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How apple taking of rivals

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How apple taking of rivals

  1. 1. Last weeks WWDC announcements seemed routine enough. They werent. They were thinlyveiled thrusts at Google and Microsoft.By Jay Jamison, contributor FORTUNE -- Last week, Tim Cook took thestage and keynoted Apples annual Worldwide Developers Conference for the first time. Itwasanother milestone marker at the beginning of the Cook era, and a high stakes one at that.Apples new CEO is laboring not only in the shadow of the great Steve Jobs but the millions offanboys, analysts and investors looking for any signs of a drop-off in innovation, a loss of a step. Butthe announcements had one core focus: Cook is going on the offensive against Microsoft andGoogle. Cook and Apple want to set the competitive battle ground on which Microsoft launchesWindows 8 and it wants to attack Google mobile OS unit leadership with Android. Heres how:Apples (AAPL) New MacBook Pro with Retina Display is going after Microsoft (MSFT) Windows 8.With its upcoming Windows 8 launch, its Metro UI and ARM support, Microsoft has a major Windowsrelease that appears well tuned to evolve its mass scale computing platform to a more mobile-centricworld. (A new tablet dubbed Surface isnt likely to hurt either.) Mobile-centric startups, especially withtablet offerings or enterprise focus, should watch Microsoft Windows 8s launch closely.Apples new MacBook Pro announcement has stolen a bit of a march on Microsoft here. Bylaunching this new MacBook Pro lineup -- with Retina Display, a reported 7 hour battery life, attodays prices -- Apple is raising the bar (and likely the BOM costs) on WinTel-based PCmanufacturers. Though still a small percentage of unit share in the global PC marketplace, Applenow accounts for the vast bulk (potentially all) of PC manufacturer profits. Maintaining and extendingthat profit pool leadership against the WinTel PC manufacturers limits Microsofts maneuverability onits strongest front, namely its Windows PC business. From Apple, this is a solid jab at Microsoft onMicrosofts core front, while Apple retains its leadership on its key mobile fronts.MORE: New MacBook Pro: Worth every pennyApples Facebook (FB) integration hits Google (GOOG) Android hard. Apple and Facebookannounced that Facebook will be much more deeply integrated into the upcoming iOS6. Users willfind it much easier to connect to Facebook from iOS6, making it easier to post a photo or a songfrom your device to Facebook.Strategically, this aims right at Google and Android, and the big beneficiary in my view on thisannouncement is actually Facebook. Facebook has reportedly struggled in mobile, in part becauseits been cumbersome to get stuff from your mobile device onto Facebook. This developmentappears to address this problem. Also, by opening up Facebook on iOS via an API, iOS developerswill get access to the increased social flow that this integration enables. Done well, this move maytighten the vice on Google Plus. With the Instagram acquisition and now this, Facebook has somestrong responses to any perceptions that theyre not focused on mobile.
  2. 2. On the Android side, Googles unit share leadership continues to provide the advantages of being#1, but the ecosystems health is questionable. With most developers I speak with, Android strugglesto deliver consistent profits and revenue to high value-add developers. Part of this challenge is dueto the fragmentation of Android App Stores, form factors, and even different OS versions running ondevices. Google is apparently working to address these issues, but material progress has been slow.Google has to turn on the jets here, as Apples strategy of having an integrated device, software, andapp store ecosystem enables Apple to drive innovation into the marketplace more quickly and morebroadly than Google.MORE: 15% would rather give up sex than their iPhoneAnother key challenge for Android is winning high profit users who today tend to choose iPhones oriPads. On the tablet side, in particular, how often have you actually seen a user with an Androidbased device in the wild? Its rare. In todays PC world, the most profitable users are Mac users; thesame dynamic is starting to take hold in the smartphone world.What do Apples announcements mean for startups? Apples moves potentially pressure somesuccessful earlier stage companies in spaces such as maps, payments or loyalty programs, but myfirst take is that Apple is not specifically trying to suffocate these efforts. This may be a contrarianview, as the more common narrative is that tech behemoths, such as Apple, Microsoft, Google, orFacebook copy or buy out good ideas built in their ecosystem and, as a result, stifle innovation.My perspective is that Apples move to extend and