Dogfight: How Apple and Google Went to War and Started a Revolution

144 Pages·2013·0.84 MB·English

by  Fred Vogelstein

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For Evelyn, Sam, and Beatrice
Contents
Title Page
Copyright Notice
Dedication
Introduction
1. The Moon Mission
2. The iPhone Is Good. Android Will Be Better.
3. Twenty-Four Weeks, Three Days, and Three Hours Until Launch
4. I Thought We Were Friends
5. The Consequences of Betrayal
6. Android Everywhere
7. The iPad Changes Everything—Again
8. “Mr. Quinn, Please, Don’t Make Me Sanction You.”
9. Remember Convergence? It’s Happening
10. Changing the World One Screen at a Time
A Note on My Reporting
Notes
Acknowledgments
Index
A Note About the Author
Copyright
Introduction
When Steve Jobs stood before the world at the beginning of 2007 and said he
was going to reinvent the cell phone, the expectations were modest—at best.
Jobs had upended the music business with the iPod and iTunes. But taking on
the cell phone industry? That seemed unlikely. The wireless carriers, who
controlled the market, had been foiling cell phone innovators for years. And the
iPhone, while cool looking, seemed no match for their iron grip on the industry.
It was more expensive than most phones out there. And it was arguably less
capable. It ran on a slower cell/data network. And it required users to type on a
virtual, not a physical, keyboard. To some critics, that meant the iPhone was
dead on arrival.
If anything, Jobs undersold the iPhone that day. It truly was a breakthrough.
The iPhone wasn’t really a phone, but the first mainstream pocket computer that
made calls. With its touchscreen, it did so many things that other phones could
never do that consumers overlooked its shortcomings. Consumers got used to the
virtual keyboard, and Apple continued to make it better and better. It cut the
price to equal that of other phones. It quickly upgraded the slower cell/data
radios to make its technology competitive. It developed displays with unheard-of
resolutions. It bought a chip design company to make sure the iPhone was
always the fastest device out there. It rolled out a completely new version of the
iPhone software every year. And it designed iconic television ads—as it had
done for the iPod—that made consumers feel special about owning one.
The subsequent frenzy of demand gave Apple and Jobs the leverage to turn
the tables on the wireless carriers and start telling them what to do. More
important, it ignited a technology revolution that today touches almost every
corner of civilization. The iPhone has become one of the most popular cell
phones of all time, selling more than 135 million units in 2012 alone. It has
become the platform for a new and hugely profitable software industry—phone
apps—that has generated more than $10 billion in total revenues since starting
five years ago, in 2008. And the iPhone has become the source of an entire
rethink of how humans interact with machines—with their fingers instead of
buttons or a mouse. The iPhone and its progeny—the iPod Touch and the iPad—
haven’t just changed the way the world thinks about cell phones, they have
changed the way the world thinks about computers for the first time in a
generation, arguably since the advent of the Macintosh in 1984.
Since 2010, when Jobs followed the iPhone with the iPad, the questioning has
grown frenzied. Who said our computer had to sit under our desk or on our lap?
Can’t it just be a screen that fits in our pocket or purse, or something we leave
lying around the house? Indeed, if you compare iPad sales to sales of desktops
and laptops, Apple is now the largest PC maker in the world. It now sells more
iPads per quarter than Dell or HP sells laptops and desktops. Apple’s total sales
of iPhones, iPads, and iPod Touches now exceed 200 million devices a year.
That’s about the same number of TVs sold by all manufacturers every year and
about four times the number of cars sold worldwide. All of this has turned
Apple, the corporation, into a colossus larger than even Jobs’s enormous
ambitions. Once on the precipice of bankruptcy, in 1997, Apple today is one of
the most valuable and profitable companies anywhere.
And yet Apple behaves like a corporation under siege—because despite all
this success, it is. From the moment in late 2007 that Google unveiled Android
—and its own plan to dominate the world of mobile phones and other mobile
devices—Google hasn’t just tried to compete with the iPhone, it has succeeded
in competing with the iPhone. Android took hold in 2010, and it has exploded in
popularity since. To Apple’s astonishment, there are now more smartphones and
tablets running Android software than there are iPhones, iPads, and iPod
Touches running Apple’s software, known as iOS. In 2012 there was even
debate about whether the iPhone was the most popular smartphone anymore.
During the third quarter of 2012, some surveys said, Samsung sold more
Android-powered Galaxys than Apple sold iPhones.
Apple ended the “who has the most popular smartphone” discussion at the
end of 2012, when it unveiled the iPhone 5. But more and more wonder whether
this is even relevant anymore. The differences between the two platforms are
narrowing by the day. Sure, they are different structurally. Apple makes every
