Will Apple get Microshafted by Google?

Having lived through Apple’s entire corporate history (and still own IPO shares), I see the writing on the wall – history will repeat itself 25 years later.  This time, it will be Google spoiling Apple, not Microsoft.  I just got back from CES in Las Vegas with this first-hand revelation.

Quick history:  in the early 1980’s, Apple’s Lisa / Macintosh operating system and graphical, mouse-driven user interface were the leading innovations in personal computers.  The hardware worked with the operating system which worked with the applications.  So far, so good. Along comes Microsoft acquiring MS-DOS, licensing it first to IBM and then every other PC manufacturer (remember Compaq, DEC, Kaypro, etc?) and eventually to all the “clone” manufacturers.  Market share of DOS soared and eclipsed Apple, stuck at under 10% of personal computer units.  Apple’s policy of not licensing their OS ensured a superior user experience for their “few” users, but forever limited potential growth by denying other manufacturers the ability to provide it on their hardware.  One manufacturer would never have been able to meet the exploding market demand.

The consequences for Apple were almost fatal. Besides falling market share, from early 1981 through 1997, Apple stock FELL a total of 6%.   Microsoft rose 14,800%. What a bummer to be an Apple shareholder. In the 2000’s, Apples fortunes turned around with the iPod and iPhone in particular.  From 1998 through 2010, Apple rose 8,085% and Microsoft only 58%. (But you’d still have been better off holding MSFT the entire time.)

So, is all well in Apple land?

Walking the 2011 CES (Consumer Electronics Show) floor last week, two observations struck me hard, well three.  First, although Apple does not exhibit, their dominance of the entire mobile accessories / integration market is clear. I saw hundreds of booths selling cases, stands, boom-boxes, devices for the iPhone / iPad / iPod platform. No other single platform, alas, not even all other devices combined, has created such an ecosystem of add-on manufacturers.  That’s good news for Apple.

Second, Windows on mobile devices seemed non-existent. Microsoft came out with tablet versions of Windows years ago. Almost nowhere to be found at CES. Except at the Microsoft booth. The same goes for Blackberry. Okay, they’re business-oriented, but hey, the consumer market is moving upstream into business, and they’re losing out. Consumers are buying smartphones and expecting business quality services on them.

Third, and most important, Google-powered Android tablets and phones were EVERYWHERE. The entire Hilton pavilion was full of mainland Chinese manufacturers selling all styles of white-label tablets. Every single one was powered by Android. Apple is projected to sell 50m iPads worldwide in 2011, but I predict that nearly every tablet Not sold by Apple will be running Android. Of the big names, Sony, Panasonic, Dell, Asus, Samsung, Toshiba were all showing Android tablets. I believe market demand will outstrip Apple’s supply, and the cheaper price point of Android devices, and their variety, will fuel tremendous growth.

Although the Android OS is still rough around the edges, and the iPhone provides a superior user experience, I think Google will catch up within a couple development cycles. At that point, Google will overtake the Apple platform in sheer numbers. Google has a lot of cash and a disruptive revenue model.  Is Apple doomed to repeat history? I hope not. Or I gotta sell my stock now…

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