"Search" is not a vertical market. It's something ALL of Google's customers use (or would use, in your hypothetical). I guess I do agree with Des on that main point. Plugging a gap in someone else's software may not be a great long term strategy.
Search alone isn't vertical, search alone isn't even a market if people don't pay for it. You misunderstand the (Google) business and who the customers are. Those doing the searches are not the customers. Advertisers are the customers. Eyeballs of those searching are the primary product. Search isn't the product, only part of the means to obtain the product. Search is a supporting part of a vertical structure that produces revenue for Google.
It's the same thing with commercial broadcast television. The viewers are not customers, the programs are not the product.
In both cases, the choices that produce maximum advertising revenue are not necessarily those that deliver what the person searching or viewing considers best.
In the case of Google, there are elements of a vertical market in the sense that they're combining pieces. They just aren't combining the same pieces or using them the same way as most others. They don't actually sell a mobile OS, or (with past exceptions for developers) handsets. I don't believe they're directly producing much video either.
And while they mine data, that is yet another companion component to drive sales of or increase value of the advertising. The will tell how apps fit into their revenue model. They relate to attracting users, more ads in some cases, and a cut of sales. Even if not a big part of the total phone revenue stream, apps are still something that they're stuck dealing with.
There was search before Google, there was data mining before Google, there were ad brokers before google. They're well beyond all of that, more vertical than any of those things alone. In some cases they're filling in gaps or providing alternatives in other vertical products (handset/OS/carrier) only to insert their ad business into the equation. Mapping, video hosting and other things they do also are methods to increase the value of ad business, or build pathways to insert themselves into other ad funded businesses (perhaps broadcasting)
Whether a particular model or product is "good" all depends on perspective. A model where the OS is nearly free appeals to some handset makers or carriers. Low budget "reality" tv and infotainment news programs with 18+ minute of ads an hour may appeal to a tv network if it has a better viewer/cost ratio than obtained with more expensive quality programming.
But is your point that this is commendable behavior from Apple? Or that developers should just shut up and put up with it regardless?
What gets me is that software developers aren't a little more discerning when it comes to fawning uncontrollably over all the good stuff Apple does and just explaining away (is that what you're doing here?) or blinkering out the bad.
Why can't this same energy and enthusiasm be directed towards keeping the hardware and software we all depend on for our livelihoods as open and accessible as possible?
We are the early adopters and the evangelists. We're the ones our friends and family turn to when they need suggestions on a new computer or MP3 player. Why perpetuate Apple's "our ball, our game, our rules" environment any more than absolutely necessary?
My point is that this is expected behavior from Apple. This is what they do. They build amazing platforms.
The chances are that whatever Joe Bloggs little app is, Apple want to do it better/differently. So they will. Why should Apple leave the "to-do list" market alone when they believe they can do it better. And in fact they almost always can do it better because they can integrate in a way no one else can.
I don't think this behavior is good or bad. I think it's expected.
I didn't criticise Microsoft when they did it. I don't criticise Apple now. I do laugh at folks who do the former but not the latter.
It's just business. The only point to take away is, if you are considering developing something for the Apple ecosystem, take into account the business risk that anything you do that is highly successful has a strong likelihood of being "steam rolled". Don't delude yourself that you'll be able to pick some low hanging fruit and make millions. You'll either solve something hard and have a barrier to entry or you'll solve something easy and get steam rolled, hopefully after having enough time in the sun to make it worth your while.
