I was listening to John Gruber and John Siracusa talk about the fall of Microsoft in a podcast titled “A Little Bit Of Dancing On Their Grave” and I noticed that a lot of the discussion seemed to proceed from the premise that iPhone and iOS is what killed Microsoft in the mobile space. In light of the historic rivalry between Bill Gates and Steve Jobs it’s natural to view it that way.
But what’s really killed Microsoft in this space isn’t Apple, it’s Google and Android. Look at Android’s market share and imagine a world in which all of those phones are kicking a $10 license fee up to Redmond. That would be a world of failure for Microsoft relative to its runaway success in the PC market, but it’d still be a pretty sweet situation. Apple would also be in a sweet situation but you wouldn’t have these clouds of doom hanging above Microsoft. In an Android-free world, you’d be seeing a copy of the basic competitive dynamic of the PC marketplace—a highly profitable Apple securing a minority of the market with a high quality product, a bunch of commodity device makers, and a highly profitable Microsoft feasting off licensing fees. Apple would end up with a larger share of mobile profits and Microsoft a lower share, but they’d both be succeeding.
Instead, we’re tumbling into a world where Windows is dead as a business. That’s because Google did exactly what Microsoft does—wrote an operating system and made it available to hardware makers—but they made it free. It’s incredibly difficult to compete with a rival whose giving the product away. Apple does it by not trying to make profits off OS licensing. Microsoft would have to do it by developing a product that’s dramatically superior to Android. And they can’t do it.