Digital wars: Apple, Google, Microsoft and the battle for the Internet

272 Pages·2012·0.94 MB·English

by  Charles Arthur

i
Digital Wars
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Digital Wars
Apple, Google,
Microsoft and
the battle for
the internet
THIS PAGE IS INTENTIONALLY LEFT BLANK
CHARLES ARTHUR
iv
Publisher’s note
Every possible effort has been made to ensure that the information contained in this book
is accurate at the time of going to press, and the publishers and author cannot accept
responsibility for any errors or omissions, however caused. No responsibility for loss or
damage occasioned to any person acting, or refraining from action, as a result of the material
in this publication can be accepted by the editor, the publisher or the author.
First published in Great Britain and the United States in 2012 by Kogan Page Limited
Apart from any fair dealing for the purposes of research or private study, or criticism or review,
as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be
reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing
of the publishers, or in the case of reprographic reproduction in accordance with the terms and
licences issued by the CLA. Enquiries concerning reproduction outside these terms should be
sent to the publishers at the undermentioned addresses:
120 Pentonville Road 1518 Walnut Street, Suite 1100 4737/23 Ansari Road
London N1 9JN Philadelphia PA 19102 Daryaganj
United Kingdom USA New Delhi 110002
www.koganpage.com India
© Charles Arthur, 2012
The right of Charles Arthur to be identified as the author of this work has been asserted by him
in accordance with the Copyright, Designs and Patents Act 1988.
ISBN 978 0 7494 6413 4
E-ISBN 978 0 7494 6414 1
British Library Cataloguing-in-Publication Data
A CIP record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data
Arthur, Charles, 1961-
Digital wars : Apple, Google, Microsoft and the battle for the Internet / Charles Arthur.
p. cm.
ISBN 978-0-7494-6413-4 -- ISBN 978-0-7494-6414-1 1. Internet industry–United States.
2. Apple Computer, Inc. 3. Google (Firm) 4. Microsoft Corporation. I. Title.
HD9696.8.U62A78 2012
338.4’70040973--dc23
2011044595
Typeset by Graphicraft Ltd, Hong Kong
Print production managed by Jellyfish
Printed and bound by CPI Group (UK) Ltd, Croydon, CR0 4YY
Contents
v Contents v
In9t9roduction: in the beginning 1
1 8 3
Bill Gates and Microsoft 3
Steve Jobs and Apple 4
Bill Gates and Steve Jobs 9
Contents Larry Page and Sergey Brin 11
Internet search 12
Capital thinking 14
Microsoft antitrust 16
Steve Ballmer 16
The antitrust trial 17
The outcome of the trial 20
Search: Google versus Microsoft 23
The beginnings of search 23
Google 26
Search and Microsoft 30
Introduction 1 BLiunskt to3 1money 37
Boom 39
Random access 45
Google and the public consciousness 47
Project Underdog 49
01 1998 3 PDroe pita yroinugr sfeolrf battle 5534
Going public 59
Competition 61
Bill Gates and Microsoft 3 Cultural differences 61
Microsoft’s relaunched search engine 62
Friends 67
Steve Jobs and Apple 4 Microsoft’s bid for Yahoo 69
Google’s identity 69
Bill Gates and Steve Jobs 9 The shadow of antitrust 72
Still underdog 74
Larry Page and Sergey Brin 11 Digital music: Apple versus Microsoft 79
The beginning of iTunes 80
Gizmo, Tokyo 82
Internet search 12 iPod design 84
Marketing the new product 86
Capital thinking 14 Meanwhile, in Redmond: Microsoft 90
iPods and Windows 92
Music, stored 95
Celebrity marketing 99
iTunes on Windows 103
02 Microsoft antitrust 16 iPod mini 107
The growth of iTunes Music Store 109
Apple and the mobile phone 111
Steve Ballmer 16 Stolen! 112
Two-faced 117
iPod in the ascendant 127
The antitrust trial 17 Ecosystem: hardware and apps 127
Scratched! 130
The outcome of the trial 20 Silence from Apple 133
Apple’s best results 136
Zune 136
Tying the Zune to the Xbox 138
White Christmas 141
03 Search: Google versus Microsoft 23 Twilight 143
Rout or strategy? 145
Smartphones 147
Mobiles and Microsoft 147
The beginnings of search 23 Android 150
ROKR and a hard place 151
Google 26 iPhone, that’s what 154
Just walk in 156
Search and Microsoft 30 Disrupted 166
Free as in data 169
The drawer of broken dreams 172
Bust 31 Developers and the iPhone 175
Free as in lunch 178
Link to money 37 Apps for all 184
Money in apps 186
Boom 39 Flash? Ah 187
Envy 193
The losers 194
Random access 45 Android rising 195
