

Why the integrated approach to mobile devices is winning - jayliew
http://cdixon.org/2012/06/25/why-the-integrated-approach-to-mobile-devices-is-winning/

======
hristov
I usually agree with Chris Dixon, but here I believe he is working from an
incorrect premise.

First of all it is not at all certain that the integrated approach is winning
for smart phones. In fact depending on what definition of winning one uses, it
can be easily said that the integrated approach is losing. There are more
android devices being sold than iOS devices and the gulf is widening.

Here Dixon uses a bit of sleigh of hand by stating that Android is integrated
now because Google bought Motorola. This is not true. Google bought Motorola
for the patents, there is no indication that they will change their Android
strategy. They still offer the Android software to all other makers at the
same terms as they do to Motorola. And furthermore, Motorola is not even the
largest Android phone maker. That honor belongs to Samsung and they are very
much distinct from Google.

It is also not exactly true that the non-integrated approach always
compromises performance. Remember the days of the old pre OSX macs? Those were
truly integrated devices with a closed and proprietary architecture from top
to bottom. Were they better performing than the PCs? Not even close.

There is an advantage in performance for the non-integrated approach that
business people tend to discount. A non-integrated system is much more open
and thus it can easily benefit from improvements from unexpected directions.
Thus, for PCs we had the improvements like better sound cards, consumer grade
video accelerators, and a shitload of improvements of motherboards, memory
peripherals, etc. before apple got them. The open PC was ready to take
advantage of any brilliant idea anybody in the world ever thought of. For the
mac one usually had to get permission from the Apple headquarters first and
Apple management were not always perfect or fast.

This is the great advantage of open systems. Their disadvantage is that there
are usually problems with interfaces, etc. This was not much of an issue for
the relatively large and well powered PC, but may be an issue for cell phones
where power, heat dissipation and space are all at a premium.

In general, it seems that the integrated approach wins out in the beginning,
when there is no broad marketplace open systems can take advantage of. But
after a while, the non-integrated approach wins out. It seems that relatively
less-integrated smart phones are slowly but surely beating their more
integrated peers. For tablets, however, integration still rules.

~~~
kunle
>First of all it is not at all certain that the integrated approach is winning
for smart phones. In fact depending on what definition of winning one uses, it
can be easily said that the integrated approach is losing. There are more
android devices being sold than iOS devices and the gulf is widening.

If you define winning as profits generated (which is an important definition
because sustained profits earn you the right to keep playing, while market
share does not), then the integrated approach is definitely winning, as Apple
consumes the lion's share of mobile profits (there are several sources but for
reference see here: [http://www.asymco.com/2012/05/03/the-phone-market-
in-2012-a-...](http://www.asymco.com/2012/05/03/the-phone-market-
in-2012-a-tale-of-two-disruptions/)).

How things play out in 10 years is anyone's guess, but for now the profits,
momentum and sentiment remain firmly on the side of the integrated approach.

~~~
nl
Yeah, that "Apple consumes the lion's share of mobile profits" is rapidly
becoming a myth.

Eg: [Samsung] _posted a record net profit for all its divisions of 5.05
trillion won ($A4.43 billion) in the first quarter, thanks largely to strong
smartphone sales._ [1]

[1] [http://www.smh.com.au/digital-life/mobiles/samsung-
galaxy-s3...](http://www.smh.com.au/digital-life/mobiles/samsung-galaxy-s3-to-
hit-10-million-sales-20120625-20xvx.html#ixzz1yskenc7t)

~~~
coob
1) Why are you referring to mobile profits, then citing the net profit of the
entire company? Samsung do a lot more than phones.

2) Even if you're comparing the whole company's profits, AAPL still win, they
raked in 6 billion USD in profit last quarter.

~~~
nl
Did you read the quote, especially this part: _thanks largely to strong
smartphone sales_?

There is no argument that Apple is making more money. The point is that others
are also making excellent mobile profits.

------
6ren
I've studied Christensen's three main books; I find them very appealing but
I'm not quite convinced by the component-vs-integrated idea.

While an integrated approach can squeeze out more performance, does it predict
industry structure? Here, it's true that the iPhone's integration greatly aids
its performance; and performance is certainly needed in this market.

