Google and Apple are like chess players in a smart game – their war is raw. They are as thran as a pair of cloth galluses. Both players attack: they have developed a cognitive awareness of each other as competitors and like Radar O’Reilly they always know the rival strategy before the rival does. Players ought to know their weakness in a game. Their weakness, paradoxically, is their rivalry. It is rational now for Apple (White) to defend iOS with selected roll-out of iNext smart pawns supporting iCloud to Apple Pay to e-SIM to iCloud Voicemail to MVNO in 2016 and beyond. But with Google (Black) in attack allowing its King’s Knight (Android) to be positioned across the chess board so as to weaken White’s centre pawns both players could be worse-off. Maybe Pushkin had a point in preferring a bad peace to a good quarrel.
In this essay we try to argue that they should lose the competition and collaborate together in a partnership. Both players would be better off. Their individual success lies in the creative technologies and innovations they have created unilaterally. From the recent iPad Pro launch to Google’s voyage into wireless. Their future success, however, in the evolving complex market of artificial intelligence, cyber-genetics and autonomous devices, is mutually interdependent. Maybe Apple will buy Tesla. Maybe Google will navigate successfully the unchartered technical land of the wireless Sirens. Who cares?
Google throws the gauntlet down at every opportunity but Apple remains secretive, playing a Fabian strategy of delay. Apple products can fail: who remembers Newton, Apple’s personal digital assistant? Or who remembers the Pippin game console system? Or the befuddled roll-out of its mapping service? Or that Apple TV does not support 4K? Or that Apple lags behind in the evolving complex market of artificial intelligence, cyber-genetics and autonomous devices. Covertly, Apple may have the upper-hand. Even if Apple does not have the latest device or innovation once it decides to enter a market, any market, competitors find themselves in Apple’s line of fire. Who cares?
Apart from investors, twenty-first century consumers, and businesses, care. As the ipso-centric generation, we, as our own ‘photographers, broadcasters, cinematographers, chanteuse, matchmaker and funeral director’ do care because of the impact the new innovations and technologies will have on our daily lives and in the creation of new services.
Integrating the narrative of Fred Vogelstein’s book with chess strategy provides an interesting canvass on which to paint the competitive rivalry between Apple and Google. Guided by the brush strokes of non-cooperative game theory we discuss the strategy choices as moves on a chess board, Apple (White) v Google (Black) with Google (Black) as a player on the counterattack since the launch of the first iPhone in 2007. A game where it will be challenging for Apple (White) to hold on to the centre as Google attacks its Queen (iOS) quickly and swiftly, faster than any counterattack from Apple. In the discussion of a best reply for Apple (White) to counteract any perceived weakness in the game we have argued before that Apple as a player should stop defending its pawn line of iPhone-iPad. The recommendation then for Apple in 2013 was to reshape strategy by playing not to lose rather than playing to win – simply, launch a nano-iPhone for $100-150.
Google (Black) is intent on attacking the pawn line. So, what is Apple’s best reply today? The recommendation for Apple playing not to lose today is to acquire or develop wireless. Google (Black) has already moved into wireless, launching ‘Project Fi’ an alliance with Sprint and T-Mobile. Google’s entry into the mobile virtual network space (MVNO) has changed the game dynamics to the very core of the rivalry, the ecosystem iOS v Android.
The ecosystem is a zero-sum game. It is a game of attack in the style of Alekhine’s defense where Google (Black) attacks Apple’s broad pawn base with Google (Black) allowing its King’s Knight (Android) to be positioned across the chess board so as to weaken White’s centre pawns as Black continues to play vigorously. It is a game of uncertain technical standards and software development that facilitates the arrival of spherical competitors from anywhere at any time in the game.
What would a playbook look like as Apple (White) defends pawn line of iPhone-iPad against a Google inspired Android alliance with Black allowing its King’s Knight (Android) to weaken White’s centre pawns. In the ‘I-think-You-think-I-think’ reasoning of non-cooperative game theory we could translate the Apple (White) v Google (Black) game into a payoff matrix with strategy sets S1, S2, S3 and S4. The Google payoffs (S3, S4) are in italics so best to read Table 1 as if you were an Apple executive with (S1, S2) and Google is your near-rival competitor.
