Digital wars: Apple, Google, Microsoft and the battle for the Internet PDF
Preview Digital wars: Apple, Google, Microsoft and the battle for the Internet
i Digital Wars ii THIS PAGE IS INTENTIONALLY LEFT BLANK iii Digital Wars Apple, Google, Microsoft and the battle for the internet THIS PAGE IS INTENTIONALLY LEFT BLANK CHARLES ARTHUR iv Publisher’s note Every possible effort has been made to ensure that the information contained in this book is accurate at the time of going to press, and the publishers and author cannot accept responsibility for any errors or omissions, however caused. No responsibility for loss or damage occasioned to any person acting, or refraining from action, as a result of the material in this publication can be accepted by the editor, the publisher or the author. First published in Great Britain and the United States in 2012 by Kogan Page Limited Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms and licences issued by the CLA. Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned addresses: 120 Pentonville Road 1518 Walnut Street, Suite 1100 4737/23 Ansari Road London N1 9JN Philadelphia PA 19102 Daryaganj United Kingdom USA New Delhi 110002 www.koganpage.com India © Charles Arthur, 2012 The right of Charles Arthur to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. ISBN 978 0 7494 6413 4 E-ISBN 978 0 7494 6414 1 British Library Cataloguing-in-Publication Data A CIP record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Arthur, Charles, 1961- Digital wars : Apple, Google, Microsoft and the battle for the Internet / Charles Arthur. p. cm. ISBN 978-0-7494-6413-4 -- ISBN 978-0-7494-6414-1 1. Internet industry–United States. 2. Apple Computer, Inc. 3. Google (Firm) 4. Microsoft Corporation. I. Title. HD9696.8.U62A78 2012 338.4’70040973--dc23 2011044595 Typeset by Graphicraft Ltd, Hong Kong Print production managed by Jellyfish Printed and bound by CPI Group (UK) Ltd, Croydon, CR0 4YY Contents v Contents v In9t9roduction: in the beginning 1 1 8 3 Bill Gates and Microsoft 3 Steve Jobs and Apple 4 Bill Gates and Steve Jobs 9 Contents Larry Page and Sergey Brin 11 Internet search 12 Capital thinking 14 Microsoft antitrust 16 Steve Ballmer 16 The antitrust trial 17 The outcome of the trial 20 Search: Google versus Microsoft 23 The beginnings of search 23 Google 26 Search and Microsoft 30 Introduction 1 BLiunskt to3 1money 37 Boom 39 Random access 45 Google and the public consciousness 47 Project Underdog 49 01 1998 3 PDroe pita yroinugr sfeolrf battle 5534 Going public 59 Competition 61 Bill Gates and Microsoft 3 Cultural differences 61 Microsoft’s relaunched search engine 62 Friends 67 Steve Jobs and Apple 4 Microsoft’s bid for Yahoo 69 Google’s identity 69 Bill Gates and Steve Jobs 9 The shadow of antitrust 72 Still underdog 74 Larry Page and Sergey Brin 11 Digital music: Apple versus Microsoft 79 The beginning of iTunes 80 Gizmo, Tokyo 82 Internet search 12 iPod design 84 Marketing the new product 86 Capital thinking 14 Meanwhile, in Redmond: Microsoft 90 iPods and Windows 92 Music, stored 95 Celebrity marketing 99 iTunes on Windows 103 02 Microsoft antitrust 16 iPod mini 107 The growth of iTunes Music Store 109 Apple and the mobile phone 111 Steve Ballmer 16 Stolen! 112 Two-faced 117 iPod in the ascendant 127 The antitrust trial 17 Ecosystem: hardware and apps 127 Scratched! 130 The outcome of the trial 20 Silence from Apple 133 Apple’s best results 136 Zune 136 Tying the Zune to the Xbox 138 White Christmas 141 03 Search: Google versus Microsoft 23 Twilight 143 Rout or strategy? 145 Smartphones 147 Mobiles and Microsoft 147 The beginnings of search 23 Android 150 ROKR and a hard place 151 Google 26 iPhone, that’s what 154 Just walk in 156 Search and Microsoft 30 Disrupted 166 Free as in data 169 The drawer of broken dreams 172 Bust 31 Developers and the iPhone 175 Free as in lunch 178 Link to money 37 Apps for all 184 Money in apps 186 Boom 39 Flash? Ah 187 Envy 193 The losers 194 Random access 45 Android rising 195 Patently 205 Google and the public consciousness 47 App patents 210 Tipping 211 Project Underdog 49 The revolution will be handheld 213 Tablets 222 ‘Within five years’ 222 Preparing for battle 53 Third