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Friday, December 30, 2011, 03:40 pm PT (06:40 pm ET)

Inside Apple's 2011: iOS, Apps & iCloud


Apple's iOS competition

In contrast to iOS 5, Microsoft and Google lack more than just Siri. They also lack the installed base of users on the same platform, with Google boasting more smartphone users than Apple but only a tiny fraction of the app sales, despite a store that now claims a huge portfolio of software. Google has no significant first party apps on the order of Apple's iLife and iWork suites, focusing instead upon selling what are essentially web app features of its online, ad supported features like Maps and local search. Android is also lacking significant third party development because of rampant piracy, while malware distribution becomes an increasingly large problem for users.

Microsoft offers a curated mobile software store like Apple's with similarly strong security features and rigid platform management to avoid fragmentation, but it lacks a fraction of Apple's installed base of users and developers, failing to reach a sustainable critical mass necessary to make Windows Phone 7 a credible platform for developers or users who want to buy apps and games.

Outside of smartphones, fragmentation of Android has completely derailed Google's efforts to push Android 3.0 Honeycomb tablets, with the only Android-based tablets seeing any interest in the market being ones that use a customized version of a year old release of Android 2.x that can't run anything other than stretched smartphone apps. Microsoft's tablet plans are still at least a year away, and tied to a layer of web apps running on its Windows 8 platform rather than being part of the Silverlight-based Windows Phone 7 platform.

Apple's iOS impact in 2011 wasn't limited to tablets and smartphone apps, however. The company's mobile platform also made a huge dent in portable gaming, blunting the launch of new devices by Sony and Nintendo and changing how even console game developers and entertainment producers such as Disney plan to deliver games in the future. Apple even disrupted its own "digital hub" model introduced by Jobs a decade ago, when Jobs introduced iCloud as a new hub for devices, apps, data, documents and content.

Apple even modified its desktop Mac platform to incorporate successful elements of iOS, including its App Store, a Full Screen focus for apps and expanded support for multitouch gestures in the interface. When Jobs introduced the iPhone nearly five years ago, he noted that it was running "OS X," something that was widely reported to be false at the time. It turned out that Apple had actually ported Mac OS X to ARM and customized and optimized the software for mobile use. Apple later referred to the software as "iPhone OS" and eventually branded it "iOS."

There was still far more similarity between iOS and Mac OS X (in terms of code, technology, development tools, API, and so on) and Microsoft's Windows/Windows Mobile, and between the company's stated plans for Windows 8 PCs and Windows 8 ARM-based tablet devices, and certainly between Google's Android and Chrome OS. Apple's use of "iOS" is simply an arbitrary marketing distinction. iOS devices are mobile Macs.

Just as viewing all iOS devices as "iPods" dramatically shifts the picture of iPod history, viewing iOS devices as mobile Macs presents a very accurate picture of where Apple has taken its NeXT-derived platform over the past decade. While Apple has gone from selling around a million Macs per quarter five years ago to selling nearly 5 million per quarter today, it has actually expanded the Mac platform to a portfolio of mobile devices that sells 40 million units per quarter.

This reality has so disgusted firms like Gartner and IDC that they've had to begin counting Apple's sales under new rules that silo unit sales into separate bins, rather than counting everything with similarly branded software under the same total, as they did for years with Microsoft. So, for example, the iPad isn't a PC but Tablet PCs are; and the iPod touch isn't a tablet but Android oversized smartphones are. At the same time, other market research groups are desperately trying to slice Apple's iOS into chunks so they can compare the company's sales against all smartphone vendors using Google's Android.

Both efforts to present Apple's product sales in the most unflattering light possible fail to take into consideration the supportive role that all of Apple's Darwin-based product play for each other. A major factor in the successful launch of the iOS App Store, for example, was that the development tools it used were already well documented, mature and proven, because they had already been refined for years on the Mac. The iPad's software ecosystem was similarly aided by its commonality with the iPhone, and Apple's sales of the iPod touch afforded the iPhone a larger installed base of users than had Apple only been trying to sell the iPhone. Android and Windows Phone 7 not only lack a competitor to the iPad, but they are also missing any significant iPod touch.

Combined with Apple's strength in retail and operations, the company's iOS-powered unit sales combined with its Mac desktop platform indicate a high bar for would be competitors who want to challenge its unified computing platform. Throughout 2011, Apple did more than just deliver Macs, iOS devices and new software to run them. The next segment will review Apple's other challenges and accomplishments as a company over the past year.

Inside Apple's 2011: iPod, iPhone & iPad
Inside Apple's 2011: Mac hardware and Mac OS X
Inside Apple's 2011: Steve Jobs' achievements, battles and crises