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.