Leaving the Land of the Giants
While it's not wise to bet against a company as successful as Apple has become, it is wise to expect failure from a company whose success is rightly attributed to a dead and irreplaceable CEO. Although it was business as usual for a while after Steve Jobs perished in September 2011, it was clear a year later that the wheels were coming off. First there was the Maps app debacle, in which Apple replaced its Google-based Maps app on iOS 6 with one based on a stew of inadequate substitutes—and then failed to improve it for months while Google took its sweet time not producing its own Maps app for the operating system. This not only hurt Apple and iOS 6, but also the new iPhone 5, which featured the Maps value-subtract and was itself an unspectacular successor to the iPhone 4s—which wasn't all that big an improvement on the iPhone 4, which came out way back in 2010. Meanwhile, for all of Apple's continued success with the iPhone, its entire iOS smart-thing hardware market contains just three devices (iPhone, iPad and iPad Mini) made by only one company. Meanwhile, Android remains an open platform with countless hardware implementations from many companies. As I write this, the new Consumer Reports rates various Samsung Galaxy devices ahead of the iPhone, which had formerly topped the magazine's ratings. Countless new Android phones also will hit the market before the iPhone 6.
In 2012, Apple also continued to make fixing or improving its hardware as hard as possible for anybody not an Apple employee. Batteries, RAM and solid-state storage on new Apple hardware tends to be hard-wired or -glued. One result is the latest MacBook Pro, with its retina display, which Kyle Wiens in Wired calls "the least repairable, least recyclable computer I have encountered in more than a decade of disassembling electronics" (http://www.wired.com/opinion/2012/10/apple-and-epeat-greenwashing and http://www.wired.com/gadgetlab/2012/06/opinion-apple-retina-displa).
Credit where due: Apple has been brilliant at retailing and customer support. On the latter count, nobody else is even close. Also, Apple is advantaged by a competitor—Microsoft—that seems hell-bent on sending customers anywhere else.
At this point, it's not clear where Apple is headed. The company's only "wow" product since Steve died was the iPad Mini, which should have come out years earlier. In the past, it was easy to assume that Apple had a "next big thing" up its sleeve. Now it's not.
On to Google.
Last October, Google took the wraps off the biggest thing it has in the physical world: giant data centers, which it immodestly calls "Where the Internet lives" (http://www.google.com/about/datacenters/gallery/#/). The photos doing the bragging are as artful as can be, considering that the subjects look like power plants: vast and stark white buildings, with glowing racks inside and huge cooling gear outside, veined by an abundance of plumbing. It makes one pause to consider how dependent we have become on giant companies and their very earth-bound "clouds".
By coincidence, this month is the third anniversary of a column here titled "The Google Exposure" (http://www.linuxjournal.com/magazine/eof-google-exposure). In it, I wrote:
I'm just worried about the way Google makes money. Nearly all of it comes from advertising. That's what pays for all the infrastructure Google is giving to the rest of us. As our dependency on Google verges on the absolute, this should be a concern. Think of advertising as oil and Google as one big emirate. What happens when the oil runs out?...The free rides won't go on forever. There are better ways than advertising for demand and supply to find each other...and more will be found. Google will be in the middle of that discovery process, no doubt. But it's an open question whether Google will make the same kind of money in a post-advertising marketplace. I'm betting it won't.
Since then, Google has continued growing at a 20+% annual rate, and diversifying a bit (for example, by acquiring Motorola Mobility). But the vulnerabilities are still there: for Google and therefore also for the rest of us. Also, the Internet that "lives" in Google's data centers has become an overwhelmingly commercial one, especially on the Web. The percentage of information on the Web that isn't about selling something continues downward as more and more eyeball-routers get into the ad-based game—and game that game as well. How far can this go before the whole ad-funded system, with Google at its center, begins to fail in big and obvious ways? No way to tell, but the system we have now can't go on forever. Trees do not grow to the sky.
An alpha geek told me recently that the most remarkable thing about Facebook is the sturdiness of its infrastructure: it rarely if ever goes down. Compare that to Twitter, a much smaller service notorious for its familiar "fail whale". Facebook's infrastructure should be good for many things other than housing a locked-in "social" space where inhabitants get advertised at. What if Facebook started offering paid services to its users, turning them into actual customers? For example, it could work as a fourth-party agency (http://blogs.law.harvard.edu/vrm/2009/04/12/vrm-and-the-four-party-system), helping customers actually find products and services, rather than merely searching for them, as they do with Google. Facebook could host personal clouds (http://www.windley.com/archives/2012/11/the_cloud_needs_an_operating_system.shtml) of data kept private for paying customers, selectively disclosing required data to potential sellers (or government agencies, or nonprofits) on a secure need-to-know basis—treating personal data the way a bank (as a fourth party) treats customers' money. Prototype work on this kind of thing has already taken place at Innotribe (http://innotribe.com), the innovation arm of SWIFT (http://www.swift.com), the banking nonprofit that moves $trillions around the world every day. I know, because I've been involved in it. But Facebook won't go there because Facebook, like Google, sees its main business as advertising and would rather do business with businesses than with individuals. Also, like Google, it would rather sell its users to advertisers than serve as an intermediary in the far larger retail and services marketplace.
One reason Facebook won't make that move was suggested to me by a top executive at an advertising company a couple years ago. He told me the blinders both Facebook and Google wore were the ones that keep them focused mostly on each other. While this isn't a verbatim quote, it's close enough: "Google envies Facebook's ability to get personal with users, while Facebook envies Google's ability to put ads everywhere on the Web." Thus, we have locked tentacles rather than evolution by either squid.
Doc Searls is Senior Editor of Linux Journal
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