by Rich KarpinskiDecember 28th, 2010
In a slow holiday week, the media (including Connected Planet) struggles hard to find something to write about. So you get “best of” and “look ahead” stories a plenty. But sometimes, something real and important rises out of all those top-ten lists. This year, I’d argue, it’s the focus on how the balance of power between Apple and Google in the mobile market will play out — and what impact that will have on all the other players, including their mobile operator partners (and in some cases rivals).
Kicking off the industry navel-gazing was a story by Fortune blogger Seth Weintraub, predicting that 2011 will the year Android explodes. His key idea (which should excite mobile operators to no end):
In 2011, we might see half a billion phones sold worldwide.  Smartphones will likely blow by traditional computers next year as the way most of the world gains access to the Internet.
Two major factors will drive this, in tandem: Wireless infrastructure is getting better every day, and hardware is getting cheaper.  Cheaper hardware will eliminate the need for subsidies and therefore will improve competition between carriers, and spur them to improve their networks.  Google (GOOG) Android head Andy Rubin calls this a ‘perfect storm‘ for smartphone adoption.
Google claims to be on the cusp of this perfect storm already, recently noting that it is now activating some 300,000 Android devices per day. Even cheaper hardware (and to some extent cheaper network services) will only drive smartphone and mobile broadband adoption to even higher levels.
Which brings us to our next question: in such an environment, can Apple maintain the mobile lead it established with the iPhone, or will Google and Android sweep by it in 2011 much like Microsoft and Windows did in 1995?
Just asking this question makes some Apple ‘advocates’ antsy. Prolific tech blogger Robert Scoble addressed the 1995 question head on (Why 2011 isn’t 1995 for Apple), doing a good job detailing Apple’s strengths:
….back in 1995, who owned the best distribution and supply chains? Microsoft did. Today? Apple does. Apple didn’t have stores back in 1995 which will ensure its products get seen in the marketplace. Back then Microsoft could outspend Apple for shelf space at Frys and other retailers. Plus, Microsoft’s model of having many OEMs building hardware for its OS was far superior to Apple’s approach. Today that’s not really true, because the OEMs aren’t really able to bring that much value to the table and Apple has the best supply chains in China locked up (I visited one of them about two years ago and keep in touch with the folks there and that’s still the case). So, it’s not very likely that a Google phone will ship with better screens or better materials. At least not in volume. That is a huge difference from 1995 to today.
But other tech pundits are seeing Google marching inexorably forward and ultimately passing Apple in mobile.  To close up our circle here, venture capitalist Fred Wilson (who also influenced Scoble’s blog posts on this topic) gave his take on the Fortune Android story that started our own story here today:
Smartphones prices are about to plunge and the result will be hundreds of millions of people all over the world starting to use them. And many of these devices will be running Android, not iOS. And wireless data prices will likely come down too.
That’s a big macro theme that entrepreneurs and VCs need to get in front of. We are working on it and you should be too.
For telecom service providers and mobile operators, this big-picture story raises some important questions to consider moving in to 2011:
  • Will Apple continue to be the valuable partner it proved to be for AT&T in 2010 (hello Verizon…)?
  • Can Google — which seems anti-telco in so many areas from net neutrality to its fiber communities project –  be trusted to be a good partner, especially once it reaches a critical mass that enables it to wield power in the mobile market?
  • Who will play the threatening (Microsoft 1995) to Apple in 2011 (whether or not the result is the same)? Will it be Google? Or will Microsoft with Windows Phone 7 also pose a similar threat?
  • Where will the mobile revenues flow across apps, network services and “other” — be it network-delivered services (such as SMS or the like) or things like advertising, etc…and how will the relative market power of device maker, OS provider and network operator impact how that pie gets sliced up?
  • How will that balance of power be viewed by other players — including mobile developers in particular — and how will the direction that they throw their weight further impact that balance?
All of which is to say that we agree wholeheartedly that 2011 will be a major tipping point for the mobile industry — not just for Apple and Google but for Microsoft, RIM, AT&T, Verizon and a host of other players as well.