The breaking of a monopoly...…
...and the creation of a duopoly.
Can you imagine a world without the Internet? Can you imagine a world without a mobile Internet
connection? The chances are that if you are under 35 years of age you will find both of these
conceptions difficult. Look at the chart that I’ve constructed using recent data from the
International Telecoms Union (ITU). What you see is the rise and growth of a connected, networked
world. Right now, using population statistics from the World Bank, the graph line shows that over
32% of people around the globe have an Internet connection although, of course, the distribution
of varies greatly across countries. According to Ofcom, in the UK, (an industrialised country), 76%
of households have broadband connection to the Internet. Looking at Ofcom’s latest report, we
can also see some interesting changes in the devices people are using to connect to the Internet,
particularly in developed countries. These devices determine how much people use the Internet as
well as the services and activities they use. This is the area where an intense commercial, and
frequently legalistic, battle is being played out. It is also an area where increasing sums of money
are being spent lobbying governments around the globe in order to gain commercial advantage.
The pie charts on the slide tell this story.
For the moment this profit-making only involves a handful of U.S. companies but it is entirely
possible that at a future stage of development there will also be a Chinese competitor. You may
smile at this suggestion, but this article is being written using the free version of a Chinese word
processor. The software is a clone of Microsoft Word but with several key design enhancements
that have greatly improved on the original. Not only that, but I have also edited this document on
my Android tablet, as well as on my Windows notebook, using software from the same Chinese
company. Now editing on two devices is something you won’t be able to do using Microsoft
software until November this year, and then only by purchasing Office 15 when it’s released. I’ve
mentioned this because in a way this illustrates some key aspects of the changes currently taking
place in everyday computing. And I’m forecasting that Microsoft, which has more to lose than any
other company, will find itself increasingly marginalised. Make no mistake, the virtual monopoly
that Microsoft has had on the desktop computer since the mid-1980s has been fundamentally
broken. It has been broken by Apple, Google and Amazon who have provided a much better way to
match what people want from their personal computing. Microsoft is desperately fighting back
with a better integrated operating system that will run on smartphones and tablets but, unless
things radically change, its future doesn’t look good. Because of its monopoly Microsoft always had
time on its side and could afford to experiment in improving its products and services. This
iterative development meant that each version of Windows solved much of what was lacking in the
previous version. But just as Microsoft was slow to appreciate the importance of the Internet, it
didn’t understand the mobile zeitgeist, and it failed to respond quickly by providing an appealing
smartphone operating system. The convergence of smartphones and tablets into desirable,
powerful, independent computing devices has happened fast - and without the combination of a
Microsoft operating system and Intel hardware.
In developed countries people now access the Internet using three primary devices: a laptop, a
smartphone and a tablet. Look at the three pie charts I’ve created using data from the Chitika
Advertising Network, which serves advertising on over 100,000 websites across the U.S. and
Canada. The data is derived from the information captured as literally hundreds of millions of ad
impressions were served over a 24 hour period on the 1st August 2012. This is a large sample of
behavioural data, recording not what people say they are doing, but what they actually are doing.
This is the most reliable data that can be acquired. And what a story it tells: Microsoft still
dominates the desktop market, although they are coming under increasing pressure as more
people buy Apple computers. But in terms of smartphones and tablets they have very little
presence and these are the two computing devices that people are now rapidly adopting. In the
UK, according to Ofcom, 39% of the population now have a smartphone with an Internet
connection and many people now use this as much, if not more, than their laptop.
The growth of tablet computing has taken everyone by surprise, including the manufacturers. In
the UK, according to the same Ofcom report, at the end of the first quarter in 2011 only 2% of UK
residents owned a tablet computer. By the end of the first quarter of 2012 that number had grown
to 11% and it’s expected to swell to 17% by the end of the year. This prediction is likely to be
conservative because this data was produced by Ofcom before the UK launch of Google’s low cost
Nexus 7 tablet. The demand for this product has been so great that retailers quickly ran out of
supplies, and in the U.S. the shortage has resulted in Nexus 7 tablets being sold on eBay at over
twice their real cost. Having just acquired my first non-Microsoft computing device in 27 years in
the form of a Nexus 7 tablet, I can confirm that Google’s cloud software and infrastructure really is
impressive. An extremely lightweight but powerful computer that will run all day, without needing
a battery charge, combined with access to excellent cloud services has been a holy grail in
People are using their laptops, smartphones and tablets to connect to the Internet at different
times of the day, in different situations. All three may be mobile devices, but it’s the smartphone
that travels the most. Or so it would seem as the UK Ofcom data shows that 87% of tablet
connection to the Internet is made in the home. In reality I think this data doesn’t indicate the
richness and variety of tablet usage. The majority of tablets sold so far are lower cost models
which link to Wi-Fi connections, not mobile phone networks. In the absence of reliable continual
free Wi-Fi access in our towns and cities, it’s hardly surprising that so far tablet owners mainly
access the Internet at home. But in many areas this is starting to change as telecoms companies
see a business opportunity in supplying free Wi-Fi hotspots supported by advertising. What the
Ofcom data doesn’t capture is just how useful tablet devices are when used offline, i.e.
disconnected. In this mode a tablet can become a newspaper; a magazine; a book; a Filofax with
calendar and email available; a note making device; a map; a music or podcast player; or a screen
on which to watch movies or TV on the move. No wonder they are so popular, all this flexibility in a
package that typically weighs less than 345 grams for a seven inch tablet.
Underpinning, or perhaps it should be overpinning, the use of a laptop, smartphone and tablet is a
sophisticated Internet (cloud) infrastructure. This is state of the art computing where one’s
information is stored in data centres and made available seamlessly across all the devices used and
available whether connected to the Internet or not. This enables multiple mobile devices to be
kept up to date without manual file transfers as any changes are automatically synchronised when
connected. The computing power that provides this capability lies not only in the mobile device but
also in the Internet platform used which have to work effortlessly together.
When I developed software one of my maxims was: “what is easy for people is hard and complex to
develop in software”. It’s the same with the Internet. This new Internet cloud operating system
has taken years to develop. All four U.S. companies involved; Apple, Google, Microsoft and Amazon
have Internet operating systems that have reached different stages of maturity. Apple may have
sought-after devices because of its product design and usability but its iCloud software platform is
currently way behind Google’s. You can find out about some of Apple’s software synchronisation
problems here or here. Google has built an impressive number of data centres around the world in
order to provide its services. You can view the location of some of them if you follow this link.
Google now has a huge advantage because it was a software systems company which was
developed for the Internet from day one.
All though the pie charts indicate that mobile computing appears to be a two horse race between
Apple and Google, we can’t entirely rule out Microsoft, but I predict the company will become
increasingly side-lined. As mobile device usage grows exponentially, few future devices will be
using Microsoft’s software. Their monopoly has been smashed and replaced by an Apple and
Google duopoly. When Microsoft’s shareholders realise the extent to which they have lost out in
the area of personal computing, I expect to see Steve Ballmer, Microsoft’s CEO, under whose watch
all this happened, making a very rapid exit.
...with analysis & insight...