Digital Wars: A book review by Bob Morris

Posted on: August 21st, 2012 by bobmorris

Digital Wars: Apple Google Microsoft & The Battle for the Internet
Charles Arthur
KoganPage (2012)

Brilliant fulfillment of an extended metaphor

I am grateful to Charles Arthur for adding to my knowledge about Apple, Google, and their leaders as well as for adding substantially to what little I knew about Microsoft previously. (For whatever reasons, Microsoft no longer attracts the attention it once did.) They are three of the most interesting as well as successful companies throughout U.S. business history and their founding CEOs (Jobs, Larry Page and Sergey Brin, and Bill Gates) are among the most regarded. Arthur skillfully provides information and insights as he examines evolving relationships between and among these companies and also among their leaders.

In the Introduction, Arthur introduces a metaphor that equates the Internet (actually the Web) with a network of roadways, and, companies that charge for various products and services with tollgates. “What is certain is that to control any of them is a golden opportunity to extract tolls from the millions and millions of people passing through. The reward for winning any of the digital wars is enormous wealth – and often, the chance to use that to build a fresh set of tollgates on another part of the landscape, or displace an existing rival.” It is helpful to keep this extended metaphor in mind when reading the book while also realizing, at the same time, as Arthur would be the first to point out, that “generals” and their “armies” who compete to win “battles” during digital “wars” are far more complicated than any figurative language can possibly suggest.

Here are a few of the subjects and themes that he discusses that are of greatest interest to me:

o  What did (and didn’t) happen in the companies during the last 15-20 years
o  Leadership similarities and differences between/among Jobs, Gates, Steve Ballmer, Page, and Brin
o  The anti-trust component (e.g. U.S.A. vs. Microsoft and Foundem’s Shivaun Raff vs. Google)
o  Five major “battlefields”: winners, losers, and TBD

•  Computers (Apple vs. Microsoft)
•  Search (Google vs. Microsoft)
•  Smartphones
•  Music Players
•  Tablets

o  Shifts in competitive advantage(s) and why they occurred
o  Why Apple did not allow Walmart and Best Buy to sell its products
o  The significance of the Apple stores
o  Why, for a time, Page and Brin opposed advertising
o  When and why Micosoft began to resemble Apple

Here are three of several dozen passages that caught my eye:

“Even if the search engines weren’t thriving during the dot-com bust, the model devised by Bill Gross of Idealab was. He had come up with a very clever model for advertising: connect advertisers with the results of queries…[He] approached Page and Brin repeatedly, but they didn’t like the idea of ‘polluting’ their organic search results with paid ones. ‘They were so pure about advertising,’ Gross told John Battelle, author of The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture about Google’s early days, ‘We talked and talked but nothing came of it.’” (Page 37)

At the start of 2001, Apple’s leaders sat down to answer a critically important question, What does Apple need? “The answer: a new gizmo that would hook up to their digital hub – the Mac (and only the Mac) – and offer some service that everyone would covet. Get them to buy the gadget and they’d buy the Mac as well,” a gadget that would become part of the Apple ecosystem. Later, Jon Rubenstein (head of Apple’s hardware products division) was among those who met with Toshiba engineers in Tokyo who showed them a tiny drive. “Rubenstein saw at once that it could be used to build a music player – the device that could hook up to the Mac and make the most of the digital hub.”  The iPod would be Apple’s first big consumer electronics gadget. (Page 83)

“On August 2011, Apple’s market capitalization briefly rose to $341.5 billion, edging it just ahead of Exxon, until that morning the highest valued company in the world…At the end of the day it was worth $346 billion; Microsoft was worth $2143 billion and Google $185.1 billion. Compared to the end of 1998 (Apple $5.4 billion, Microsoft $344.6 billion, Google $10 million), the aggregate wealth of the companies had more than doubled. Microsoft, though, had shrunk by 40 per cent, after being outdistanced first in search, then in digital music, and then in smartphones – in the latter category by both companies.” (Page 239)

These are only three of countless passages throughout the book’s lively and eloquent narrative that caught my eye. Readers will gratefully welcome the abundance of information and insights that Charles Arthur provides. He has created a context, a frame-of-reference, for battles yet to be fought and for leaders yet to become engaged in a “war” that may never end.

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