It is all about the experience and the ecosystem

The iPhone was announced in January 2007 and launched in June 2007. It came with a revolutionary user interface and in mid 2008 it  added the app store, the iTune was there since the beginning since it was coupled with the iPod. A new revolution started and competitors started to align to the new key value propositions of what it is now considered a smartphone: the touch UI and the ecosystem story.

Android entered the (public)scene in 2008. Google acquired Android Inc., a small startup company based in Palo Alto, California, USA in 2005. The Android SDK 1.0 release is September 28, 2008 and the first Android phone was the HTC Dream.

From there the rest is history:

The touch UI and the app store are now must have features. Follow the Distimo for reports and updates on the App stores. Apple is still the leader (in those elements) but competitors are getting closers. The competitive advantage will not last long. Nobody can stand still in this fast and competitive industry. So what’s next?
Ray Ozzie in his Dawn of a New Day describes a very compelling vision.
A short summary from the text:

We’re moving toward a world of

  1. cloud-based continuous services that connect us all and do our bidding, and
  2. appliance-like connected devices enabling us to interact with those cloud-based services.

And this probably what it is already happening. The experience must be compelling, seamless and easy for any users, as far as you enter the Apple ecosystem, the Google ecosystem, etc.

The Apple ecosystem includes the MobileMe, the Apple TV, the Mac, the iPad, the iTune and the accessories. With Airplay you can transfer your music experience from the iPad/iPhone to the Apple TV.  If you have an Apple Airport Express you can stream the music from the iTune library in any room in your house. if you have the Apple Time Capsule you can automatically and wirelessly backup your Mac and you can Access your drive over the Internet thanks to the integration with the Apple Mobile Me service. iTune includes all possible content (Music, Books, Apps, Videos,Podcasts), as far as you use one of the Apple devices.

Apple monetizes with the HW, Google with the ads and services but both play in the same domains. Google has launched Google TV, the book store, etc. And with the NFC (Near Field Communication) in the latest Google Nexus S, new services and opportunities will be created. (Nokia had NFC for many years but the ecosystem was not ready to support the use cases).

Once you are part of one ecosystem of services and devices the experience is seamless and good. But you have to buy in in that ecosystem. This is where the game is and will be played in the next couple of years. Things change fast so it is a very interesting topic to follow.

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