Jan 4, 2009

What Do Google Android Netbooks Mean For Microsoft And Apple? (GOOG)

Ed: Mission critical elements for a netbook:

High density LCD screen with chip assisted zoom, unzoom.
Touch sensitive gestures - not just on/off states.

Apple owns a lot of the IP and chip technology to support the iPhone platform. Microsoft, Android, Symbian, RIM, and Palm need to invent around those patents - slowing their progress.

What Do Google Android Netbooks Mean For Microsoft And Apple? (GOOG)

Dan Frommer | January 2, 2009 12:20 PM

It's no secret that Google (GOOG) is hoping its Android operating system can be useful for more than just mobile phones. So it makes sense that Google would want to get Android on "netbook" laptops -- small, lo-fi computers that companies like Dell (DELL), HP (HPQ), Acer, and Asus are selling like hotcakes to geeks and early adopter-types.

If that happens, and Google-powered computers take off, Microsoft is the biggest loser. Early netbooks ran Linux, but today's best sellers run Windows. For instance, the 10 top-selling laptops on Amazon (AMZN) right now are netbooks running Windows XP Home. While selling an XP Home license likely isn't as valuable to Microsoft as selling a Vista Ultimate license, it'd still be losing some potential license sales. And if netbooks start cannibalizing real laptop sales, Microsoft stands to lose market share, too.

What about Apple? The company hasn't joined the netbook market yet -- unless you count the iPod touch, or maybe the iPhone -- but will supposedly start selling larger tablet computers sometime next year. We see no reason why a Google-powered netbook would necessarily be better than an Apple-powered netbook. But they could be cheaper.

So who will win? Obviously too early to tell -- most of this is theoretical. But if Google and Apple both enter the market, we think it's a positive for both companies, and a negative for Microsoft. Some thoughts:

It will be hard for anyone to make hardware as nice as Apple's, especially if their multi-touch technology is involved. And their OS X is still more elegant and useful than Android (and Windows, many will argue).
Assuming Apple's tablets can access an equivalent of the iPhone App Store, it'll be hard for Google or Microsoft to catch up quickly with similar offerings of lightweight, powerful apps. Android's app market is a disappointment so far, and Microsoft's Windows Mobile apps would be useless on netbooks.
It will be hard for Apple (or Microsoft) to match Google's excellent, expanding base of free Web services -- which is the core purpose of a netbook -- ranging from GMail and Google Maps to Docs, Gears, and even ane-book store.
As long as these services run just as well on an Apple- or Microsoft-powered device as they do on a Google-based device, that's not a reason to buy a Google-powered device. However, if a special version of Google's Chrome browser is Android-exclusive, and makes Google apps much, much better, that could be an Android advantage.

It's always possible Microsoft has something up its sleeve -- the killer netbook platform, or something. But given the way they've punted so far in the next-gen mobile platform war -- Windows Mobile is weak compared to iPhone and Android -- we're not holding our breath.

Meanwhile, Google's best bet for making money still seems to be using Android as a tool to get more people using the Internet on more non-PC devices, and eventually viewing and clicking on Google ads. So... how's that mobile ad business going?

New Economics of Advertising

Jan 4, 2009