Dogfight: How Apple and Google Went to War and Started a Revolution (25 page)

Yet by 2011 the world had come full circle. If you counted desktop
and
mobile operating systems together, Apple’s computing platform was now about as big as Microsoft Windows and Windows Mobile. And it was fitting that Dell had been hit among the hardest. When Jobs returned to Apple in 1997, Michael Dell had declared he had so little faith in an Apple recovery that if he were Jobs, he’d “shut Apple down and give the money back to the shareholders.” “Steve hated the fact that the Macintosh wasn’t mainstream right away—that everyone wasn’t just fucking sweating to get one,” the Jobs confidant said. “So we talked a lot about how we could make sure the iPad caught on right away.”

Andy Rubin and the Android team at Google scrambled to keep up with the relentless pace of Apple’s innovations. But in 2011 they were being outflanked on almost every front. Yes, there were more Android devices in use than iPhones or iPads combined. But platform size was turning out to be just one, not the only, measurement of dominance in the Apple/Google fight. With the iPhone
and
the iPad, Apple still had the coolest, most cutting-edge devices. It had the best content for those devices. It had the easiest-to-use software. And it had the best platform for making content owners and software developers money. What Jobs understood—and what Google executives were furiously trying to get their heads around—was that this was more than just a fight over which company would dominate the future of technology. It was a battle over which would control the future of media too. The iPod was a great-looking device, but what made it popular was all the music consumers could easily buy for it. iPhone sales didn’t really take off until Jobs introduced the app store. And the iPad became mainstream only when Jobs convinced big media companies to let consumers shop for an endless supply of books, newspapers, magazines, movies, and TV shows.

Indeed, the more successful Apple became, the more Google and Android hewed toward Apple’s “we control everything” approach. To make Android software look cooler and be easier to use, Rubin hired the designer Matias Duarte from Palm in the middle of 2010. And to make Android phones and tablets sell better he started dictating how certain Android phones were designed. While these so-called Nexus devices are built by manufacturers such as Samsung or LG or HTC, they are largely designed and sometimes even marketed by Google.

But this was not an easy adjustment for Google’s and Android’s very engineering-driven culture. It wasn’t until Google released the Nexus S at the end of 2010 that it had a top-selling phone made this way. And it wasn’t until it released the Nexus 7 in 2012 that it had a top-selling tablet. Google didn’t have a meaningful competitor to the iTunes store until it released Google Play in 2012, which combined its Android app store with its own efforts at distributing movies, books, games, and TV shows.

You’d think that over the years Google would have developed
some
affinity for the sales and marketing skills necessary to make a dent in the media business. Virtually all its revenue came from advertising. It owned YouTube—arguably the biggest distributor of video in the world. But Google had succeeded because it
rejected
these social and business mores. It had used technology to take most of the sales and marketing
out
of advertising and distribution and turn them into giant number-crunching exercises.

Google is trying to develop these sales and marketing skills today, but throughout 2012 and 2013 it continued to demonstrate that it has a long way to go. In 2012, when Google showed off an orblike device called the Nexus Q—which wirelessly streamed music, TV shows, and movies to any device in the house—the public response was so negative that Google decided to scrap the project entirely and not even offer it for sale. The Nexus Q was supposed to challenge the dominant streaming-media devices made by Apple and Roku. But Google said the Nexus Q would cost three times that of its competitors’ boxes and would work only with consumers’ existing entertainment libraries or with Google-supplied content from its store. Consumers couldn’t, for example, watch Netflix or Hulu Plus on it. In mid-2013 Google tacked the opposite way with Chromecast, a $35 TV dongle that turns any smartphone into a remote.

In 2013, it also offered the Chromebook Pixel, a laptop with a touchscreen that was one of the sharpest ever made. But it seemed like more of an experiment than a real product that anyone would buy. Conceptually it worked like a smartphone or tablet—that is, with most of consumers’ information stored not on the machine but in the cloud. It came with a tiny 64 GB hard drive, no DVD drive, and not an operating system from Microsoft or Apple but Google’s own browser-based setup called Chrome. It wouldn’t run Microsoft Office.

