Don’t Play Leapfrog with a Unicorn

With much anticipation, Monday brought the now annual ritual of iPhone day. The tech blog coverage was predictably deafening yet little has so far been said about the rabid stomping elephant in the room. I’m talking about the passive aggressive counter-attack Apple launched against Google.

The iOS 4 was previewed on April 8th and the first move into Google territory, the iAd network, was announced. Jobs’ justification was rightfully that Google made the first move and Apple is just protecting its turf. And if you step back a bit, what Google pulled was in fact an appalling betrayal. Schmidt should have resigned from Apple’s board much earlier. Android was almost ready for primetime by the time he finally did (or got booted, the real story will come out one day).

With the official unveiling, Jobs also pocked Google in the eye by adding Yahoo and Bing to the web search options. And literally added insult to injury by quoting a developer that made more in one day selling an iPad app than in five years of Google ads on his site. (This brings up the brewing debate of app economy vs. web applications which I’ll leave for another post.)

In an effort to find the next cash register, Google has overplayed their hand. (See my comprehensive Google retrospective perspective.) The Nexus One failure must have hurt (Google’s first and likely last foray into hardware and direct sales that was recently abandoned, if you are not familiar). Google is not a company that is used to such grand failures (unlike Microsoft in the last decade). And now they’ve really pissed off one of their most important allies. Android will be a force to be reckoned with for sure, but the complete seamless package of perfection that is iPhone it is not. And there is no way a software company, any software company, can compete in the hardware game with Apple.

Apple knows that for a new product to succeed it has to be twice as good and half the price. Given that often their products are far better than twice as good, they can actually charge a premium. When Microsoft try to unseat the iPod with a slightly cheaper, incrementally better device (minus the iTunes ecosystem) they weren’t shinny enough to get consumers excited. And just when they thought they had the better device, here comes Apple with the next generation announcement that rose the bar that much higher. The same thing just happened with the Android update announced only a few weeks ago that measured itself against the one year old iPhone experience. They didn’t expect Apple to announce the next leap in June just like they’ve done the last three years in a row? For someone to be an Apple-anything killer, they have to out-innovate by an order of magnitude not by a series of incremental feature-matrix checkboxes.

Google’s gone from a company that was unbelievably great at their specialty product to attacking other businesses at all costs. The true cost in this whole debacle is their fading halo of “do no evil”. They are the new Microsoft. And I hope that Jobs learned his lesson the first time around. (Watch Pirates of Silicon Valley if you need a refresher.)