Hardware without hardware

Enrique Dans. Professor. IE Business School

28 April 2014

A virtual winner appears to be emerging in the battle between Apple and Google to dominate the Smartphone market, given that most sets currently use the Android system. But the real war starts now, with the fight to dominate sales of devices like tables, laptops and smartwatches. It would appear that success could be achieved through a strategy based on controlling hardware without actually producing any…

A few weeks ago Google revealed its strategy for the wearables market, which includes devices like smartwatches. It’s a very interesting market that looks set to expand fast.

What really stands out is Google’s strategy with regard to these devices. It has consolidated its products into a small number of lines that are easy to understand. It aims to dominate the hardware market, not by producing hardware but by creating an open software platform that is free of charge to any manufacturer that wants to use its devices.  

The strategy worked perfectly well in the case of smartphones. In spite of Apple’s efforts to redefine the sector at the time, today the vast majority of handsets around the world use the Android operating system, giving Google enormous power in spite of the fact that it has never produced a single smartphone.

The Android strategy has been so amazingly successful for Google that it now seeks to duplicate it in all segments. In tablets, iPad’s leading position, again thanks to the art of reinvention, is under threat from a much higher growth in sales of Android devices. In the laptop segment, Google Chromebooks are growing surprisingly fast, following a similar strategy, namely that of fostering competition among manufacturers by offering an open system.

Google has just announced that it has the same plans for the fledgling smartwatch segment - an Android system adapted to these devices, added to the work they have already done with fashion brands and chip and consumer electronic producers to ensure its adoption. The timings are different. In the case of smartphones and tablets, Google was reactive and arrived late on the scene. On this occasion, it is taking a proactive approach and wants to get in on the act early.

But the common aim is the same: to dominate the hardware market without producing any hardware. For the time being, it is an unbeatable strategy.

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