By Lyons, Daniel
Newsweek , Vol. 155, No. 25
Apple Inc.--Product information
Google Inc.--Product information
Computer industry--Product information
Computer industry--Officials and employees
Computer industry--Industry forecasts
Online information services--Product information
Online information services--Innovations
Smart phones--Product information
Tablet computers--Product information
Chief executive officers--Beliefs, opinions and attitudes
T-Mobile G1 (Smart phone)--Product information
Apple iPhonea4 (Smart phone)--Product information
Apple iPad (Tablet computer)
Jobs, Steve--Beliefs, opinions and attitudes
Byline: Daniel Lyons
It's Apple vs. Google in the battle over the future of computing.
When Steve Jobs took the stage for his keynote address at Apple's annual developers conference last week, he had plenty to say about the new iPhonea4, calling it "the most precise, beautiful thing we've ever designed." He waxed on about its mind-blowing video-chat features and its gorgeous display--even though the Wi-Fi connection failed during his demo. He didn't neglect the iPad, either, pointing out that Apple has sold 2amillion in two months--or about one every three seconds. But Jobs didn't say one word about the venerable old Mac, even though the conference used to be the place where Apple showed off the new features coming to its line of computers.
It's a sign of the times. Right now the computer industry is undergoing one of its periodic upheavals in which an aging platform is swept away and replaced by something newer, cheaper, and better. In this case, the victim is the personal computer. Just as mainframes gave way to minicomputers and minicomputers gave way to PCs, the PC is about to be eclipsed by mobile devices. Apple's new smash-hit product, the iPad, might seem like a toy, but soon it and other mobile devices will become our primary computers, replacing laptops and even desktop machines.
And just like the last time around, a battle is brewing to see which company will rule the industry. During the PC wars, Microsoft triumphed, ending up with 90 percent market share, which left Apple with table scraps. In mobile, Jobs sees a shot at redemption. But this time he faces a new opponent, Google, whose mobile operating system, called Android, has emerged as the biggest rival to Apple.
As the presence of Google indicates, it's not just the machines that are changing: the industry's entire business model has been transformed. Instead of laying out big bucks for a huge personal computer that can store hundreds of gigabytes of data, we'll end up using lots of simple, inexpensive mobile devices--appliances, really--to manage photos and videos and music that will be stored online, somewhere out on the Internet cloud. For computer makers, the money will be made not just in the device itself but also in the applications and content and services that can be sold around it, as well as the advertising that can be delivered through those shiny little screens. "The times they are a-changin'," Jobs told a blogger in a recent e-mail exchange, "and some traditional PC folks feel like their world is slipping away. It is."
Laptops and desktops aren't going away overnight, of course. But a glance at Apple's revenue by product line shows just how much the times have already changed. Sales of Macs are slowing while revenue from the iPhone is booming, up from $631amillion in 2007 to an estimated $21abillion this year. Next year, mobile devices will represent roughly half of Apple's total business--and deliver twice the sales of Macs, according to RBC Capital Markets. …