Prisoner's Dilemma: PC vs mobile

Prisoner's Dilemma is a descriptive title for a strategy problem in game theory. It got its name from a hypothetical situation when two prisoners who stand accused of committing a major crime, e.g. an armed robbery, are interrogated separately by the police. The police have arrested them on a smaller charge and currently doesn't have any direct evidence that connects the prisoners to the armed robbery. If both prisoners stay silent they will receive a short sentence of several months in jail. If both of them confess they get 5 years in prison each. If one of them confesses, but the other stays silent, the first one goes free, while the second gets a 10 year sentence. It's a famous example - you can read an extensive description of how it works in Wikipedia and other sources.

Obviously, it would be better for the prisoners if both of them stayed silent and as the result got the lighter sentence. But game theory analysis shows that the most likely outcome of the game is when both of them confess and each gets 5 years in prison. The key to understanding this craziness is to appreciate the fact that the prisoners cannot communicate with each other and they don't trust each other. As a consequence, they choose to confess and get 5 years, rather than stay silent and have the other guy confess, which would cause him go free and you'd get 10 years in prison.

Now, let's turn to consider the world of mobile communications. It seems to me that Apple and Google are playing Prisoner's Dilemma in this space. Had they decided to cooperate in making iPhone a dominant destination device for media and cloud services, both companies would have benefited enormously: Apple on the hardware and media side; Google on the search and cloud computing side. But, Google seemes to choose the "confess" position. That is, rather than building apps and services exclusively for iPhone/iPad/iWhatever, they make an extensive effort to develop software and services for competing hardware. As a result, we can observe how Apple and Google are increasingly becoming marketplace adversaries. For example, recently Apple announced iAd, its own ad platform, which threatens Google's ad business on iPhone.

This situation stands in marked contrast with the 30-year old Intel-Microsoft relationship that made both companies dominant in their respective hardware and software PC business domains. Comparing the situations, I can't help but conclude that there's a lot more trust and communication between PC industry leaders than between Apple and Google.

tags: battle, technology, strategy, system, information, evolution, competition, mobile, cloud