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Photographs by Spencer Platt/Getty Images (Bezos); Bloomberg/Getty Images (Jobs)

Why Tech Companies Now Compete for Equal Market Share

The iPad won't kill the Kindle. In fact, says Farhad Manjoo, the tech industry is maturing out of its "[insert product here] killer" days.

Not since the days of "Amazon.toast" has the smell of death hung in the air at Amazon.com's annual shareholder meeting. But there it was this past spring. The company faced no real financial trouble: Sales were up by nearly 30%, and Amazon had recently completed its Zappos acquisition. The stench came from all of the Kindle.toast predictions in the wake of the iPad's debut and rapid adoption. CEO Jeff Bezos's black-and-white e-reader looked awfully wan compared with the iPad, which lets people surf the Web, watch movies, play games, run apps, and also read books. And in color! The Kindle's fate was written in e-ink. Apple had created the Kindle killer.

Death is a surprisingly frequent topic of conversation in the tech industry. Everyone is constantly on the lookout for the next Google killer, the next iPhone killer, the next Facebook killer. This search isn't irrational. For as long as anyone can remember, tech businesses have operated according to winner-take-all economics -- a single product comes to thoroughly dominate a certain category, while all its rivals suffer crushing failures. Think of Windows, the iPod, or Google. These products are so far ahead of the field that you wonder why the competition even bothers. The iPad, with its blockbuster sales and round-the-clock media coverage, looks like another winner-take-all business. If the iPad succeeds, doesn't it follow that everything else in its path, including the Kindle, will lose?

Not so fast. The days of this kind of zero-sum game appear to be on the wane. As we begin to access the Internet on all kinds of new gadgets and not just PCs -- and as those gadgets get smaller, more portable, and more specialized in their purpose -- we're beginning to see something unusual in the tech industry. Stalemate. Across a range of markets, several companies are competing for more-or-less equal market share.

Look at the smartphone business. According to Nielsen, Apple now commands about 28% of the market, impressive just three years after the iPhone's debut. Yet it seems far from obvious that Apple will gobble up the entire business. Research in Motion's BlackBerry continues to lead, while phones based on Google's Android OS (a year younger than the iPhone) now constitute 9% of the market -- and that share is expanding.

Although it's impossible to predict who will come out on top in the years ahead, it's difficult to see how anyone "loses." Proprietary platforms aren't what they used to be. In the PC era, Windows won because everyone needed a common system for running applications, and Microsoft was savvy enough to understand the power of feedback loops -- developers created programs for Windows because that's where the customers were, and customers bought it because that's where developers were. In the Internet age, though, customers are no longer locked in to a single platform. A committed iPhone user could easily switch to Android -- your email, social-networking contacts, bookmarks, and other data will follow you wherever you go.

What about apps? Thanks to common Web-based programming standards, it's easy for developers to port their apps to whatever phones come along next. More important, the Web -- our greatest source of apps -- is available to anyone, on any platform. As long as Apple, Google, HP (through Palm), Microsoft, and RIM stay in the game, they'll each be one amazing phone away from taking the lead, or one terrible phone away from losing it.

That brings us back to Amazon's allegedly beleaguered e-reader. Speaking to investors, Bezos pointed out that because Kindle books are delivered across the Internet to a range of devices -- including the iPad -- Amazon might actually benefit from the Apple tablet's popularity. The more iPads Apple sells, the more potential Amazon customers. Bezos is wise to ignore the calls for Amazon to make the Kindle more like the iPad. The Kindle will be a gadget whose only purpose is to read books. Bezos concedes that such a device isn't for everyone, but "serious readers" will always prefer a dedicated e-reader. They'll also like the Kindle's new low price: $189. It's time to kill the idea of the killer.

Photographs by Spencer Platt/Getty Images (Bezos); Bloomberg/Getty Images (Jobs)

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3 Comments

  • Norman Birnbach

    I agree -- it's absolutely time to "kill the idea of the killer" app or device. Unfortunately, VCs and the media often are interested in killer technology when the fact is often the alleged victim -- radio, movies, TV, etc. -- continue to serve a purpose and an audience. I don't like blaming the media, but Newsweek for example, has posted a lot of headlines with the word "kill" in it. Check out my blog article, Newsweek Goes in for the Kill, http://bit.ly/bntWNT.

  • Jacqueline Holloway

    Too often we forget that a customer's satisfaction with the existing technology may preclude any fascination with new or future technology. The whims of customers can sometimes be quantified but more often than not their whims are not always predicatable.

    Jacqueline Holloway

  • Noah Spurrier

    The statement that it's easy for developers to port their apps to other phones, thanks to "Web-based programming standards", is nonsense. There is nothing web-based and certainly nothing standard about the iPhone API. The same is true of the Android API. Both of which are incompatible with each other.
    Porting an application from the iPhone to Android is not quick, easy, or cheap. Even the primary languages used for coding apps on the iPhone and Android are very different from each other. The iPhone uses Objective C, which is like C mixed with Smalltalk, and nothing like C++ . Android uses a variant of Java (it's more complicated than that, but it suffices to say that Android Dalvik byte-code will not run under a Java Virtual Machine). Then on top of the language differences you have vastly different object models in their respective APIs... Also, the statement about the Web being our greatest source of Apps has been shown to be a failure. Remember that Apple initially rejected the idea of third-party apps on the iPhone, and instead pushed the idea of web-based iPhone "apps" using a flavor or HTML tailored to the iPhone. That whole idea evaporated over-night once Apple finally came to their senses and allowed real app to be installed on the iPhone.

    As a committed user of the iPhone I could not easily switch to Android mainly because Android Apps suck. There, I said it. I'm a Linux engineer and open source advocate, so I have an extra motive for embracing Android, but it's a hard platform to support when I haven't seen any apps that wouldn't embarrass themselves compare the the best that the iPhone has to offer. I am not happy with this situation. I do not like Apple's closed platform policy and their exclusive control over which apps may be installed on the iPhone. Despite this, I feel that my only options are to either live with no apps at all or endure with Apple's "Big Brother" control. Switching to Android is not an option yet. I might as well live with no apps. I hope that the situation will improve. I believe that it will, but it will take a while. I like the IDEA of Android, but as a platform it is still bleak and dull compared to the iPhone.

    Finally, I don't think there is much of a battle between the Kindle Reading Device and the iPad. The Kindle device is just marketing for the Kindle service. The Kindle can survive as a niche device. The Kindle device can even die, but the Kindle service will still survive on the iPhone and iPad -- and on the Android and many other platforms. The Kindle Device is only a small part of the Kindle book delivery service. I've read many books on my iPhone -- all of which I purchased through Kindle, so Amazon has made money on me even though I didn't purchase their reading device. Amazon isn't stupid.