improve these areas is the natural order of thingsfor a platform owner managing the innovation of its ecosystem. The platform owner, Apple, has abusiness interest in enriching its platform, making its platform more functional and more attractive fordevelopers to build against and ideally for users to consume. You can look to any mainstreamplatform, whether targeting gamers, consumer, social or enterprise -- XBOX, Facebook, Google,Twitter, Microsoft Windows Server or Amazon (AMZN) Web Services for example -- all expand thefootprints and capabilities of their platforms to make them more functional for developers andecosystem providers, for the purpose of providing a deeper and more useful end-user experience.MORE: Apple price target roundupSo no startup can stand still. As Apple continues to raise the water line on its platforms functionality,startups are going to have to continue to innovate or theyll struggle. And in most (not all) cases, Iworry more about the risk of a startup that fails to execute and continue to innovate, than I do a techgiant extending its platform into a space. Keep in mind, Apples iCloud was supposed to kill Dropbox,and Apples Ping was supposed to crush Pandora (P) or stop a Spotify before it come out. This is nota critique of Apples innovation at all; Im merely saying that startups that execute and innovate cancontinue to thrive.Despite my view that the larger risk is a startup failing to execute, how would I analyze theseannouncements for impacts on specific startup categories? First, I think its too early to tell, and whatIll be watching for is how Apples developer terms of service roll out. As we get clearer insight as towhat developers can leverage and take advantage of with these new innovations, well have a bettersense.But if I were going to speculate, heres what Id say. Apples Passbook app is the one that I think willbe the big wrecking ball on several early stage startups in the space of loyalty cards and rewardsprograms. This space has had a whole host of early stage entrants over the past 24 months itseems. A very small number were gaining strong momentum, with 5Stars (loyalty) and ScoutMob(local merchant discovery) probably the two that I see as the private companies that are farthestalong. Again, watch what Apple allows these developers to leverage its technology. Id say that the
  3. 3. air in this crowded space got a whole lot thinner. One or two of the cream of the crop will make it, therest are really exposed.MORE: How Tim Cook is changing AppleFor payments and maps, both fantastically large categories, Im less concerned about high growthleading startups in this space. Partly, this is due to the very fact that the market sizes of thesespaces are so large that smart, innovative startups are going to find spots to innovate and attractcustomers. Also, at least in early reads of developer notes (Ive not studied these deeply), Appleappears to be expressing relatively developer-centric approaches to maps in particular. And Idcaveat that if youre a payments or nav company relying on legacy technology and an outdatedbusiness model, then Id say thats troubling. My perspective here is that Apple wont own theseentire categories, as always innovation is required.What was missing? The one thing Id love to hear more about is Apple opening Siri as a platformservice. Much was made of the improvements and the doubling down on Siri. This is good, as todate it has seemed as though Siri was a cool demo feature that few actually used very much.Perhaps with the new improvements, more of us will find Siri more indispensable as a service. Butdespite these announcements, Siri is not yet a platform service that independent developers cantake advantage of to extend their apps. Im sure its hard as Apple would have to constrain tightlywhat Siri could do in this context. But it does seem a continuing open issue—when will otherdevelopers get the chance to build programs to take advantage of Siri? That day will mark thestarting point, in my mind, of Siri becoming a mainstream feature.The bottom line, though, is that WWDC showed a company at the top of its game, a company that isan aggressive and savvy competitor -- and one that is pushing its ecosystem forward effectively.Jay Jamison (@Jay_Jamison), Partner, joined BlueRun Ventures in November 2010 and is basedin Menlo Park. He focuses on early stage mobile, consumer and enterprise opportunities. Jay has 12years of product management and marketing experience in the software and internet industry.Previous experience includes leading Microsoft Japans Windows Business Group as SeniorDirector, and other senior level roles at Microsoft in product management and marketing. Jay alsosuccessfully founded and led Moonshoot, a venture-backed online English education service forchildren.

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