Jan 2, 2019 · 27m · a16z
a16z Podcast | Apple and Google Won the Mobile OS War, But a New War Has Already Begun
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of the a16z podcast, analyst Benedict Evans joins host Michael Copeland to discuss the conclusion of the mobile operating system wars between Apple and Google and explore the emerging competitive battlegrounds above the OS layer.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
The host as informed peer 3.0 Guest teaching 6.1 Guest disagreement 2.1 The host pushing back 2.0
speaking balance: gold is the host, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 11:06 Direct rejection of host's iPhone 5C premise
Guest flatly disagrees with host's assertion that the iPhone 5C is as far down market as Apple will go, stating 'No, I don't think that's true' and reframing Apple's pricing strategy.
Hardest push from the host ▶ 17:00 Host challenges guest on Google hardware strategyHost refuses to accept guest's premise that Google isn't in the hardware business, interrupting with a direct counterexample of Google buying Motorola for billions.
Biggest teaching moment ▶ 17:05 Financial and strategic correction on Motorola purchaseGuest corrects host's financial quote from $12.5B to $9.5B net cash and explains that the deal was primarily a patent defense mechanism rather than a shift into hardware.
The host holds their own ▶ 17:00 Host cites Motorola acquisition figuresHost demonstrates concrete domain knowledge by bringing up Google's multi-billion dollar acquisition and resale of Motorola to challenge guest's argument.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The host as informed peer | Guest teaching | Guest disagreement | The host pushing back | Why |
|---|---|---|---|---|---|---|
| The Status of the Mobile OS Wars | 1 | 6 | 1 | 0 | Host opens with a broad question on whether the mobile OS war is over and lets the guest deliver an extended analysis of global market share and low-end device dynamics. Guest reframes the issue around data plans and developer ecosystem size rather than simple OS counts. | |
| Mobile Market Dynamics versus Historical PC Trends | 2 | 7 | 3 | 3 | Guest explicitly dismisses the host's attempt to draw analogies to the historic PC industry, explaining why enterprise PC buying differs entirely from consumer mobile purchasing. Host offers a mild corrective joke insisting on using US-centric retail examples like Walmart. | |
| Value Accrual, Demographics, and the BMW Analogy | 4 | 7 | 4 | 3 | Host interjects to ask if the iPhone 5C represents Apple going as far down market as they will go, but guest directly refutes this assertion. Guest uses the BMW luxury tier analogy to explain Apple's pricing strategy and brand positioning. | |
| The Shifting Battleground Above the Operating System | 2 | 5 | 1 | 1 | Host asks where the battleground shifts if the OS war is over, prompting guest to reframe the evolution of mobile apps versus the desktop web browser. Dynamics are highly collaborative with light humor around tech jargon. | |
| Divergent Strategies of Tech Giants | 6 | 7 | 4 | 6 | Host actively pushes back against guest's claim that Google is not in hardware by citing the Motorola acquisition. Guest immediately corrects host's financial figure ($9.5B net, not $12.5B) and explains Motorola was essentially a legal patent defense strategy. | |
| Entrepreneurship, Scale, and Discovery in Mobile | 2 | 6 | 1 | 1 | Host asks how entrepreneurs can build leverage against tech giants, leading guest to break down how startup metrics have inverted since the dot-com era. Guest explains app discovery bottlenecks and compares current app stores to early Yahoo directories. | |
| Hardware Integration versus Cloud Services | 4 | 5 | 1 | 0 | Host synthesizes guest's points by comparing the current state to historical browser wars. Guest agrees and concludes by contrasting Apple's hardware-stack strategy with Google's cloud-services strategy. |
Statements from this episode (17)
Apple holds 10% and Android 45-50% of global phone sales
“In as much as Apple has about, well, in the launch quarter, they have about 10% of all the phones sold on Earth, and Android has another 45 to 50% although only about two-thirds of those are Google Android and one-third are in China and don't have any Google s…”
Remaining feature phone market will convert to smart OSs in 3-4 years
“And the remaining half or thereabouts of the phone market will convert over the next three or four years to phones running smart OSs or there'll be a kind of a residue of five or 10% of people who really can't afford them.”
Active Android devices will reach 2-3B; iOS will reach 700-900M
“And, you know, as things play out with the current dynamics, which aren't really going to change in the next two or three years, we will end up with seven, eight, nine hundred million iOS devices in use on Earth. It's probably about 500 now. And we'll end up w…”
Apple lacked PC market fit because corporate buyers prioritized price
“At the kind of the critical period of the PC industry, most of the sales were corporate. And corporate buyers wanted, ah, 1500 generic boxes that they would put out of people's desks. So they didn't care what they looked like. They didn't care how easy the use…”
Evans: iPhone users account for 75 percent of retail basket size
“If you were to look at share of value right now, it's probably three quarters of your basket size.”
Evans: Tech ecosystems survive unless product quality becomes uncompetitive
“It's extremely hard to kill an ecosystem as long as the product's good and the customers keep buying it. You know, the way that BlackBerry killed its ecosystem, in effect, was by having a product that was no longer competitive.”
Evans: Android E-Commerce Basket Sizes Are Half of iOS
“Basket size or an e-commerce transaction or, you know, payment rate on Android that's half what you see from iOS, and that's, as I said, it's really just a function of price.”
Evans: A $150 iPhone Would Collapse Apple's Revenue Averages
“The corollary of that, of course, is that if Apple was to make a 150 dollar phone, their average would collapse, because they'd be getting loads of people who don't care.”
Evans: Apple Could Build a High-Quality $300 iPhone
“And I think today it would absolutely be possible for Apple to make a 300 dollar phone that would, you know, to use Johnny Ives line, would be a phone that they could be proud of.”
On mobile, the web browser is just one of many channels
“For 20 years, the web, the internet and the web were the same thing. And that's not the case on mobile. On the desktop, you had this box on the screen And everything happened in that box. And there was a little bit of fighting 15 years ago about who got to mak…”
Evans: Terms like 'app' and 'installed' will be obsolete in five years
“I mean, if I was to say, That I installed a app on my Android smartphone in five years' time. I don't know what any of those words would mean. I don't know what installed would mean, because is that a web app? Is it something happening within a messaging syste…”
Evans: Google's Motorola Acquisition Was Effectively a Patent Infringement Fine
“It was nine and a half with cash, and then they sold the cable business, but yeah, I mean, that was basically an enormous patent infringement fine as much as anything else.”
Evans: Google Views Apple as a Channel, Not an Existential Competitor
“Google is not in a one-to-one fight to the death with Apple. You could argue it's in a one-to-one fight to the death with Facebook. Or even potentially with Amazon. But Apple is a channel.”
Benedict Evans: Apple and Google Both Won the Mobile OS War
“The platform war ended and Google and Apple both won, because Google and Apple both got what they wanted, but they wanted different things.”
Evans: Modern mobile startups achieve 100x users with 1/10th capital
“In the time of the first internet bubble, you know, a prototypical startup, an archetypal startup, you would have a hundred people, and you'd have raised ten million dollars, and you'd have a million users. And now, you'll have raised one million dollars, and …”