But (IBM) PC's were never integrated... and performance was certainly in
demand in that market (for years and years people would keep buying faster
PCs). And, to compare them with Apple's Macs at that time (which _were_
integrated, just like the iPhone), PC's often had better performance per buck
than Macs.

Christensen argues that this is because the performance enhancement was more
due to particular components (especially the CPU), rather than their
integration. Thus, those key components became the focus for improvement. So,
the result of Intel improving CPUs (for example) was that the performance of
the whole PC increased. This saves the theory... in fact, he turns it around,
and points out that Intel CPUs were integrated _internally_ in order to get
that performance.

While I do find this very interesting, I get the feeling of _post hoc_
analysis in too many of his examples... and a theory that doesn't predict the
future is just not quite compelling for me. :-)

BTW: Christensen says that integrated and component approaches have different
strengths, and which one wins depends on what that market needs. If the market
is desperate for performance (and will pay a premium for it), then an
integrated approach will be more popular and profitable. But if the market
doesn't really care about performance, but instead wants something that is
customizable, then a component approach will win. Markets change over time.
Typically, some feature gets better until it's "good enough" (most people
won't pay for more of it). He claims there's also an alternation between the
levels of a system: if "integration" wins at one level, then
"componentization" wins at the parts that are integrated e.g. PC's were not
integrated, but their parts (CPUs, HDD etc) _were_ integrated internally...
but the parts used within them switched back to being not integrated.

~~~
joe_the_user
I haven't read Christensen in particular but there's another factor which
could distinguish PCs and Phones.

PCs were in demand for more or less one quality, power (with screen resolution
making maybe two). A phone is in demand for a multitude of qualities - size,
power, batter life, screen resolution, ergonomics, etc. A PC that was twice
the size, twice the power and half the price of its competitor could do well.
Phone not so much.

With a multitude of constraints to combine, it's not surprising that software
hardware integration happens. Cars are integrated systems more than a hundred
years after their invention whereas you can make do buying different
components for your house.

~~~
6ren
First, I'll correct my terminology - it's not "componentized" but "modular".
Both integration and modular approach have components, the distinction is that
different modular components can be used; there are many components that
fulfill the same interface in a modular architecture, whereas in an integrated
architecture, the components are interdependent, so you can't just swap one
out. It's similar to reusing modular code: you can have different
implementations of a List, and they all work the same - and, since it's
standardized interface, many different programs can reuse them. But in
integrated code, if you change one thing, you have to change everything else.
So you can't mix and match, and you can't reuse the code between projects. So
"modularity" is really about the cleanly defined interfaces.

Yes, I agree phones are more constrained. But for evaluating the theory, how
can you tell how constrained it has to be, to count?

For example, Carmack says that integrated CPUs and GPUs are about twice as
fast than as separate modular components (so, for the same power components,
an xbox360 can be twice as fast as a PC). And yet, even though graphics power
is in demand, the PC market was (and still is) dominated by modular GPUs.

Curiously, Christensen doesn't provide any statistical data across industries
(but he did do this for his basic "disruption" idea). I think it's more that,
if some quality is in demand, and if that quality can be delivered best by
integration, then that might be how it happens. It's a softer theory. I guess
the simple answer is that this idea of integrated vs. modular is just one
factor of many, so it's not predictive alone.

