hate it! On my iPhone, I could control what was running on my phone. The current abomination of a phone has so much crap running on it (that cannot be shut down) that my battery is constantly drained. It refers to itself as my "life companion". Can't wait to turn it into a doorstop when I get another iPhone!

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