Patently 205
Google and the public consciousness 47 App patents 210
Tipping 211
Project Underdog 49 The revolution will be handheld 213
Tablets 222
‘Within five years’ 222
Preparing for battle 53 Third category 226
Apple dominant 230
Do it yourself 54 Always on 232
Post-PC 235
Going public 59 Grand unified theory 236
2011 239
Notes 244
Competition 61 Chapter One 1998 244
Chapter Two Microsoft antitrust 244
Cultural differences 61 Chapter Three Search: Google versus Microsoft 245
Chapter Four Digital music: Apple versus Microsoft 247
Microsoft’s relaunched search engine 62 Chapter Five Smartphones 249
Chapter Six Tablets 251
Chapter Seven 2011 252
Friends 67 References and further reading 253
Acknowledgements 254
Trademarks 255
Index 256
vi Contents
Microsoft’s bid for Yahoo 69
Google’s identity 69
The shadow of antitrust 72
Still underdog 74
04 Digital music: Apple versus Microsoft 79
The beginning of iTunes 80
Gizmo, Tokyo 82
iPod design 84
Marketing the new product 86
Meanwhile, in Redmond: Microsoft 90
iPods and Windows 92
Music, stored 95
Celebrity marketing 99
iTunes on Windows 103
iPod mini 107
The growth of iTunes Music Store 109
Apple and the mobile phone 111
Stolen! 112
Two-faced 117
iPod in the ascendant 127
Ecosystem: hardware and apps 127
Scratched! 130
Silence from Apple 133
Apple’s best results 136
Zune 136
Tying the Zune to the Xbox 138
White Christmas 141
Twilight 143
Rout or strategy? 145
05 Smartphones 147
Mobiles and Microsoft 147
Android 150
ROKR and a hard place 151
iPhone, that’s what 154
Just walk in 156
Disrupted 166
Contents vii
Free as in data 169
The drawer of broken dreams 172
Developers and the iPhone 175
Free as in lunch 178
Apps for all 184
Money in apps 186
Flash? Ah 187
Envy 193
The losers 194
Android rising 195
Patently 205
App patents 210
Tipping 211
The revolution will be handheld 213
06 Tablets 222
‘Within five years’ 222
Third category 226
Apple dominant 230
Always on 232
Post-PC 235
Grand unified theory 236
07 2011 239
Notes 244
References and further reading 253
Acknowledgements 254
Trademarks 255
Index 256
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1
Introduction:
in the beginning
The world we experience is analogue: colours, sounds, smells, all
merge and mix smoothly. The digital world ushered in by computers
is different: binary, on or off, yes or no. The arrival of affordable personal
computing beginning in the 1970s, followed by the addition in the 1990s
of the internet, began to create entirely new businesses – such as Yahoo,
a website that offered up-to-the-minute news, weather and free e-mail –
and to overturn existing ones, such as the music industry, at a pace that
multiplied geometrically with the number of computers connected to the
network.
Into this maelstrom of change came three companies: Apple, Microsoft
and Google. They were radically different companies. By the time all three
arrived on the digital battlefield, the glory days of one were apparently
behind it; another stood atop the computing and business world; the third
was barely more than a clever idea in the minds of two very clever
students.
The companies would subsequently fight a series of pitched battles for
control of different parts of the digital landscape. Their weapons would be
hardware, software and advertising. At stake were their reputations – but,
equally, our future. Does it matter which search engine most people use?
Where we buy our digital music? Who makes the software that powers
our mobile phone, or the tablet that we use while waiting for a train or
meeting? Some think not: that the momentum of human intentions means
we will always get the correct outcomes, no matter who is overseeing
our experiences. Others say that the digital landscape is covered in
tollgates, and that those who control them will always determine the
shape of the future.
What is certain is that to control any of them is a golden opportunity to
extract tolls from the millions and millions of people passing through. The
2 Digital Wars
reward for winning any of the digital wars is enormous wealth – and,
often, the chance to use that to build a fresh set of tollgates on another
part of the landscape, or displace an existing rival.
The first time that all three found themselves sharing the same digital
space was 1998. They could not know of the battles to come. But those
battles would be world-changing.