We humans like to look at the world through a Good-Guys/Bad-Guys lens (the GG/BG lens, available in Canon, Nikon and Micro Four Thirds camera mounts). It’s a bad lens.
Consider the cases of Apple Pay for iOS and only iOS, and MS Office for iOS and Android as well as for Windows.
There are those among us who, looking through our GG/BG lenses, will applaud Apple for its innovation while excoriating Microsoft for … well, I’m not sure what, exactly, but because Microsoft is the Bad Guy, there will be a reason.
Forget your GG/BG lens, and focus (sorry) with your Business Strategy lens instead (no, no acronym for that, and if the reason isn’t clear, figure it out).
On the surface (as opposed to the Surface™), “strategy” might appear to be the decision as to which platforms to support. Apple’s is to use Apple Pay to further differentiate iOS from Android, while Microsoft’s is to finally support non-Windows platforms, presumably out of desperation.
The view from here: Despite their superficial similarity, the two decisions have nothing to do with each other.
Start with Apple. Its Apple Pay decision looks more like applying old habits to a new situation than like a strategy.
Start with what made the iPhone so wildly successful in the first place. It wasn’t a case of the King Kong syndrome (“It was beauty killed the beast”) although compared to the Blackberry and Treo smartphones it competed with, the iPhone was quite pretty.
No, the big, big deal about the iPhone was that it wasn’t just a product. It was a platform (and Open/Closed Platform Strategies: How, When & Why,” Geoffrey Parker and Marshall Van Alstyne, which explores this subject, is well worth your time).
Apple’s App Store is what made the iPhone a platform, which is what drove the marketshare of Blackberry’s mere products to ever-more miniscule levels.
Apple Pay looks like a replay of Steve Jobs’ legendary argument with his executive team about whether to release a Windows version of iTunes. Only in the replay it’s Android not Windows, Jobs wins, and there is no Android Apple Pay.
Understand, Apple Pay is just a way to pay at the register by pulling out your iPhone instead of a credit card. I guess that’s more convenient(?)
So Apple Pay makes consumers’ iPhones a smidgeon more valuable; Apple makes its money by capturing a smidgeon of the credit-card processing fee; and the banks are willing to give it this slice because Apple Pay is, in principle, a smidgeon more secure than a standard credit card.
Merchants? They mostly care about the expense they’ll incur by equipping themselves to support Apple Pay, if they decide to support it, which depends how many customers they expect will have an iPhone but no credit cards with them.
Off topic: Smelling opportunity, Google has announced Android Pay, which has no user interface, only an API. It’s a platform. In principle there’s no reason Android Pay Apps can’t be written for iOS. Sure, Apple could return the favor, but right now an Apple Pay App for Android seems farfetched.
On topic: Microsoft’s decision to release iOS and Android versions of MS Office.
Once upon a time, MS Office was, for Microsoft, what Apple Pay is supposed to be for Apple right now: A way to increase the value of a platform, in this case Windows, by providing a valuable application that isn’t available on any other platform.
From both a consumer and enterprise perspective, if you want word processing, spreadsheet, and presentation software that renders reliably no matter who you send your documents to or receive them from … if that’s what you want, your only choice is MS Office, and if you make that choice you’re going to run Windows on your PCs.
Or, to be fair, on a Mac, but for the budget-conscious Macs cost more than Windows machines.
It’s a strategy that’s worked for a couple of decades. It’s still working. But it’s had an unfortunate downside: It’s made Microsoft’s desktop Windows team fat, dumb and happy.
No more. Astonishingly, Nadella is the one who has broken Windows’ de facto monopoly on MS Office.
Which leaves the Windows team little choice: It has to start designing an OS and user experience users actually prefer.
From Nadella’s perspective this has to be a gamble. The guess from here: Not taking this step was even riskier.
Your take-homes from all this (you knew there’d be one, didn’t you?): (1) applying old mental habits to new situations is dodgy at best; and (2) few risks are bigger than a culture of fat, dumb and happy.
Plan accordingly.
