Humans are irrational creatures and the reasons we buy and collect things can be quite strange indeed. There are blog posts and articles each day about iPhone vs. Android and which one will “win” the supposed “war” between them and it feels a lot to me like people want to relive Mac vs. Windows all over again. I propose a different idea.

Both will win, but each will win something different.

Apple’s iPhone is going to be far more profitable as a device and likely as a platform than Google’s Android will be. However, Android powered devices will outsell iOS devices eventually much like Nokia outsells Apple in total phones.

It’s apples to oranges. Or maybe, it’s comparing Ford to BMW(or maybe Aston Martin).

The reason people buy different vehicles usually has a lot to do first of all with money. If I had unlimited money, I’d buy a Ferrari instead of a Ford. Wouldn’t you?

Most people don’t want to spend a ton of money on phone service so they have basic phones. Right now this basic phone is a feature phone that might have a qwerty keyboard for texting. Think of that phone as a Ford Tarus or Honda Civic. A solid product that will take you from point A to B reliably. You see them everywhere. It’s a safe, common, rational purchase that fits a large number of people.

Some people want to get smartphones, and they tend to be more upscale in price for the time being. Apple’s iPhone is sexy, powerful, and pretty popular. It’s like a BMW. More pricey, but popular and very high quality. They aren’t everywhere, but a slightly older, used model is not that expensive or hard to come by.

Google’s Android is a bit more like Caddilac. It’s nice, powerful, and popular, but not nearly as refined and sexy as the iPhone. People don’t desire the Android quite as much. Android phones are a bit cheaper. Caddilacs and Android phones also drop in price fast and feel more like a commodity than a luxury item over time.

However, in the real world there is a big difference between phone comparisons…

If all smartphones are tied to the same data plan pricing, and all devices are about the same price, why would you buy the Caddilac of smartphones when you can buy a BMW for the same price?

Google is about to find out this lesson the hard way when iPhone launches on Verizon.

People will flock to the iPhone because there is a much higher perceived value to the average customer in an iPhone than there is an Android device.

Thus, Android’s future resides in becoming the Ford of phones. Nice, comfortable, common, and cheap. Like, what is happening at Virgin Mobile with the LG Optimus V.

$150 gets you an Android phone that can be paired with a $25 unlimited data phone plan. If all you want is email, light web browsing, and a few social apps, that deal is a winner. That is where Android is headed - they will replace Nokia on the low end of the market.

Does this mean Apple will follow suit? Nope. Does BMW try and compete with Ford? What would the point be? Work harder to make less money?

Apple has 4% of the sales volume, but makes 51% of the profits in the mobile phone industry. They own the most profitable customer segment. Nobody does it better.

So, whenever you are tempted to think that Apple or Google is going to “win”, just remember, they already both have won, they are just playing different games with different objectives.

To be clear - Apple wants to sell as many devices as it can with a 40% profit margin. Google wants to have as many people viewing Google Ads on their Google phones as possible and they would give away the phones if they could do it profitably(they already do this with their software).

A Side Note…

Unsubsidized tablets will play out more like the iPod business than the iPhone business. iPad will take like 60-80% of the market unless Google can beat Apple on price in a huge way, which is almost impossible given Apple’s incredible operations management under Tim Cook.

Also, Google is going to have to do a lot better than a 7” tablet priced at the same as a 10” iPad to take market share away. Otherwise Android 3.0 tablets are going to outsell iPad just like Zune outsold iPod.

-Brian

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