Consumers might have made that adjustment if the Pixel were lighter than a typical laptop, had a cooler, more functional design, or better battery life. Google’s Office substitutes have become very competitive. But the Pixel wasn’t lighter, better looking, or less power hungry. And it cost $1,300, twice the price of an iPad with a similar screen.

*   *   *

In retrospect it’s odd that it took the iPad and not the iPhone to help the media business see a future they wanted to be part of, not fight. One of its holy grails has always been to reach customers wherever they might be. Nothing was better at that than a smartphone connected to the Internet. No other device could consistently reach customers
everywhere—
not only when they planned on reading a book or watching a movie, but also during their many in-between moments—while they were standing in line, using the restroom, or having a moment of boredom in a meeting or a show. But back then content executives thought the screen was too small—they couldn’t imagine their customers watching a movie or reading a book on it. And advertisers couldn’t imagine flashy, high-budget campaigns on it.

The iPad, on the other hand, with a screen nearly the size of some magazines, offered all manner of possibilities. Could publishers offer digital subscriptions that consumers would actually pay for and wean them off the expectation that their content would always be free? Could publishers sell advertising at the same price as in their printed publications? Could Hollywood change the way it charged cable and satellite distributors for its content by making it more mobile and offering new interactive features?

The answer to most of these questions turned out to be yes. By the time Jobs died, in October 2011, users could read or watch virtually anything on an iPad. Fueled with books, magazines, newspapers, movies, and TV shows from iTunes and the app store, live TV from cable, plus content from other online services such as Amazon, Netflix, Hulu, and HBO, the iPad had become the most important new media-consumption device since television. Subscriptions to hundreds of magazines were available through iTunes. More than 1 million e-books were available for instant download through Amazon’s Kindle app or the iTunes bookstore. Almost any movie or TV show you could think of could be found on one of the streaming services.

Media executives’ negotiations with Apple and one another were bumpy at first. Newspaper and magazine publishers were worried that selling their content through iTunes would give Apple ownership of their subscriber lists, perhaps their most critical asset. Television studios such as Viacom and News Corp. worried that the cable companies would use the iPad to massively expand their audience and ad revenues but not pay them a cent.

Indeed, for about eighteen months it looked as if few of the issues would be resolved. In 2010 and 2011 separate teams of executives from Condé Nast and Time Inc. made almost monthly pilgrimages to Apple’s headquarters in California to explain why they would never negotiate the rights to their subscriber lists. But after roughly a dozen meetings, it still seemed as if Apple didn’t understand. Apple’s only big concession was agreeing to put up an “opt-in” notice each time someone subscribed through iTunes. Apple would ask subscribers, in effect, “Would it be okay if we shared the name, address, and contact information you’ve just given us with the publisher?” Condé Nast and Time Inc. executives were convinced this was just a mealymouthed way of turning them down. Their research showed that subscribers almost always responded no when presented with questions like this.

Instead, it turned out, most subscribers said yes. Within six months most of the big magazine and newspaper publishers were selling subscriptions to their content through the app store. They had to give Apple 30 percent of whatever new subscriptions they generated, but given what it cost to acquire new subscribers via analog methods, that seemed like a bargain. It typically costs $10 to $15 to acquire each magazine subscriber. In addition there is roughly $1 of manufacturing and distribution costs built into each magazine copy, compared to about ten cents for each digital copy. “The early response [when subscribers were first asked to share their information] was better than fifty percent, and now [in 2013] it’s running at better than ninety percent,” said Scott Dadich, editor in chief at
Wired
. As the magazine’s design director at the time he was part of the negotiating team for Condé Nast.

