In recent weeks, I’ve written that Microsoft (MSFT) will ultimately muscle-out Apple (AAPL) as the leader in smartphones and tablets. It will be a long war of attrition, but Apple has no durable long-term advantages—what Warren Buffett calls “moats”—to keep most of its customers loyal. And Apple’s insistence on controlling every aspect of both its software and hardware puts it at a disadvantage to a more flexible Microsoft.
With Nokia (NOK), Samsung (SSNLF), and other major manufacturers lining up to produce Windows phones, we will likely see a very different smartphone market a year from now. (To read the whole story, click here. And to see what caused Nokia’s share price to jump 30% last week, see Nokia Lumia sells out in Germany.)
But what about Google’s (GOOG) Android?
It may seem odd that Google gets barely a mention from me, given that the Android operating system dwarfs both Apple and Microsoft in market share. By some estimates (it depends on what your threshold for “smartphone “ is), Android has over 75% of the market. And I myself carry an Android phone.
If you want to know why I don’t take Google seriously as a long-term competitor, consider my recent experience with Google Play Music, which is Google’s (shoddy) attempt to compete with Apple’s iTunes.
Google Play Music sounds great, in theory. It offers you the ability to upload your entire music collection into the cloud and sync all of your mobile devices to one library and one set of playlists. You can stream the songs over the internet or keep copies locally on your phone…or so I thought.
This is where I start to curse Google under my breath. Google Play is incapable of syncing music to an SD card; it can only save your music to your phone’s internal memory. That’s a problem when you have 32 gigs available on your SD card and less than 2 gigs in the phone’s internal storage.
This has been a “known issue” for over a year, and one that Google should seemingly be able to fix in a matter of hours. Yet in order to get Google Play Music to use my SD card, I had to hack my phone with a jury-rigged scripting file.
You simply don’t have these sorts of problems with Apple or Microsoft. Why? Because they are real companies with real business models. With a few exceptions, they actually charge for their products and offer some degree of support.
Given that Google gives most of its products away for free, you have to question how seriously they take them. And given my experience with Play Music, the answer is “not very.”
I should be clear that I am not forecasting an immediate collapse in Google’s share price. I simply have no way to gauge the sustainability of their advertising model, so I find it more prudent to invest elsewhere.
Disclosures: Sizemore Capital is long MSFT.