inch of the iPhone—the hardware and the software (though the devices are
assembled in China). Google just makes the software for Android phones. It
allows phone manufacturers such as Samsung to make the hardware. But both
platforms now have an equivalent number of pluses and minuses: Apple’s
platform is a little easier to use, but it only offers three products—the iPhone, the
iPad, and the iPod Touch. Google’s platform offers many more phone choices,
and often has the latest phone features ahead of Apple, but it lacks the polish of
Apple’s interface. Still, both platforms are now equally available among large
carriers worldwide, and, with the exception of Apple stores, they are available
for purchase in the same places.
Seeing Apple’s market dominance challenged so swiftly and broadly was
uniquely painful for Jobs and remains that way for the company’s other
executives. Jobs thought, and Apple executives still think, that Google and the
Android community cheated to create their success. They think that Google
executives stole Apple’s software to build Android, and that Android’s largest
phone maker, Samsung, copied Apple’s designs to build its supersuccessful
Galaxy phones. They feel betrayed. Apple and Google weren’t just business
partners when the iPhone was unveiled in early 2007. They were spiritual allies
—the yin and yang of the technology revolution. This was one of the closest
alliances in American business. Apple made great devices. Google made great
software. Google’s founders considered Jobs to be a mentor. Google’s then
CEO, Eric Schmidt, sat on Apple’s board of directors. They had a common
enemy: Microsoft. Together they planned for a long and prosperous marriage.
Then, as can happen in a marriage, the relationship frayed. Secrets were kept.
Promises were broken. And the two went to war. When Jobs died in October
2011, there was hope that the dogfight would feel less like personal betrayal and
quiet down—that Apple’s new CEO, Tim Cook, would take the emotion out of
the battle and find a way to settle it. But if anything, Apple has gotten more
aggressive and nasty toward Google since then. It still has dozens of patent
lawsuits in at least seven countries pending against the Android community—
mostly against Samsung and Motorola (owned by Google). In the summer of
2012, it took the unheard-of step of having its fight with Samsung, Google’s top
distributor of Android phones, tried in front of a jury in San Jose. It won a $1
billion judgment, though that is being appealed. In September 2012 Apple
stopped selling the iPhone preloaded with Google Maps. It replaced the app with
one of its own, despite wide consumer complaints that the app was inferior.
Apple is believed to be working on a video service to compete with YouTube,
which Google owns.
Apple has even begun replacing some Google search technology in the
iPhone with search technology from its old enemy, Microsoft. Now when you
use Siri, the iPhone’s voice recognition feature, Apple’s newest software no
longer uses Google search. Instead, she queries Microsoft’s Bing search engine,
which has been clawing at Google for a decade over search market share. To get
Siri to use Google’s search, you have to specifically ask her to “search Google”
before each request. Google is still the default search engine inside the iPhone’s
web browser. But for those with long memories, the idea that Apple would dump
any Google technology for Microsoft’s—when Microsoft was the bitter enemy
of both for so long—is an astonishing development.
Google’s public posture in its fight with Apple has consistently been “Who,
us? We’re just a bunch of geeks out to change the world.” But in its quiet, nerdy
way Google has fought back ferociously. It defied Apple’s demands that it
remove software from Android phones or face patent lawsuits. It employed
tactics to make Jobs look like an unhinged tyrant. And it bought the cell phone
maker Motorola for $12.5 billion in 2012, its largest acquisition by far. It said
the only purpose of the purchase was to buy Motorola’s patents. It said it would
be easier to fight a litigious opponent like Apple if it owned the company that
invented the modern cell phone and all the patents associated with that. That’s
true, but the claim hid another equally powerful reason: the acquisition means
that Google will always be able to make phones to compete with Apple no
matter how successful Apple is with its lawsuits against other phone and tablet
manufacturers. The purchase also gives Google leverage in case new challengers
emerge.
Last, Google now finds itself doing something most thought it would never
do: it is making its own consumer electronics from scratch to compete with
Apple devices in the living room. Google has all the pieces not only to hook
users on cell phones running its Android software, but to reach them wherever
they go, inside or outside their homes.
*
Usually, the story of two companies and their powerful leaders going at it makes
a great magazine piece and little more. Company X attacks company Y.
Company Y fights back. One wins. One loses. But this is a much bigger tale than
that. It’s hard to imagine a more revolutionary object than the object the two
companies started fighting over: the smartphone. The smartphone has
fundamentally changed the way humans get and process information, and that is