A Brave New Mobile World

This paper evaluates the business models of Apple, Google, and Microsoft in the light of IoT and emerging mobile OS.  Microsoft has a unique component model that generates the revenues on a global scale capturing 95% of the PC market by collaborating with the strategic vendors of the corporate enterprises.  The high-tech innovators Apple have an end-to-end business model that has tighter integration with the highest quality of software, hardware, embedded iOS for IoT with more than 800,000 apps on Apple app store.  Google continues to prevail as the marketing leader in mobile computing by 2014.

Introduction

Mobile computing network and communication a emerging trends of the Internet age connecting consumers on the smartphones with a wide range of applications that can allow to even connect to virtual desktops remotely from the smartphones.  The evolution of multiple mobile networking protocols and convergence into a single version of digital mobile computing in the form of LTE (Long Term Evolution) network and 5G, 4G, 3G, 2G networks gave rise to create a new brave mobile world for the consumers in terms of big data transmission and connectivity on a larger scale of distributed network.

Analysis

In the digital age of recent evolution of technology, there are two business models that have been extremely successful; one is the integral model that constitutes as an embedded element into the core of the hardware and edge-to-edge inherent model that is pushed through into the market place to create new horizons of revenue opportunities. Microsoft has championed the integral embedded business model for few decades, while Apple has championed the edge-to-edge business model in the last decade.  In the integrated model, large number of enterprises either creates software applications like operating systems for IoT and computers, MS Office and other utility applications or hardware components such as processors, motherboards, and peripherals on an integrated platform.

The final product is assembled with the blend of software manufacturers and hardware manufacturers, though each application or chipset is not architected keeping in view of a specific operating system or a target software application platform.  There are some nuances and risks when such models are not built for perfection.  However in the edge-to-edge models a single enterprise architects the hardware keeping in view of the software applications and operating system that runs on the platform, therefore the rendering of the final product is impeccable, but the pricing strategy proves to be expensive with a single version of the final product either as a phone or as a notebook.  In the battle for conquering the computer industry, Microsoft has evolved as a marketing leader due to the specialization of operating system and software applications.

The business models of computer manufacturers are equipped with several component procurement suppliers with build-to-order just in time calls for piecing the components together such as Dell, Sony Vaio etc.  The computer manufacturers have established themselves as the strategic vendors such as IBM, Dell, HP for several corporate enterprises with contracts running over several years, thus Microsoft has pushed the envelope to renew the licenses with their latest operating systems and Microsoft software applications including Microsoft SQL server for the database storage applications. On the other hand, Apple could not evolve as a strategic vendor for enterprises as it has not tied up with hardware partners or establishing collaboration licensing agreements thus the Mac operating system did not soar above the competition.

The market trends have been shifting in the recent times, Apple has developed the go to market strategy to build edge-to-edge model building hardware such as Mac books, iMacs, music players such as iPods, iTouchs, Apple TV for streaming apple devices, mobile phones such as iPhones and mobile tablets such as iPads that can serve either as mobile consumption devices or gaming devices. Apple has championed the integration of software and hardware by building the iCloud platform with Apple servers storing data for mobile accessibility 24 x 7 on any of these devices.

Microsoft continue to clone some of the business processes from Apple business model in terms of building video game devices such as Xbox 360 which in turn is an edge-to-edge business model but with only limited success.  Apple in the recent times also started building Apple iTV which is in the R&D for conquering the households of the United States that can serve as a media explosion with music, video, Internet enable device as a hardware component as well as a software component.  The market capitalization of Apple continued to dominate with the evolution of end-to-end models thus reaching the position of most valuable company in the world.  Microsoft also launched cloud-based platform with Microsoft servers similar to Apple cloud-platform, however due to the lack of end-to-end model Microsoft could not generates as there are not many consumers of music or tablets, cell phones who would like to store their data on the cloud (Mossberg, 2006).

Google is a search giant with 90% of the worldwide population leveraging the Google as the search engine; their business model is heavily relied upon generation of revenues via ads. Microsoft’s Bing search model a competitor to Google, currently holds 5% of the market place for search-based industry generating ad-based revenues (Delaney, 2005).  Google also launched a digital library project to build the largest body of knowledge in the world for the human race.  On this platform, Google started ads; though American association of publishers and guild writers raised concerns regarding the copyrights of the books, Google finally settled down the books agreement to grant the part of the revenues to the publishers and for those who have opted out of the books project, they can opt in to allow 20% of the snippets of the books thus generating revenues for both publishers and Google.  The majority of Google revenues are coming from their AdSense and Adwords launched on search engine, YouTube.

Google has launched Android operating system for enabling the advance mobile computing for cell phones. Google generated $14 billion revenues for the Q4 of 2012 with profits at $2.9 billion; mainly the profits were generated from ads with 67% of the revenues generated on Google search engine and Google associated products and sites.

Google has created a new wave of technology on mobile computing with Android operating system with open source software created open handset consortium with Samsung, Sony, HTC, hp, and LG etc.  By 2010, Google’s android mobile operating system has evolved as a game changer on the mobile computing taking a quantum leap over Apple, RIM (now blackberry) and Microsoft Windows mobile phones worldwide.  The research firm Gartner projected that Google’s Android will evolve as number 1 mobile computing operating system by 2014 even surpassing Nokia’s Symbian OS and handsets.

Table 1

Rise of the smartphones and mobile computing OS by 2014 projections by Gartner Inc.

Google faces certain challenges in surpassing Nokia Symbian and Apple iOS and prevailing as a market leader. Oracle has recently sued Google for $1 billion dollars for manufacturing Android operating system with Java UI for violation of patents from Oracle the owner of Java’s Sun Microsystems.  A victory for Oracle could mean derivation of the shared percentage of revenues from Google, on the other hand; a loss for Oracle could catapult their leading software marketing position on the Internet Java based applications development.  The loss for Google could mean a roadblock for prevailing as a market leader (Bailey, 2012).

In 2012, Google won the law suit over Oracle and the jury in the case found that Google did not infringe any Oracle’s patents and the structure of the Java APIs used by the Google was so abstract that it cannot be copyrighted by Java, therefore both Google and Oracle settled down on zero dollars in statutory penalties.  Google now has built algorithms on all Android phones to extract the data related to search performed on the mobile platforms thus it can increase the ad revenues and can pool the Big data generated by the smartphones in making intelligent product launch decisions.

Conclusion

This paper has evaluated different business models of Google, Apple and Microsoft by drawing comparisons on their component and end-to-end models.  Microsoft continued to dominate the PC-era by building the operating systems and software applications by collaborating with the assemblers of the computer machines such as Dell, HP and IBM and occupied 95% of the PC market.  Apple’s business strategy relies on building end-to-end model for tighter integration between hardware and software including music players, gaming consoles, mobile computing devices, tablets, cell phones etc. This strategy made Apple as the most valuable company on the planet.  Google has developed Android operating system to dominate the mobile computing to compete with Apple and soar above the competition.  Google faced some patent challenges but it has now settled the suit with Oracle.  Google is on the trajectory path of prevailing as the market leader in the mobile computing with a projected 30% share of the market by 2014.