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peter

Who would have thought five years ago that Apple & Google would be dominating the smartphone market in 2011?

It's amazing how much things can change in such a relatively short period of time. Back in 2006 the big players were Nokia, RIM, Microsoft (with Windows Mobile), and Palm. Now every single one is struggling.

Also serves as a reminder that no matter how high Apple and Google are riding right now, it is still a volatile business and it's not hard to imagine two or three other companies emerging in the next five years to seriously challenge them (like Facebook, for instance).
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beau

Even wilder go back 10 years and ask if you thought it was possible that the mobile phone business could be dominated by American companies. Back then here in the States I would be reading article after article about Japan's DoCoMo i-Mode, Korea's Anycall, and wild things being done by Nokia and Ericsson in Europe that seemed impossible to imagine happening in America. America was a backwater for handsets then, but the landscape has shifted extremely rapidly.
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nitehawk

It's a valid point, but I really would like to see Google focusing more. There are simply too many Android devices and because of that many still run older versions of the software instead of the newest one.

I love that Google brands one phone a year as being the hot new shit, but having Samsung, HTC, LG and the like make 3 to 5 phones each quarter simply makes the space crowded. I understand people want a selection with different features, but most of them do the same thing and if it's tough for techies like us to tell the difference it's gotta be confusing for Joe Public.

This brings me to my next point: Apple is always going to dominate the cash flow as long as Steve Jobs doesn't piss people off too much and Google and smartphone manufacturers spread themselves so thin. Only having 1 device to support allow Apple to focus their marketing and engineering to either have the best features or market like they have the best features. Android supporting companies need to narrow their focus to make 3-5 phones a year instead of 15 phones a year.

Maybe having rotating franchises like the Incredible and Droid X will work to keep costs down and make things easier for consumers. "Oh what's this? It's like last year's Incredible? My sister had that one and she liked it. OK, I'll get the new one!"

Instead of "Droid Bionic? Droid Pro? Droid Charge? Motorola Photon?Evo 3D? Evo Shift? Inspire? Infuse? Captivate? Atrix? WTF? What's the free one?"

Windows phone needs to market heavier and work with Nokia to really make something special. There's plenty of room for them to enter the market and make money, but they have to be in stores and they have to market heavy like Google and Apple.

Public appearance of Windows is that if you can't afford Apple you get Windows. Or if you don't like the Apple culture/price you go with Windows because there's nothing else out there. It's usually not something you choose. Making Windows Phone integrate with the desktop OS and Xbox 360 is great. The former is only going to sell enterprise phones and with the costs of cellphones ever rising, those business people are likely to either stick with their shitberry or just integrate their personal phone as a business phone. The latter is may sell phones, but it's going to be slow and many people are already used to a smartphone OS and don't want to change because you can't transfer apps or other purchases.
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willdau

It is amazing isn't it. But it is to be expected looking back on it, if neither company existed windows phone would be dominant, and RIM a close second and palm still existing in a solid third place. Fortunately Apple saved us from this bleak alternate future with the launch of the iPhone and Google saw how much they were making by seeing the users of their partnered apps.

Funny huh? As a self proclaimed nerd thinking that the iPhone was key to his favourite oS, android!
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MobyTurbo

Colligan of Palm said "a computer company can't just walk in and build a smartphone", or words to that effect. Many people underestimated Apple in the beginning, and now they're trying to catch up. It takes years to develop a product, and years to build an ecosystem around that product. Apple has both of those things, and Google came in with Android at around the same time as Apple. The others, sad to say, are at the wrong place at the wrong time. I am the proud owner of a Touchpad, and a former Palm Pre owner, and whatever the merits of WebOS are, it, and other efforts like it, are not likely to succeed against the 200,000 apps of iOS and the similar ecosystem built around Android.
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internalogic

What if we remove smartphones from the equation and broadly consider Apple vs. Google?

Within the next 5 years, smartphone and Tablet penetration will approach all-commodity volume, worldwide. Both Apple and Google will look to blue sky territory to sustain their current growth rates.

Looking at Apple, it's hard to imagine that they will uncork another iPhone-type product within 5 years. Not impossible, but on the heels of the iPhone and the iPad, it's hard to ID another category killer. Possibly a TV or gaming product? In either of these living room categories they will face a competitive environment that is vastly different than mobile segment was when the iPhone was introduced. It will be difficult to sustain high margins in hardware businesses as product lines inevitably expand to include lower price points in established categories. Sure Apple beat Palm and Sony at their own game with the iPhone and iPod, but it won't be easy to do it yet again with the same categorical dominance and growth curve and margins that the iPhone, iPad, and iPod have enjoyed.

Looking at Google, it seems like they are approaching the category from the other side of the market - Moto's hw margins actually have the potential to trend up. And Moto's STB business combined with Google's data and analytics could provide the basis for a compelling living room proposition that has the potential to rival Apple TV (particularly if Google offers a more effective business model to the content community than the iTunes steamroller). In addition to phone, tablet, and tv, Google also has nearly unlimited opportunity and ability to address mega-verticals beyond the consumer-oriented categories that Apple has generally specialized in.

Google may have mothballed their Energy and Health initiatives to fully execute on mobile in the near-term - however they have expertise and data in these areas that could position the company to (re)enter entirely new verticals with a disruptive value proposition.

