What’s the difference between Apple’s iPad and Google’s Nexus? Sure there are differences in prices and features, but what really sets them apart is in how these products make money for their manufacturers. Apple has always been a hardware company, and one that has managed to demand high margins on the hardware they sell. From Apple’s point of view, software is simply an absolutely critical part of the Product (with a capital ‘P’). Apple views software as something that combines with the device ships to you in a package and together they are the product you buy. For this reason, well integrated software is critical to your purchasing choice.
Of course, Google knows about software too. What makes Google so innovative is that they use software to sell something quite unexpected. What Google is selling, above all, is ad revenue. Even the Google Nexus device is subsidized by the business model which says, it’s not about the device, but rather owning the platform through which potential consumers gather information about purchases and then selling this information to advertisers. It’s an old idea made very new again, and Google is the absolute master of it.
Google, and Amazon for that matter, want to make revenue off the channel to market. More Nexus tables into user’s hands is a very good thing. The critical element here, though, is not just selling customers razor blades, but making sure that they are using them to shave. Of course, Google is aware of this and that’s why so much ongoing effort is focused on creating and improving the Android mobile operating system. Apple, meanwhile must ensure that its operating systems are engaging only if they hope to sell you another iPad someday in the future; or to your mom, or brother. Google’s model scales better (how can you still make money when everyone’s already bought an iPad?) but has its risks.
Given the disparity in how Apple and Google try to make money, this info graphic from IBM is an eye-opener. One read is that even as Andriod catches up to and even surpasses Apple’s iOS in number of users, iPad and iPhone users spent more time actually using their devices for, at very least, shopping.
If Apple devices engage their users longer and better than Android users, that is some pretty disturbing news for Google. Apple needs to make better software so that customers will recommend their products, but beyond that, once they’ve sold a device, they have relatively few channels to make money from them. Google, meanwhile, is depending on the use model, for that is a critical piece in what they sell to their customers (advertisers).
The lesson for consumers might be to understand just who the customer is for a given product and be sure you’re it. If not, you have little leverage to be sure you’ll get the best experience going forward. For manufacturers, (and Google) it’s a sobering example of how important it is to understand the ecosystem of your product. Specs are so 90s, use-case is third millennium, and now we have to add engagement, if we want to make sure our products succeed.