Attack is a Dominant Strategy
In the classic game theory of Prisoners’ dilemma both players prefer the outcome (3, 3). However attack is a dominant strategy and if both players behave rationally they will end up at the equilibrium payoff (2, 2). This is happening now in an action-reaction sequence of product launches and software updates toggling towards a point of balance in the game where both players independently of each other decide whether a new product is too geeky for it to be commoditised for the mass-market.
Payoffs (iOS, Android)
Table 1: Attack Strategy for Apple (White) & Google (Black)
|S3: Defend Android
|S1: Defend iOS
|S2: Attack with Pawns –
The players’ secrecy, for example, in artificial intelligence may be hurting its software development. So we have to ask: are the strategies realistic for 2016? Yes. Apple (White) will (and does) continue to move pawns to centre stage, launching new smart products including the recent iPad Pro and Google (Black) will continue to engage with Nexus smartphones, AI, IoT and MVNO as re-shaping strategy set S4,.
The technology game is changing. Early denials by Apple in 2010 on MVNO have changed to signals on trial and camouflage allowing for a more realistic and nuanced interpretation of likely future strategies, so we include e-SIM and iCloud Voicemail in Apple’s S1 strategy set in Table 2 and ask: what if Google (Black) is looking at a payoff column in Table 2 with payoffs (2, 4) and (1, 2) with an S4 attack strategy? Why would Google think like this? Firstly, there have been plausible denials and camouflage from Apple. Also the facts speak for themselves: in the commoditised market like smartphones and tablets Apple is unique and a brand leader commanding 28% of industry profits.
Payoffs (iOS, Android)
Table 2 Attack Strategy for Google (Black)
|S3: Defend Android||S4:Attack
|S2: Attack with pawns –
It would be rational for Google to believe that Apple would defend with iPhone-iPad pawns under a sustained attack from Google. Or does Apple have MVNO plans but delayed due to the early innovation cycle of MVNO? Probably – Apple filed patents for MVNO IN 2006.
The Fabian delay in roll-out of MVNO would be equivalent to a Fabian strategy of avoiding a frontal attack with a sequence:
Step 1: observe the future of Sprint under Softbank management.
Step 2: orient strategy and then
Step 3: attack with a MVNO product offering.
This is a classic OODA feedback loop in play here by Apple (White). This is a rational ‘hold-back’ play by Apple in an evolving smart innovation technology game where its competitor Google (Black) castles queenside and attacks Apple (White) pawns. If Google believes that Apple believes that Google thinks like this then we recommend for Apple to play minimax strategy in order to minimise the maximum gain of Google in the zero-sum ecosystem game.
If Apple plays minimax it should continue the pawn attack because Google will play maximin in order to secure a second win by forfeiting larger payoffs of 4 for a 2 in smartphones and smart products. Google will attack with S4, for example, a wireless strategy and (1, 2) is the likely outcome. Knowing this, it is rational for Apple (White) to prefer the payoff (3, 3) in Table 2. Apple (White) should not over-extend. It is rational for Apple (White) then to defend iOS now with selected roll-out from iCloud to Apple Pay to e-SIM to iCloud Voicemail to MVNO in 2016 and beyond.
Lose the Competition
Albeit, both players know that if Google (Black) MVNO strategy fails to take off or if Apple (White) is prepared to sacrifice its Queen with open source iOS the game could careen towards the Nash equilibrium. The war as described so vividly by Vogelstein might just result in significantly higher payoffs in the short term but lower long term benefits. When both Apple (White) and Google (Black) realise that in this war ‘the sweetest wine, it’s a witches’ brew’ they should lose the competition and collaborate together in a partnership.
