The Coming Standards War - Google vs. Apple

Standards wars are long, bitter struggles that often costs companies their lives. However, at least once a generation, businesses roll the dice hoping to strike rich and become the standard of choice in emerging growth markets.

In many ways, the $1 billion lawsuit that Apple successfully prosecuted against Samsung was the most visible shot fired in a war that has been waging for years. It is very likely that the war will not be decided for another 3 or 4 years. By that time, we will probably be gearing up for the next war.

What is a Standard?

When technology advances, it usually needs a format to provide it. The format is a logistical concern, and is merely a method to deliver the newest technology. When you watch a movie at home, you may watch it on tape, DVD, or over the internet. Each of these is a standardized format that simply relays the underlying technology: namely, the digitized video.

Standards are the toll roads of technology. While they are independently technologically advanced, their primary focus is to deliver other forms of technology in a cost-efficient manner.

What is a Standards War?

Because standards are toll roads, they provide a cost-benefit relationship and can be very profitable once the product achieves market saturation. An established standard can milk royalties from other technology producers for years.

The problem, of course, is creating the necessary market saturation. If a producer's customers ("end-users") have not adopted a standard en masse, the producer will be forced to spend an inordinate amount of time and money making their product compatible with all standards. Therefore, many producers will hitch their star to a particular standard hoping to bet on the winning horse.

The balkanization of companies backing different standards ups the ante for choosing the "right" standard. No company wants to see their investment in a standard turn up as a bad investment. This creates an arms race that forces companies to back standards that they did not necessarily develop solely because there is no other way to get their products to market.

What are some famous Standards Wars?

Railroad Gauges - The very first recorded Standards War followed the invention of the steam engine. While the steam engine was a monumental invention, it was useless without properly designed rails. Different areas of the world, and even different areas within a single country could have wide variances in the width of the tracks. If a track was even a few inches wider or slimmer, it could render the mighty iron horse useless. In fact, the variance in the gauges became a major issue during the American Civil War, preventing the efficient movement of soldiers.

8-Track vs. Compact Cassette - Many people love to reminisce about their old 8-tracks, but no one would go back to the days of not being able to rewind. The B-side could get pretty grueling when all you wanted to do was enjoy your most recent 1-Hit Wonder. While Phillips developed the Compact Cassette, they were forced to license the product free of charge, which turned the battle into a Pyrrhic victory.

VHS vs. Betamax - The video cassette battle proved that the "better" product does not always win in the end. Betamax was better reviewed, but JVC's VHS won out after signing some of the biggest electronics companies of the time. Not only was JVC able to win the battle, but they were able to do so while maintaining their licensing rights, likely making this victory the most profitable in history. JVC's win has motivated many standards-creators since.

Apple vs. Microsoft - At the beginning of the PC-era, Apple dominated the landscape. However, in a few years' time, they completely lost their edge to Microsoft. Many blame Apple's slide on a policy that too greatly restricted the producers who used their standards. Apple had veto-power and the ability to augment the programs that ran on their platform. The greater customizability and flexibility of Microsoft's platform attracted producers who ultimately backed its format over Apple's.

The New War: Google vs. Apple

Use of mobile devices has completely changed the internet landscape. For instance, Google is even investigating the viability of digitizing your entire identity, including your identification and wallet. The stakes are high, and increasing:

1. Apple has shunned Flash, a standard developed by Adobe. Flash is a common web standard, and Apple's refusal to support the standard on their mobile iOS has created serious problems for the company.
2. Google starts developing the Android mobile operating system. Like Microsoft before it, Google hoped to seize on the chaotic app development market with little to no restrictions. This strategy allowed for much quicker growth, but could open the devices to security issues.
3. Google seized on Apple's decision and offers Flash support natively (i.e. without after-market apps or other downloaded plug-ins).
4. Samsung was originally a manufacturer of some of the iPhone parts. Apple's insistence on design standardization encouraged Samsung to look for other avenues, which lead them to Google's Android standard.
5. Samsung's backing of the Android standard increased its global market share to greater than that of Apple's iPhone. Instead of being a manufacturing partner, Apple increasingly saw Samsung as a competitor.
6. Steve Jobs, infuriated at Samsung, sues over patent infringement.

It is easy to look at the Samsung suit and think that it is the end of the line, but it is only one of the most visible battle in this Standards War. Even then, the battle is not really over. While a jury has determined that Samsung infringed upon Apple's designs, no determination has been made that Apple's designs were even proper and enforceable.

The Road Ahead

It is always hard to predict how Standards Wars will end. I am putting my money on Google's Android platform. I have always held the belief that innovation, even to the point of recklessness, will beat out censorship, well-intentioned or not. Apple's format censorship almost killed the company back in the early 90's, and even got Jobs fired from his own company. On the other hand, Microsoft seemed to succeed in spite of itself. Their operating systems continually had issues, but that did not seem to slow down support for the format. Google's issue, if it develops one, will be its insistence on retaining data of any and all types. Google, at its heart, is an advertising company. Its seemingly endless hunger for consumer data may eventually cross the line, but Google has been able to walk the rope, at least so far.

Mobile is still a growth market. As the market continues to grow, the players do not have a great incentive to start a war. Open land does not encourage property disputes. However, as the market becomes increasingly saturated, the formats will eventually bump heads. By 2016, I expect we will look back at the $1 billion Apple v. Samsung ruling and think, "That was nothing, you should have seen what Google did last week."