Apple, Social Business Software Could Miss Their Chance to Topple Microsoft

By Joe Shepley (@joeshepley) Jul 19, 2011

In my last post, I talked about some of the ways that the iPad and social business software (SBS) both had tremendous opportunities to outflank Microsoft's dominance in the desktop document creation and document management space, respectively. Based on the responses to the article, it seems like lots of folks out there are wondering the same things about Microsoft's ability to maintain their dominance in these areas.

But, like any consultant worth their salt, I like to have it both ways, so in this post I want to consider the very real ways that Apple and SBS vendors could fail in their attempts to knock Microsoft out of the game, because their long-term success is far from assured.

Nothing Lasts Forever

You can’t dispute the fact that Apple has enjoyed a tremendous first-mover advantage with the iPad. I’ll admit that as I write this, I’ve seen my very first Xoom in an airport lounge, but that’s the exception that proves the rule: I see iPads all over the place and just about no other tablets in use.

However, first-mover advantage is never permanent. The history of computing in the last 50 years is a series of incumbent market leaders getting disrupted by new entrants who re-imagined the solution space.

You can read all about this in Clayton Christensen’s work, or just think about what happened to the iPhone: it exploded onto the scene, dominated what a “cool” smartphone should be, and then, when we all least expected it (or at least when I least expected it), the Motorola Droid carved out a whole new way to approach the smartphone, followed by a flood of awesome Android phones.

I can see a similar thing happening to the iPad in the not-so-distant future, and when it does, Microsoft will have a way back in to the tablet market. These new entrants will not be focused on beating Microsoft, as Apple is. They’ll be focused on beating Apple; and a core part of that strategy will be touting how natively they work with Office.

The question is whether Apple will have gained enough market share to make the play worth it…or would it have been better to play nice with Microsoft from the beginning? After all, if competing tablets are having trouble competing now, what would it be like if the iPad had a native Office app? Flash support?

Amazon’s Mistake

In all this, Apple’s at risk for making the same mistake that Amazon made with the Kindle: misunderstanding the true leverage of its product.

Now, before folks protest that the Kindle has been a huge success and a game changer in the way we consume books, let me explain what I mean when I say it’s been a mistake for Amazon.

When the Kindle came out, it was astonishing, groundbreaking — most folks had never thought that an e-reader could be so compelling or have so much mass appeal.

And that cool factor came with a price tag: $399. And lots of folks shelled it out, not only for the first generation Kindle, but for the next as well. At the time, it seemed like yet another brilliant play for Jeff Bezos.

On this side of the craze, however, I see the Kindle as a huge miss for Amazon. It was their chance to pretty much own the delivery of electronic books by getting a Kindle into as many hands as possible. Once someone owns a Kindle, Amazon has a built in revenue stream as they consume more and more content through the device instead of through other media (print, internet, other e-readers).

The best way to do this would have been to give away this revolutionary device: buy $100 in e-books and get a top-of-the-line Kindle for free. Instead, Amazon charged $399 for it, which indicates to me either that they didn’t understand the true value of the technology for their business or that they were greedy (or that they hadn’t considered the razor blade industry as an instructive paradigm).