a16z Podcast: Apple and Google Won the Mobile OS War, But a New War Has Already Begun

Episode Summary

Executive Summary: Benedict Evans argues the mobile OS battle is effectively over: iOS and Android have won, while Windows Phone, BlackBerry, and fringe efforts are trapped at the low end. The real competition has shifted to platforms and services built on top of smartphones—identity, messaging, discovery, payments, and cloud-based engagement—where Apple and Google pursue different strengths and third parties still have room to innovate.

Main Topics: Mobile OS market consolidation (Priority: 5/5): Evans says the smartphone OS war is largely settled, with iOS and Android dominating global usage and the remaining contest confined to low-end and niche segments. Value concentration in iOS vs Android (Priority: 5/5): He explains that iOS captures a disproportionate share of high-value users and transactions, while Android includes the full range of consumers, lowering its average value metrics. Failure of traditional PC analogies (Priority: 4/5): Evans warns that PC-era platform dynamics don't map well to mobile because phones are bought by individuals for experience and design, not corporate standardization. The new war: services on top of mobile (Priority: 5/5): The real competition has moved to apps, messaging systems, identity, discovery, and payment layers that sit above the OS and may redefine what a 'phone' or 'app' means. Apple and Google as different types of platform companies (Priority: 5/5): Apple focuses on tightly integrated hardware and user experience, while Google is a data and machine-learning company using mobile as a channel for reach and feedback. Discovery and distribution remain unsolved (Priority: 4/5): App stores resemble early Yahoo directories, and there is still no clean equivalent to search/SEO for mobile discovery, especially as apps and web experiences blur. Third-party opportunities and ecosystem leverage (Priority: 4/5): Despite the dominance of Apple and Google, companies like Facebook, WhatsApp, WeChat, Line, Amazon, and Nokia can still build meaningful layers and control user relationships.

Key Arguments: The OS war is over in practical terms because iOS and Android already command nearly all meaningful smartphone demand. Android’s average monetization looks weaker than iOS because it serves both high- and very low-value customers, not because all Android users are low value. Apple’s product strategy fits phones better than PCs ever fit Apple, because phone purchases are driven by personal experience, design, and feel. Even a dominant OS share does not necessarily create winner-take-all economics for every business on top of the platform; retailers and banks still need both iOS and Android. The next major competition is not for the OS itself but for control of user interaction layers: messaging, identity, discovery, payments, and contextual services. App distribution and discovery are still immature, and the mobile world lacks a robust equivalent to web search and SEO. Apple is extending downward into deeper hardware integration, while Google is moving upward into cloud services and machine-learning-driven experiences. Google and Apple both 'won' the platform war, but they won different battles: Google wants reach and data, Apple wants a loyal customer base and strong device sales.

Data Points: Apple share of phones sold: about 10% - In the launch quarter, Apple’s share of all phones sold globally Android share of phones sold: 45% to 50% - Global smartphone sales share, including non-Google Android variants in China Google Android share of Android: about two-thirds - Portion of Android devices using Google services Non-Google Android share: about one-third - Android devices in China without Google services Residual feature-phone/non-smartphone market: 5% to 10% - Remaining users who may not convert to smartphones due to cost Projected iOS devices in use: 700 million to 900 million - Estimated installed base in the next few years Current iOS devices in use: about 500 million - Approximate installed base at the time of the discussion Projected Android devices in use: 2 billion to 3 billion - Estimated installed base in the next few years Global mobile phone users: 3.5 billion to 4 billion - Approximate total number of people with phones worldwide People really spending money: 2 billion to 2.5 billion - Estimated economically active audience most relevant to developers and tech companies Smartphone users as share of Earth population: about half - Projected smartphone penetration globally PC installed base: about 1.5 billion - Comparison point for mobile scale Low-end phone price range: $50 to $75 to $25 - Price points where the remaining growth is expected Windows Phone USA sales last quarter: 500,000 to 600,000 units - Example of how small Windows Phone volume was in the U.S. Typical startup then vs now: 100 people and $10 million vs 10 people and $1 million - Contrast between late-1990s internet startups and mobile-era startups Users in archetypal startup then vs now: 1 million vs 100 million - Growth scale shift from first internet bubble to mobile era

Pivotal Quotes: "Yes. But it’s not quite clear what that means." — Benedict Evans: Answering whether the war for the mobile OS is already over "For all practical purposes, we have two substantially ecosystems." — Benedict Evans: Summarizing the dominance of iOS and Android "The smartphones are the dominant computing platform and the dominant Internet platform and will completely supplant PCs in importance." — Benedict Evans: Describing the long-term significance of mobile

Implications: Mobile strategy now centers on layers above the OS: discovery, messaging, payments, and identity. Companies should optimize for platform access and customer relationships, not OS wars. Developers must plan for iOS/Android dominance while watching for new interaction models beyond the app.