And as others have noted, the new Google - Motorola combo enables Google to create value in new segments backed by the same (ok, similar) end-to-end control that Apple is famous for.

It's hard to find significant weaknesses in Apple's business today - however Google's business seems to have greater elasticity and upside, which is only fortified by the Moto acquisition. Over the next 5 year cycle I expect to see Apple and Google skirmish on multiple fronts - well beyond the smartphone segment.

It's hard to short either company, but with Apple facing growth and margin pressure (as well as unnecessary design challenges entirely of their own making), the advantage should go to Google on the long haul. Time will tell if Google can execute and harvest.
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Ktulu1

I had no idea what was going to happen in the last five years in the smart phone industry and I’ll bet that the safe money is on me not having any idea what’s going to happen in the next five years. It’s hard enough for companies that are actually in the business of selling phones and phone OS’s to figure this stuff out let alone little ol’ me, but the ride should be interesting.

I was a Blackberry user and thought my Blackberrys were great. When I give Android a try I was blown away by the difference. The rest of the world is figuring that out as well and things are changing. A few years ago I was even buying and selling RIM stock and making money. Today I wouldn’t touch that turd. I see RIM making really bad choices these days and I don’t see them coming back. They’ve had some opportunities lately and they’ve failed to capitalize on them. RIM might be going the way of Palm and if a new player buys them they better cut out the cancer before it infects them as well.

I’m not sure what the one way is that everyone seems to know, but there’s apparently more than one way to skin a cat. Apple and Google have certainly proven that cliché to be true in the world of smart phones. More recently, and to a lesser degree, Microsoft has as well. It’s pretty obvious that Microsoft has taken a little different approach and positioned Windows Phone well for a potential shift in the mobile market. They have the best chance of making a big change in the landscape in the near term.

Tablets are the key. There is a lot of room in the tablet market and progress there opens up opportunities in the phone market. Apple has the current strong hand. They’ve executed well and early, where mistakes are more easily forgiven. Google (I love Android), on the other hand, hasn’t executed as well but I see them as an example of what the market will bear. People seem to be want to buy tablets and a decent percentage of them, for one reason or another, don’t want to buy an iPad. Tablets are still the next big thing for a lot of people, at least in the near term. Blackberry and webOS would be in much better shape right now if their tables weren’t giant failures.

The tablet is where Microsoft has to kick ass. The Nokia deal is huge, to be sure, and I’m not convinced that Windows Phone will do well without Nokia doing well, but the Windows 8 tablet is crucial as well. Microsoft seems to know this. They’ve recognized the viability of the tablet and, maybe after an executive temper tantrum or two, they seem to have figured out that their big push into that market had to wait. It feels like they’ve figured out that Windows 7 won’t work and they’re wisely waiting for something better.

The only thing for certain is change. More clichés, but this one, at the very least, is apt.
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radikal

Would anyone feel think that about any company?
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njashanmal

5 years ago no one predicted we'd be where we are today and it's equally difficult to predict where we'll be 5 years from now, though it is likely that Apple will remain a dominant player.

There are nascent projects such as Mozilla's recently announced Boot to Gecko and MeeGoo which is now under the care of the Linux Foundation that will offer manufacturers license-free, open source alternatives (to Android) to experiment with and that could glimpse of things to come: as mobile hardware continues to get more powerful and as mobile broadband connections become faster it's conceivable that a mobile OS built entirely around web apps could emerge and succeed as a viable option as this is a track distinctly different from the one Android and iOS are on.

Microsoft and Nokia will make a solid go at trying to gain market share next year and we'll have to wait and see how that plays out. RIM also still has a chance to right their ship but the window of opportunity is shrinking.

Just as likely we'll all be blindsided by something that comes totally out of left field as we have been just week but both Google + Motorola and HP - WebOS...
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Avi

Apple was a much better bet than Google back then. It had the most popular consumer device, and it had already gotten burned by Motorola with the ROKR. It wasn't a huge stretch to imagine it building a phone. Google was just a search engine. Gmail wasn't even available to the general public yet.
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thenns

not me for sure. I've always been very close minded when it comes to mobile. I used to think that a phone was meant for talking, that's it. I never liked the idea of it replacing the desktop, which hasn't happened yet, but may very well occur in the next 15-20 years, maybe even sooner.
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mcdoobie

Ummm...I did? But seriously what can I answer to your (rather insightful) comment?
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roberto

I wonder what this question will look like when you ask it again five years from now.
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Avro

The market is changing extremely quickly. Hero to Zero in a flash.

My bet is on Apple winning. Google faces problems from patents on one side and the GPL on the other and then there is fragmentation.
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Carniphage

Google's software is certainly dominating the mobile space. But commercially, is Google actually benefitting from the success of Android? On a per-device basis, Microsoft is almost making as much from every Android handset as Google. Samsung and HTC are not sharing their profits.

Google has to live on the advertising crumbs from the giant Android banquet. But Google would earn almost as much if other non-Android platforms used the Google services.

This has turned into a two-horse race. But only one of those horses has a rider.

C.
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laynelev

One very big difference with Apple and Google's position is the app ecospheres attached to them. Five years ago, there was very little difficulty in jumping from one platform to another. Even switching from iOS to Android or vice versa can mean walking away from hundreds of dollars in post-purchase app investments.
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