A similar event – the synthesis of hardware and software – occurred in 2003, with Tesla, the premiere producer of electric vehicles for the automobile industry. Elon Musk, Tesla’s founder, took advantage of creating a car from scratch, away from Detroit, during a boom era of consumer technology. Like Cerent, Tesla wrote its own code and made its software and hardware the stars of the company.
Cerent introduced its Cerent Management System (CMS) to differentiate itself from entrenched telecom manufacturers while Tesla featured its massive touchscreen requiring simple finger swipes as opposed to hunting for and twiddling knobs or pushing buttons as employed by GM, Ford, and Chrysler.
Apple, the master of vertical integration, introduced its iPhone in 2007. The company transformed how callers used a cell phone by elegantly combining hardware and software. Its intuitive ease of use makes it trivial for two-year-old children to navigate. Yes, my 2-year-old granddaughter is adept at making phone calls, retrieving voicemail, and snapping photos on my iPhone.
Google followed Apple shortly thereafter, in 2008, with its first commercially available software-driven smartphone running Android software. It operated on HTC hardware, but this early development allowed Google to learn, gain market share, and then introduce its own line of phones-become-pocket-computers, in 2010. Tightly integrating software with various types of hardware allowed Google to claim a position of dominance in smartphone operating systems.
The rise of Apple and Google in the telephony market allowed the United States to reclaim its leadership position in telecommunications, replacing Nokia (Finland); RIM, the Blackberry company (Canada); and other European and Asian cell phone companies that had briefly led mobile innovation in the mid-2000s.
“Does software inform hardware or vice versa?” That’s the wrong question. The right question may be: “Is software tightly coupled with hardware?” If so, market leadership is possible and wealth creation follows. The last two decades prove the point and have contributed to American leadership in high-tech.