Apple produces a few versions of a great operating system (OSX, iPhone OS) that sit on devices it also makes (iMac, iPhone, iPad). It produces and allows others to produce applications for these operating systems on these devices (Mac-based software, iPhone apps).
Google produces applications (Gmail, Calendar, Docs, Search) that work on any device with a modern web browser (i.e. in the cloud). They're producing operating systems (Android, ChromeOS) that help advance devices to better connect with the cloud. And they're supporting and further enabling others who produce applications in the cloud.
With Apple, you're locked into Apple hardware, Apple's operating system, and Apple's rigid processes. The environment is all Apple.
With Google, you're not locked into any hardware, any one operating system, and you can deliver your services without Google. The environment is open.
Apple does walled garden well. That's because they create superb, forward thinking experiences that are a combination of phenomenal hardware and software that is tightly controlled. They've radically simplified and enabled whole experiences because of it. People buy in to pricey Apple hardware and Apple makes money. Hardware leads.
Google does open web well. They create superb web based software and experiences that are powerful and connected by virtue of the web. They've radically simplified and and enabled whole experiences as well. People choose Google software and Google makes money from ads. Software leads.
Google's betting on the open web. Apple's betting on, well, Apple.
Google has embraced the open web and put its full weight behind it as the predominant platform. Most anybody who had even a small sense of what the future held knew the web was where it was all inevitably going well before Google championed it. They're now leading the migration of our entire computing experience to this web based platform, i.e. the cloud. We need a powerful, connected, always-on, simplified and reliable computing experience as we move into the future, and the cloud model is poised to deliver. If anyone's still got reservations that this is where we're headed, talk to me privately.
Apple too knows this is where the future is going. It has every incentive to be a bigger part of this emerging future, beyond just being the maker of the dummy devices we'll use to access the cloud. If it's to ever move beyond the need to produce new devices every six months, it needs more of your stuff flowing through its veins. The more of your stuff it has flowing through its systems, the more it can monetize -- be it by ads, subscriptions, profit shares. Apple already does this to a degree -- it serves music via the iTunes store and takes a cut, apps via the App Store and takes a cut, MobileMe based on subscriptions -- but this is no comparison to what Google's set up for itself.
And so now that Apple's created the ultimate blank slate piece of hardware (the iPad), it is diverting some attention to making serious additional moves. It's going to monetize those apps even further with its iAds effort. It's selling books and even more content.
That's going to be a huge success for awhile, but eventually the walled garden reaches its limits. The best applications and content will exist beyond Apple's walls in a powerful, connected web. You'll have plenty compelling alternatives to the iPhone and iPad and iWhatever. And it'll become just as accessible of an experience as Apple's own. (Think AOL versus the open web and the parallels are clear. And we see it happening on a different scale, with Android offering a compelling experience versus the iPhone.) The possible implications on revenue are clear.
But the beauty is Apple can come into strong position from a different angle. It's fascinating how its different approach gives it an opportunity. I'd like to see Apple move more of its experience into the cloud. It can, for example, make all the applications live in the cloud so when I lose an iPhone I just pick up another one, log in and I'm back where I left off, saved data and sessions and all. It can work to create really compelling alternatives to Google's cloud based software so that not only will I continue to buy its hardware but I'll pay a subscription or see ads to use its software as well. They could open up their platform, comfortable with the fact that they're providing the platform that glues together this cloud-based experience. That's a strong position in this world we're creating.
Alas, Apple would have to do a fair amount of fundamental changing to get there. It can happen, but in the meantime Google's position is far stronger. At this rate, I see a future where Apple is a great hardware company, perhaps powering a niche portion of the software experience, but the bulk of the computing experience is Google dominated. Perhaps Google and Apple will merge, and you haven't been reading closely enough if you think that's so far fetched. At any rate, I think Google's far ahead when it comes to establishing itself as the most important player in this future we're creating.
Both Apple and Google are exciting companies that I very much admire, and each is doing critical work as this all pans out, but oversimplified comparisons between them just don't do the real story justice.