Well done, Bob. You remind me of Patrick Mcdonnell . . . the artist who writes the ‘MUTTS’ comic strip. I am not one to read the daily comics, but Patrick is a real artist . . . I keep asking how he comes up with these great comic strips that convey the everyday things we do and say . . . with a twist. I keep saying: “I wish I thought of that.”
You belong to the same club . . . unique observations of everyday life that the rest of us take for granted . . . rock on . . .sometimes, whatever you think, think the opposite.
Thanks for a lovely compliment, Jim. Very much appreciated.
Off topic: In fact, the three original components of Office appeared on the Mac some time before they appeared on Windows. IIRC, Excel was a Mac-only product for a couple of years and the WYSIWYG version of Word for a somewhat shorter time. PowerPoint was originally a Mac-only product from Forethought, Inc., which MS purchased. PowerPoint was migrated to Windows a couple of years later.
According to Wikipedia, the first version of Office, which essentially bundled the three applications for a reduced price, was released on Mac a few months earlier than on Windows. After that, however, new releases came on Windows first, probably as an incentive to encourage users to migrate to Windows, IMHO.
Thanks for a great article on contrasts in business strategy. It’s too bad that you could not include a third example where a company releases a product based on a viable, well-designed, and current international standard. Unfortunately international standards take too long to create such that they are often obsolete by the time they are finally approved.
The alternative, is the “open standard” where a company seeks to make its own investment more secure by allowing anyone to imitate it. The best example to me is when the late Don Estridge made the IBM PC an open standard by allowing anyone to build clone computers. It was a move that was “in the face” to IBM executives who favored proprietary architectures. But it worked for IBM who richly rewarded Don by taking away the company he developed and assigning it to an internal killer who nearly closed down the division.
There is also a Google Wallet with much the same features as Apple Pay but an entirely different API. Hopefully, the IT back end for both can be merged, since they both use the same physical interface – NFC (Near-Field Communications.)
Two minor corrections: The original IBM PC wasn’t completely open. Quite a lot of it was, but Phoenix and Compaq both reverse-engineered the BIOS.
One other nit: It’s Android Pay that has the open API, at least from what I’ve read. And yes, it would be interesting to see if some enterprising developer figures out a way to create an Android Pay app for iOS, and to see whether, if someone does, it survives Apple’s curation.
I’m not so sure Apple’s “strategy” is about differentiating iOS/iPhone from Android. With Google Wallet I’ve been paying with my phone for almost 2 years already. Although I do resent a little how the media and uninformed public repeatedly treats Apple as innovators when they’re actually late to the game, I’m actually happy that Apple Pay is getting so much attention because it means more merchants are installing and enabling NFC PoS hardware, which is good for Google Wallet users just as much as it is for Apple Pay users.
No, I don’t think Apple is differentiating here, I think they’re just not willing to play ball (give up anything?) with Google and the hardware manufacturers the way it would take to bring Apple Pay to Android devices. There is already a competing platform for mobile device payments, Softcard (recently renamed from ISIS) that isn’t really gaining any traction from what I can tell. So Apple is actually third to the game in this case, not really a differentiator.
> marketsahare ?
Fixed – thanks.
how many customers they expect will have an iPhone but no credit cards with them.
…
Apple Pay is just a way to pay at the register by pulling out your iPhone instead of a credit card. I guess that’s more convenient(?)
Well, I haven’t been sold on using my phone instead of a card for payments, but then I’m turning into an old fogie technophobe 🙂
In general I think people are looking towards a time when people carry fewer and fewer things with them. A credit card isn’t much in terms of space (not like carrying a camera), but it is one more Thing. Another thing to be replaced if lost, another thing to make sure is secure.
“Nothing in the known universe travels faster than a bad check.” – Anonymous
I was going to comment on this on the MS post itself, but I don’t think I can?
Anyway, the saying seems counter-intuitive: the whole reason bad checks were ever a thing is because they didn’t travel fast. They were slow. Check processing has been sped up in part to prevent/limit bad checks. Checks in general are still about the slowest way to pay for anything – cash is immediate, and credit cards can be verified in seconds.
People rarely comment on the MS because they are usually humorous and spot-on, but this one seems off to me.