Openness vs Appleness in the smartphone space

Any reader will discover in a quick browse at this blog that we strongly promote "openness" in its many shapes. We think open source software will finally be adopted and promoted by governments and used by more users than proprietary one. We have talked so much about open standards as the right way to store and exchange data. We are involved with the open data community as it is the more needed space in the openness world, and we will announce very soon our plans to support open knowledge more actively.

Perhaps that is why I am frequently asked about the extraordinary success of Apple and its i[whatever] brands when competing against the rest of the world with its more than closed platform. It is really remarkable that markets think that Apple Inc (NASDAQ:AAPL) is the second most valuable company in the world (Apple overtook Microsoft in market capitalization in May 2010). And Steve Jobs is probably one of the biggest business genius in history and an incredible innovator as he has shown several times in his career.

But I think Apple will fail as it did in the 80s when they had the opportunity to dominate the personal computing market with its Macintosh. They decided to play the hardware and software game on their own and refused to collaborate. As a result Intel and Microsoft dominated an incredible growing and profitable market that somehow Apple invented. After a painful decline in 1997 Apple had to be rescued by Microsoft's money to remain independent.

In Apple's platforms third parties have no space and users hardly have any right further than paying every 2 years a lot money for a fancy new device. As far as "appleness" is trendy and apple-fan-boys go on spending 600€ a year in their i-devices, the big hype will work. Yes, hype is the word to define what Apple is living now. An incredibly big hype that openness will end up with. Android will emerge as the winner in the smartphone space simply because its business model and growth is sustainable and iphone's is not. As well as the iPad will enjoy a couple of years of lonely diving, as the prize for the big innovator. Of course Apple will make a lot of money waiting for competitors powered with open sourced platforms as they are doing with the iPhone, but in the end they will not dominate the market they have created.

What I usually say when I am asked for a recommendation, oversimplifying is, "iPhone is cool, but if you plan to use an smart-phone, buy an Android powered one". With Palm acquired by Hewlett Packard, Blackberry looking like a retro device although still in place, Microsoft out of the game and Nokia completely clueless, never an emerging market looked so clear to me.

Be serious: The Internet it is not just about "their culture"

I was not keen to participate in the debate started a couple of weeks ago around Sustainability-Economy-Act-hidden-reforms affecting the internet in Spain. (Have a quick look at #manifiesto debate in Twitter, search Blogs, browse the group in Facebook, etc). But the Ministry of Culture went too far, trying to skip some basic rules that citizens expect from their governments in democracy (listening to all interested parties, explaining the real extension of the reforms, ...) They did not even communicate the existence of the amendment!!!! Thanks to the malicious way they are intending to change the law, the controversy even reached Boing Boing, and Slashdot, two very remarkable hits considering the insignificant relevance of our country in the internet.

Just in case you do not want to go further reading this post, I am not going to write about freedom of speech, nor about fundamental rights. Perhaps only a little bit about Intellectual Property, but in a broader sense than these interested-guys-of-the-culture try to define the concept (as if they were the only creators...) If you are expecting that, you should follow A-list bloggers like Escolar, Julio Alonso, Enrique Dans, and most of the other 150K "activists".

Of course it does not matter at all if Escolar, Dans and the others who were generously spending (or wasting) their precious time at the Ministry represent the internet community or not. Where was I when such a thing was founded? Fortunately they must be intelligent enough not to worry about that meaningless debate.

What everybody seems to be forgetting about is that we are wasting the energies that we need to build a real knowledge-based economy, founded on innovative, competitive and productive industries. Instead of that we are increasing the gap with truly non-bricked based economies, and trying to enforce the shift in our economy by law. What kind of future do we deserve?

What I have really missed in all the manifiesto mess is a strong voice coming from the Ministry of Industry saying something like: Please kids of the culture, leave the internet alone. We are not going to let you kill our weak internet-based-innovation in the name of your more than questionable interests.

Do they really think that people do not go to the cinema to watch over-subsidized-spanish movies because of P2P?. Juas!. As everybody knows since ever, The Internet is for porn, not for downloading their second-class products.

Music will not disappear in 5 years. It will be a stronger industry because innovators will figure out more ways of making money in the new and global economic scenario, powered by the internet. Of course business models based on the selling of overcharged dvds will disappear. But this kind of transformations happen in every other activity sector when a crisis overcomes or a disruptive change happens. And change and crisis have always happened and the only way to survive is innovation.

And yes, I am really upset. Please keep your hands off the internet!!!!!. You are going to kill our little opportunity to reach developed economies. Yes, Intellectual Property needs to be redefined, but this is not the way. All the creators should have something to say because it is not only a matter of culture. And surely IP must be transformed in something else, apart from giving a right to sue people or closing websites.

Competing globaly with (poor) local resources

Companies use resources (inputs) to produce products and services (outputs) that they sell to other companies or individuals (market) with the aim of obtaining a profit. Some of the resources used as inputs by companies are called commodities because anyone can easily be supplied with them at the same price, quality, etc. Nothing new here (I am not getting a tenure for this).

Other resources can not be taken for granted, they are the base of the competitive advantage of the company. These are for example, resources you manage to be supplied with and that your competitors can not get in the same conditions as you could. Your customers like this, (your great services) and that is the reason why the market lets you survive. Nothing new here either (Definitely I am not getting a Nobel in Economics for this).

Theoretically, commodities do not make a difference for a company, even less in the digital economy but the point is that, sadly, the place where a company is based can be a big threat for its competitiveness. The Open Economy lets competitors interact regardless their location, but reality is that companies are not competing in the same conditions when we look at what they call commodities at their locations.

Lets look at a few examples in the digitally-developed-world like UK, Germany or USA, that are a big deal for companies in countries with a brick-based-economy like Spain:

• Bandwidth is the more obvious one. Cloud computing advances and its amazing possibilities are based on the assumption that Mbits are free (as in beer, not as in speech), or at least, too cheap to meter. Sadly IaaS services will not take off in countries like Spain where traditional datacenter services never reached competitive scales.
  
• Brilliant engineers are also near to be a commodity in some locations, but as there are not many Stanfords and Silicon Valleys, innovative people tend to migrate to that places. Again, the breach will be deeper for companies located in small or medium cities like Valladolid.
• Ubiquitous network access: if you go a few Km away from the city and it is not possible to get a decent Internet connection then Information Society will not speak Spanish for decades. Of course your possibilities for working in mobility are really short as you can not be out of the office. (disclaimer: this post has been written over a GPRS connection with a lot of pain.)
  

From my point of view some of these barriers could be easily mitigated with a good offering at the local airports. But if you have a look at the poor flight offering of an international airport like Valladolid with 3 or 4 flights (of course not daily) you will never consider that remote place to base your company if you plan to interact with customers, providers and staff in other parts of the world.

Most of these resources are not very complex (not even expensive) to develop at a regional level and the impact in the local digital economy is huge. Some regions are understanding this and in a few years their companies will be nearer to be competitive in the global digital scenery. Unfortunately the region where I live and my company is based will not.

Until Spanish governments, no matter national or regional, get a better understanding of the Open Economy, reality is that good engineers will migrate, innovative companies will look for a better place to base their headquarters and innovation and internationalization will be only the buzz words in speeches during the global crisis.