What Happens When Apple, Inc. Doesn't Have a Head Start?

Apple enjoyed a significant first-mover advantage in smartphones, but that won't be the case for the emerging wearables market.

Mar 22, 2014 at 2:00PM

Google (NASDAQ:GOOGL) just officially announced Android Wear, a version of Google's mobile operating system tailored to wearables, starting with smartwatches. Meanwhile, Apple's (NASDAQ:AAPL) rumored iWatch launch time frame is still uncertain. Will Google's early start in the category give the company an advantage over Apple?

Rewind seven years
The entire tech world was watching when Steve Jobs took the stage that day. It was Jan. 9, 2007, the date of one of most important product launches ever. Jobs took the wraps off the smartphone that would change the mobile phone industry -- and the world -- forever. "Apple Reinvents the Phone with iPhone," read the title of Apple's press release that day.

The Atlantic's Fred Vogelstein shared the reaction of one of the Google (NASDAQ:GOOGL) Android engineers that day.

Chris DeSalvo's reaction to the iPhone was immediate and visceral. "As a consumer I was blown away. I wanted one immediately. But as a Google engineer, I thought 'We're going to have to start over.'"

From that day forward, Apple benefited immensely from a first-mover advantage. Sure, Google's Android came to market in 2008. But it wasn't until 2010 that the platform really started to gain traction. And, by then, Apple had already built a massive moat around its castle at the high end of the smartphone market, where it collects the lion's share of the mobile phone industry's profits today.

Apple's first-mover advantage undoubtedly played an enormous role in its dominance in smartphones. But what happens when Apple doesn't move first in a new category?

A disadvantage for Apple?
In smartwatches, Google will be the tech giant that enjoys the first-mover advantage. The launch of Android Wear this early in the game sets the stage for a far different head-to-head battle than the one investors saw between Apple and Google in smartphones.

Among a number of potential advantages that Google will benefit from, one is particularly notable: Providing a standardized platform for Android Wear so early and releasing an accompanying software development kit means developers can get to work on innovative new apps for Android Wear before the iWatch even hits the market. This will not only give Android's app marketplace for wearables a head start, but it will significantly enhance the customer experience on Android Wear devices.

Google's first-mover advantage really puts even more pressure on Apple to release its iWatch this year, because waiting until 2015 now seems a little too distant.

But Apple investors shouldn't put the idea of iWearable domination on the shelf. Apple has an incredible history of reinventing entire product categories. Further, Apple's enviable customer loyalty could keep the bulk of its user base waiting for Apple's alleged iWatch.

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Daniel Sparks owns shares of Apple. The Motley Fool recommends and owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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