Ben Thompson – Google



Very few people know for sure who exactly is to blame for the Google-Apple breakup. Yes, Steve Jobs was livid Android phones looked a lot like iPhones, but remember, Google purchased Android two years before the iPhone came out (and a year before Eric Schmidt joined Apple’s board) as a hedge against Microsoft; once the iPhone came out, why but for pride would you build a phone any differently?

Where Google went wrong was with that maps decision: making turn-by-turn directions an Android-exclusive differentiated Android as a platform, but to what end? So that HTC et al could sell a few more phones, and pay Google nothing for the privilege?

The truth is that when it came to making money Google and Apple were not competitors in the slightest: Apple was a vertical company that expended R&D and capital investment to design and build devices that included significant material costs, and then sold those devices in a zero-sum competition against other manufacturers. Yes, marketshare was important, but so was profitability: Apple traded off reaching the entire market in favor of creating a differentiated experience that customers would pay a premium for that far exceeded the (significant) marginal costs of each iPhone.

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