Meanwhile, Google Inc (NASDAQ:GOOG) provides equal support to all of its partners, including Motorola, and its partners support it right back. Perhaps adopting a strategy similar to Google’s, where it makes apps for all platforms, is Microsoft’s best bet to get people into its mobile ecosystem. After all, it’s biggest strength is as a software maker.
Why everyone wants to be Apple
In today’s competitive mobile device market, software companies are more reliant on hardware companies than ever before. Apple Inc. (NASDAQ:AAPL) took this route 30 years ago with a closed ecosystem that blurred the line between hardware and software. That line has gotten blurrier this decade with big software companies — Microsoft and Google — moving into hardware manufacturing through both internal developments and acquisitions.
Apple Inc. (NASDAQ:AAPL)’s strategy may have been about controlling the user experience, but it also turned out to be a great business strategy. Creating a popular device — or three — means huge revenue and profits for the company compared to a licensing strategy.
Microsoft intends to emulate the significant profit and revenue growth Apple saw with its own devices. Where it currently grosses less than $10 per Windows Phone device sold, Microsoft executives believe the acquisition will allow it to generate more than $40 per phone it manufactures and sells.
Of course, that all depends on Microsoft being able to grow its market share significantly in the next few years. It’s estimated Microsoft will have to sell 50 million units just to break even. Nokia’s current run rate is less than 30 million after selling 7.4 million smartphones last quarter.
So what?
Despite their recent entries into the hardware business, neither Google or Microsoft has been able to mimic Apple Inc. (NASDAQ:AAPL)’s success at pushing hardware. Apple’s closed ecosystem keeps its customers extremely loyal, and its innovative technology of the last decade has drawn more customers in than ever. Even as investors worry about Android’s multi-manufacturer dominance and superior devices from competitors, Apple sold more smartphones last quarter than Nokia did in the last year — and it didn’t have a phone newer than 6 months old.
Microsoft has a lot of work to do to become a profitable mobile device manufacturer. After a short experiment in manufacturing its own devices (the Surface), I actually think it’s taking a step in the right direction with its purchase of Nokia’s device business. Nokia has a proven track record of creating excellent hardware, but it’s partnership with Microsoft has likely been the biggest thing holding its smartphone business back. It’s up to Microsoft now to leverage those excellent hardware capabilities to grow Windows mobile.
For my money, however, I’m going to stick with the company that has proven it can operate effectively in the integrated hardware and software business. If everyone is trying to emulate a company, I’m going to buy the one everyone wants to be like.
The article More Proof Everyone Wants to Be Like Apple originally appeared on Fool.com is written by Adam Levy.
Adam Levy owns shares of Apple. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft.
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