Slouching Towards Duopoly: Is Apple A Casualty?

Google's acquisition of Motorola Mobility quickens the path towards what looks like the classic duopoly in the consumer technology space, namely Google and Microsoft. Much of the discussion in the financial press seems to center on how handset manufacturers feel and if Google wants to be in the handset business.

The Android experience varies substantially on different phones, which is a natural outcome of having an open source OS. (my son has always liked his bargain HTC phone) Before the acquisition, each handset maker had some incentive to innovate and make their version of the OS superior, enriching the customer experience and gaining some transitory market share. Going forward, because of the incentive for Google to work closely with Motorola Mobility, these other manufacturers like Samsung and HTC have less incentive to spend money improving Android on their phones. The suggestion that these manufacturers would automatically start looking at Windows Mobile out of pique seems irrational. If Android continues to gain share, what incentive is there to move to the OS that is less flexible to work with?

Apple seems to be left out in the cold, on first blush. It seems to be able to provide the best customer experience overall on devices from the iPad to the iPhone and the iMac. This is truly a terrific accomplishment, and at the end of the day, providing the best customer experience with innovative products and providing the best service is the best explanation of the stock's valuation. Now, all of this may not be enough to sustain it.

Both Microsoft and Google are looking for a consumer device, which seems now to be the SmartPhone, to be the stalking horse (or Trojan Horse?) into the consumer's home to deliver a variety of technology services, from entertainment to home energy management. The stand alone profitability of the device is a red herring, if the device is a means of entry.

Motorola Mobility also makes set top boxes, along with Cisco/Scientific Atlanta, used by major cable television systems, and this is another device that may continue to be important as a platform for delivering services to the household.

Since Dr. Eric Schmidt's conflict of interest serving on Apple's board was known for several years, and since Steve Jobs got it the instant he saw an Android phone prototype, one would hope that Apple has a strategy to continue to be major player. Duopolies are not good for consumers, so I surely hope that Apple continues to thrive and that it not become a casualty of the "Clash of The Titans." I'm going to go out and purchase an iSomething to support them.