Could Apple be overcome by Google’s Android attack? Kohler

Publishers who are hoping Apple’s consumer-pays system supplants Google’s “everything is free” model had a nasty setback this week: Google’s Android operating system for mobile smartphones passed Apple’s iPhone in US market share.

According to market research house, NPD, Android now has 28 per cent of the smartphone operating system market versus Apple’s 21%. They’re both still lagging Blackberry’s 36 per cent, but gaining rapidly.

The battle between Android and the iPhone is a replica of the one between Apple and Microsoft in the 1980s and 1990s that Microsoft decisively won, first with MS DOS, the system that loosened IBM’s hold on PCs and then its earth-changing series of Windows user interfaces, starting with Windows 1.01 in 1985 and culminating in the launch of Windows 7 last year.

Once again Apple has achieved early success with its design-based system of locked hardware and software and is now battling an open platform competitor – first it was Microsoft, this time Google.

But in 2010, the game is different. Publishers of movies, music, journalism and books, and just about everything else, are keen to start charging their customers, having discovered that online advertising alone won’t sustain them in the manner to which they had become accustomed.

Apple’s wonderful iTunes payment system, combined with iPhones and iPads, has looked like the answer: an integrated way of serving and charging for online content, both for subscriptions and one-off micropayments.

That will be under serious question if Google successfully swamps the mobile content business, as it did browsers on PCs.

Of course the publishers only have themselves to blame for the pickle they are in.

They were seduced by the incredible audience numbers being generated by the combination of Microsoft’s Internet Explorer, first embedded in Windows 95 and reaching a peak 95% market share on PCs in 2002, and the web search engines that began with Netscape and culminated in the brilliant Google PageRank system 10 years ago.

The numbers were so large compared to the sales figures they were used to that it seemed inconceivable that they wouldn’t make money. But they didn’t count on the price of advertising falling by 90% online as content flooded into the search engines, producing an almost infinite supply of inventory, which made Google rich but everyone else poor.

In 2001 Steve Job’s Apple went in what looked like a different direction, launching the iPod music player, one of the most beautiful consumer devices ever invented.

In 2007, as Microsoft was being picked off and weakened by open source software, Jobs launched his attack on the flanks of Google with the launch of the iPhone, although it didn’t look like it at the time.

But it soon became clear that the combination of iPhone applications, mobile convenience and the iTunes payments system, was actually an attack on Google via mobiles.

The hugely hyped launch iPad this year has turned that battle into a seminal one for publishers: apps versus browsers; pay versus free.

Apps are faster, simpler and richer at the same time, and more versatile, but require more coding expertise than websites. Nevertheless, because of the potential for making money there are now 185,000 apps and many developers are making decent money with games priced at $1.19 and a huge range of other content sold through the iTunes store. Many apps are free, to promote other content and now also carry advertisements.

Publishers have been hugely excited by all this, spending a fortune on developing apps for both the iPhone and the iPad and dreaming of the day when they’ll be able to start charging again.

But now Google is marching into mobility as well, passing Apple with its openly available Android operating system for smartphones.

At the same time, the number of mobile friendly websites is expanding rapidly. According to data from Taptu, a mobile search firm, there are now 440,100 touch-friendly websites – that is, websites that are designed to be accessed via a smartphone touch screen.

That’s an annualised growth rate of 232%, and compares well with the 185,000 apps on the iPhone.

The growth is being driven by the explosion of touch screen phones modelled on the iPhone – a bit like the IBM clones that swamped the PC market leader in the 1980s, supported by Microsoft and, later, Intel microprocessors.

History never repeats, Mark Twain once said, but it often rhymes.

This article first appeared on Business Spectator.