Who Wants to Compete with Apple Stores? Maybe Everyone!

With Microsoft entering the tablet business it’s fair to wonder just how far they’ll go to emulate Apple.  The decision by Apple to suddenly give big raises to its retail employees could be an indication they believe a rival is going to launch a store and might pirate Apple employees.  Microsoft might well have those plans, or Google might.  Would the move be a smart one for either?  It depends.

Apple has hit on a basic truth, which is that consumers are obtuse about just what provides them a visible service.  How much of an app is really running on an iPhone or iPad?  I know that on my tablet I have some apps that have entirely local functionality (viewers for photos shot in RAW mode, for example) and some that are nothing more than lightly composed URLs.  So I think the question of where Microsoft or Google might go with stores, and whether having a chain of their own is a good idea, is subordinate to a bigger question, which is what’s the future of mobile services.

The simplistic vision of the mobile future is that everyone streams HD video to their iPhones.  That’s probably highly inaccurate, as anyone who does the math on the overage costs for capacity will quickly realize.  And guess what?  Mobile bandwidth is not going to get significantly cheaper.  Anyway, was the iPhone a success because it supported video?  So did (and do) a lot of featurephones.  No, it was successful because it supported apps.

So for Microsoft and Google, the solution to their Apple Envy is to win in the cloud service space?  Not so fast.  Yes, I believe that the mobile market will ultimately revolve around “answer services”, meaning answers to basic questions like Siri might answer, delivered through apps/appliances.  The problem is that it’s going to be hard for Microsoft and Google to offer something in services that Apple doesn’t already have or can’t quickly get.  The basic nature of the cloud is that it tends to level the appliance space by sucking differentiation inward.  You could argue that’s positive for Google and Microsoft, but it doesn’t level the playing field with Apple except by possibly commoditizing the whole appliance space.  Google and Microsoft already announced participation in that space, so why commoditize it?

Google’s Nexus 7 is expected out, along with the new Android Jelly Bean release, later this week (expectations aren’t always met, of course).  A seven-inch tablet would be a smart play for Google since it hits at a void in Apple’s product, supports a lower price, and also doesn’t intersect with Microsoft’s announced position.  The most successful Android tablets have been e-readers from Amazon and B&N, the latter of which has a partnering with Microsoft.  So might Google also announce a store?  I don’t think this is the right time of year, nor is it for Microsoft to move.  Wait till the fall.


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