Apple ∨ Google = 0 → Google ∧ Apple = 1
Regulators will catch up http://www.patrickmcnutt.com/blog/soft-law-google-the-coffice/ and their ‘soft law’ will not only satisfice the demands of the ipso-centric consumers but it will also facilitate the spherical competitors arriving on the scene with new software developments and greater innovations – new businesses and new challenges. A 2013 cover page in Bloomberg Business Week, featuring Tim Cook, Jonathan Ive and Craig Ferderighi in a photograph had the tag ‘What, Us Worry?’ Yes, we say. Both players have developed a cognitive awareness of each other as competitors and like Radar O’Reilly they always know the rival strategy before the rival does. Know your weakness in a game. Their weakness, paradoxically, is their rivalry. Ultimately, a bad peace is better than a good quarrel. So lose the competition and collaborate together in a partnership.
 Radar O’Reilly in the TV series M*A*S*H who always knew what his colonel wanted before the colonel did.
 From McNutt, P (2014): Decoding Strategy
 Extracted from Alexander Pushkin’s The Captain’s Daughter translated by Robert & Elizabeth Chandler.
 This is named after the Roman General Fabius Maximus who delayed decisions for tactical advantage.
 Think Roku and Spotify. Check Chanelle Besette’s article ‘Invaders from Cupertino’ in Fortune December 23 2013 Edition.
 Read 2012 Blog http://www.patrickmcnutt.com/blog/game-vision-you-are-your-own-irrepressible-opponent/
 Comment from Will Self great article ‘The Book of Jobs’ in Prospect January 2014 pp58-60.
 Fred Vogelstein (2013) Dogfight: How Apple and Google Went to War and Started a Revolution
 Check Memo to Ms Ahrendts 2013 http://www.patrickmcnutt.com/news/memo-to-ms-ahrendts/
 Think of ‘nano’ in the dimensions of the Moto Razr. Processor speed – think of XiaoMi’s phones in 2014 such as Hongmi IS powered by 1.6GHz quad-core Snapdragon 400 as good as and cheaper than the Samsung S3 1.4GHz quad-core Exynos 4412. Check WIRED Magazine August 2015 article by Andrew Huang. The ‘sweet point’ on price in order to capture the 6.5b people who do not have smartphones is US $100 or less.
 Spherical competitors arrive at any time. Ironically, Apple in 2007 with the iPhone was a spherical competitor to both RIM and Nokia. In 2015, Chinese players like Xiaomi, TenCent, Lenovo, Huawei fit the criteria as does Amazon and Google. Check McNutt Decoding Strategy
 As defined in Decoding Strategy as that competitor from the sum of competitors whom you believe is more likely to react first to your move in a game. However, this does not imply that Google necessarily identifies Apple as its near-rival.
 For both players attack strictly dominates since 4 > 3 and 2 > 1 and 4 > 3 and 2 > 1.
 Check out Business Insider August 2015 on a possible Apple MVNO http://uk.businessinsider.com/apple-in-talks-to-launch-an-mvno-in-the-us-and-europe-2015-8.
 In Table 2 attack for Google (Black) strictly dominates since 4 > 3 and 2 > 1.
 Softbank is a key investor in Sprint and there may be regulatory hurdles in the US http://www.bloomberg.com/news/articles/2015-08-18/softbank-boosts-sprint-stake-again-with-73-million-share-buy.
 The OODA loop refers to the military strategy of observe, orient, decide and then act.
 SIT games are like games of attrition and fall under combat competition requiring constant defence as in McNutt’s Decoding Strategy
 Maximin is more commonly used in non-zero-sum games to describe the strategy which maximises one’s own minimum payoff
 The winning move is at the point of second win where the best reply in a zero-sum game to a minimax is the maximin strategy play.
 Extracted from the lyrics of Ladybird by Natalie Merchant.
 Competitors from anywhere in Decoding Strategy book and also : http://www.patrickmcnutt.com/blog/byte-me-on-my-app-and-the-brontosaurus-paradox/.
 Bloomberg Business Week Edition 23-29 September 2013.
 Extracted from Alexander Pushkin’s The Captain’s Daughter translated by Robert & Elizabeth Chandler.