The row in the television industry was even more heated. In early 2011 Time Warner Cable, Cablevision, and Comcast all came out with slick iPad apps that enabled the device to be used as a portable TV in different rooms of a customer’s house. Content companies such as Viacom and News Corp. said that watching their shows on anything but a television degraded their value and violated their copyrights. For a few months starting in April 2011, Time Warner Cable pulled News Corp. and Viacom programming such as the
Daily Show
from their iPad apps. And in June, Viacom sued Cablevision for
not
pulling its programming from their iPad apps. On the one hand Viacom’s position seemed preposterous. How was it possible that a small TV screen was okay but an iPad was not? That no doubt explains why the suit was settled quietly three months later. But it also illustrates how important and disruptive the iPad had become.

Once media companies were freed of their initial worries about the iPad, most of them embraced it. Indeed, it sparked a wave of new, innovative, and popular approaches to consuming news and entertainment that few had seen out of the media industry in decades. Book publishers rushed to make all their titles available in downloadable formats. Newspapers and magazines scrambled to develop well-designed iPad editions. Cable companies such as Comcast and Time Warner Cable developed the watch-TV-anywhere software mentioned above. By the middle of 2011 one of the hottest new iPad apps was HBO GO, from the HBO division of stodgy Time Warner.

With an HBO cable subscription, HBO GO allowed consumers free access to every episode of every show HBO had ever produced. If you had ever missed an episode of
The Sopranos
,
Curb Your Enthusiasm
, or
Entourage
, you could find it there, not to mention the roughly two hundred movies that were available to every HBO subscriber on his or her television. Previously a show’s fans had had to spend hundreds of dollars buying DVDs if they wanted to catch up on missed episodes or watch a series they’d missed completely. Released in early 2011, HBO GO had 4 million users four months later. Total users have settled at about 7 million, or 20 percent, of HBO’s total 35 million subscribers. The question HBO president Eric Kessler gets the most often now is when consumers will be able to get HBO
without
getting cable.

The iPad also sparked a flurry of start-up companies that saw it not just as another means to read or watch but as a device that could change that experience altogether. The software entrepreneur Mike McCue and the Apple veteran Evan Doll started Flipboard in 2010 by asking a simple question: What if web pages looked like well-designed magazine pages instead of the jumble of headlines on a monitor we’d begun to grow used to? What if they were updated in real time and customized with personal Facebook and Twitter feeds? “The web isn’t broken. It just needs a face-lift,” McCue likes to say.

It was a captivating conceit: the World Wide Web had revolutionized the world, but in the nearly twenty years since Netscape started it all with the first Internet browser, it had never undergone a redesign. Since the iPad now forced users to change the way they interacted with their screens—with their fingers instead of a mouse—why not also change the design assumptions underlying the content being interacted with? And moreover, said McCue, why not address the concerns of advertisers in the redesign process? Advertisers considered buying ads on news websites to be a necessary evil rather than something they sought out. Why not create a platform that actually proved attractive to and effective for advertisers?

McCue was an old hand at the start-up game. He’d been the vice president of technology at Netscape in the mid-1990s before leaving to cofound Tellme Networks, a company that built automated call-answering software for corporations. Microsoft bought it in 2007 for $800 million. So when McCue and Doll started Flipboard, they had the credibility and contacts needed to get attention for their idea. Jobs himself took the time to look at the app before Flipboard launched, and by the end of 2011 it had become App of the Year and one of the best-known start-ups in Silicon Valley. Money and attention from top venture capitalists such as John Doerr flowed in. So did résumés, and not just from people at top engineering companies such as Google, Apple, and Facebook, but from people at top media companies such as Time Inc. McCue hired Josh Quittner from there to manage all of Flipboard’s media partnerships. Besides being a top tech writer at
Time
, he’d edited
Business 2.0
and helped lead Time Inc.’s iPad app development.

The iPad also spawned Atavist, a rethink of what a magazine would look like in the digital age. When they started it 2010, the journalists Evan Ratliff and Nick Thompson, along with the programmer Jefferson Rabb, wondered whether a newly conceived publication would be just text, photographs, and graphics or include video and audio too. Could readers be allowed to choose how much or how little beyond the words they would experience? Previous attempts at “enhancing” the written word had often seemed little more than distractions. Was there a way to employ these new ways of experiencing stories to ensure they were true and enriching additives?