category 226 Apple dominant 230 Do it yourself 54 Always on 232 Post-PC 235 Going public 59 Grand unified theory 236 2011 239 Notes 244 Competition 61 Chapter One 1998 244 Chapter Two Microsoft antitrust 244 Cultural differences 61 Chapter Three Search: Google versus Microsoft 245 Chapter Four Digital music: Apple versus Microsoft 247 Microsoft’s relaunched search engine 62 Chapter Five Smartphones 249 Chapter Six Tablets 251 Chapter Seven 2011 252 Friends 67 References and further reading 253 Acknowledgements 254 Trademarks 255 Index 256 vi Contents Microsoft’s bid for Yahoo 69 Google’s identity 69 The shadow of antitrust 72 Still underdog 74 04 Digital music: Apple versus Microsoft 79 The beginning of iTunes 80 Gizmo, Tokyo 82 iPod design 84 Marketing the new product 86 Meanwhile, in Redmond: Microsoft 90 iPods and Windows 92 Music, stored 95 Celebrity marketing 99 iTunes on Windows 103 iPod mini 107 The growth of iTunes Music Store 109 Apple and the mobile phone 111 Stolen! 112 Two-faced 117 iPod in the ascendant 127 Ecosystem: hardware and apps 127 Scratched! 130 Silence from Apple 133 Apple’s best results 136 Zune 136 Tying the Zune to the Xbox 138 White Christmas 141 Twilight 143 Rout or strategy? 145 05 Smartphones 147 Mobiles and Microsoft 147 Android 150 ROKR and a hard place 151 iPhone, that’s what 154 Just walk in 156 Disrupted 166 Contents vii Free as in data 169 The drawer of broken dreams 172 Developers and the iPhone 175 Free as in lunch 178 Apps for all 184 Money in apps 186 Flash? Ah 187 Envy 193 The losers 194 Android rising 195 Patently 205 App patents 210 Tipping 211 The revolution will be handheld 213 06 Tablets 222 ‘Within five years’ 222 Third category 226 Apple dominant 230 Always on 232 Post-PC 235 Grand unified theory 236 07 2011 239 Notes 244 References and further reading 253 Acknowledgements 254 Trademarks 255 Index 256 vviiiiii THIS PAGE IS INTENTIONALLY LEFT BLANK 1 Introduction: in the beginning The world we experience is analogue: colours, sounds, smells, all merge and mix smoothly. The digital world ushered in by computers is different: binary, on or off, yes or no. The arrival of affordable personal computing beginning in the 1970s, followed by the addition in the 1990s of the internet, began to create entirely new businesses – such as Yahoo, a website that offered up-to-the-minute news, weather and free e-mail – and to overturn existing ones, such as the music industry, at a pace that multiplied geometrically with the number of computers connected to the network. Into this maelstrom of change came three companies: Apple, Microsoft and Google. They were radically different companies. By the time all three arrived on the digital battlefield, the glory days of one were apparently behind it; another stood atop the computing and business world; the third was barely more than a clever idea in the minds of two very clever students. The companies would subsequently fight a series of pitched battles for control of different parts of the digital landscape. Their weapons would be hardware, software and advertising. At stake were their reputations – but, equally, our future. Does it matter which search engine most people use? Where we buy our digital music? Who makes the software that powers our mobile phone, or the tablet that we use while waiting for a train or meeting? Some think not: that the momentum of human intentions means we will always get the correct outcomes, no matter who is overseeing our experiences. Others say that the digital landscape is covered in tollgates, and that those who control them will always determine the shape of the future. What is certain is that to control any of them is a golden opportunity to extract tolls from the millions and millions of people passing through. The 2 Digital Wars reward for winning any of the digital wars is enormous wealth – and, often, the chance to use that to build a fresh set of tollgates on another part of the landscape, or displace an existing rival. The first time that all three found themselves sharing the same digital space was 1998. They could not know of the battles to come. But those battles would be world-changing.
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