BTW: surprisingly, cars are _not_ integrated according to Christensen - they
are assembled from different components that can be mixed and matched (e.g.
the same electrical system can be used in several different models; and
different car, same engine; the same chassis can accommodate different
versions of each component, because they have bolts in the same places, and
use the same interfaces in other respects). This happened because people don't
want faster cars (that integrated components are better at delivering); they
want safer, more economical cars. But here I have doubts - it seems both those
could be better achieved by integration (esp for efficiency).

~~~
joe_the_user
Hmm,

 _Yes, I agree phones are more constrained. But for evaluating the theory, how
can you tell how constrained it has to be, to count?_

That is a good question.

It seems like one simple approach would be to just generalize the big three
aspects of phones and cars: Space, Energy and Time. These are kind of the big,
orthogonal constraints of our world. You can probably dig deeper and find some
others but that's what occurs to me.

People always want cars that are faster, more efficient and fit in a given
form-factor. Same with phones. These matter less with desktop machines or say,
houses. Laptops are somewhere in-between.

I guess a low-end car might be somewhat less integrated than a higher end car.
Etc...

------
dr_
This may hold true in the short term, but not so certain about the integrated
approach in the longer term.

It's really not just about mobile devices, it's about a new platform which is
touch and voice based. Its not hard to envision a future where large screens
that you can interact with are all over the place, from cars, retail stores,
hospitals, replacing poster ads, etc. by touching or speaking with them. These
screens will likely be made in different sizes, to accomodate different needs
and locations. It's unlikely, in such a scenario, that Apple is going to be
manufacturing screens of all sizes to accomodate everyone. It's more likely
that a non-integrated approach such as Microsoft's or Google's (or Apple in
the unlikely event they change their mind) will deliver on a large scale. The
intention of Surface, if you ask me, is Microsoft's way of staying in the game
until the above scenario bears out.

~~~
onedev
Apple doesn't manufacture screens, they buy them off of Samsung.

~~~
nopinsight
This is more about the ecosystem rather than just screens.

------
jkubicek
I have a different theory. The integrated approach to manufacturing is
_required_ to create a premium product and only after a market becomes
mainstream (i.e. no longer populated solely by early adopters) is there a
significant demand for premium products.

------
teyc
iOS won because it was a greenfield implementation, and benefited from having
no backwards compatibility issues to deal with. In addition, the outsourcing
model of building hardware was largely perfected.

Taiwanese manufacturers proved to be willing to become OEM makers for branded
products, and a lot of risk has been taken out of the system. Apple couldn't
have managed this in the 80s.

The same pattern has been replayed many times over. Even the humble PC was
just a toy before Moore's law allowed it to replace minicomputers and
eventually take over departmental servers.

------
batgaijin
Oh, come now. Mobile systems, the one place free software can still wreck
havoc, is locked off by hundreds of artifical speed bumps. It is purposefully
hard to mess with the os level on these devices.

How many phone distros are there? How easy are they to install? Why is nobody
shocked by these answers?

Turing would be fuckin screaming with stallman; we're regressing and nobody
cares.

------
ernesth
That perfectly explains why nokia and blackberry are the biggest winners of
the mobile devices market.

------
snowwrestler
I will admit upfront that I lean toward the "great man" theory of history, so
perhaps take this with a grain of salt.

We all know the old saw that "ideas are a dime a dozen, what matters is
execution." What if the strategy (integrated vs. non-integrated) matters a lot
less than how well it is executed?

Maybe the reason the "integrated approach" is winning is really that Apple is
winning, and the reason Apple is winning is simply that they are executing
better than their competitors.

As several others have pointed out, the non-integrated approach kicked Apple's
ass in the PC market for years. I think that is simply because Microsoft,
Intel, and their hardware partners executed better than Apple. Dell made a
better computer than Apple and they did it faster and cheaper too, and
marketed it extremely well. Of course they won.

Today with the iPad, it is Apple who is designing a better product, managing
the supply chain to make it faster and cheaper, and marketing it extremely
well. Their supply chain is so good that [HP could not even get their hands on
equivalent parts to build a competitor.[1]

So I think Microsoft can try to go integrated with Surface...it won't matter
until they make it better, faster, cheaper than the iPad. Maybe Horace Dediu
asked exactly the right question: Who will be Microsoft's Tim Cook?[2]

[1] [http://www.theverge.com/2012/6/5/3062611/palm-webos-hp-
insid...](http://www.theverge.com/2012/6/5/3062611/palm-webos-hp-inside-story-
pre-postmortem) [2] [http://www.asymco.com/2012/06/20/who-will-be-microsofts-
tim-...](http://www.asymco.com/2012/06/20/who-will-be-microsofts-tim-cook/)

edit: link formatting

~~~
JVIDEL
It says HP wouldn't invest in new factories to get the parts, not that it
couldn't get them _because_ of Apple.

