Canonical Limited is a UK-based software company founded in 2004 and still privately held by South African entrepreneur Mark Shuttleworth. It has over 500 employees and $30 million in revenues in more than 30 countries, focusing on open source software across a variety of applications. Ubuntu is a leading Linux-based operating system produced by Canonical and is named after the Southern African philosophy of ubuntu, which is often translated as “humanity towards others”.
One of Canonical’s recent areas of focus has been on mobile operating systems (OS), first announcing plans for an Ubuntu mobile OS at the beginning of 2013, with aspirations to become the third leading mobile platform in the industry, behind Apple iOS and Google’s Android. Even more ambitious, Chinese phone makers BQ and Meizu, anxious to differentiate themselves in the market, announced in early 2014 plans to manufacture smartphones based in the Ubuntu Linux-based operating system, potentially a huge coup for Canonical given the size of the Chinese market and the power of BQ and Meizu.
The “human-ness” of Ubuntu as “open-source” and free (ubuntu literally means “human-ness”) has taken on a somewhat ironic twist in the market as it faces the “stick” strategy of strategic control exerted by one of its most powerful competitors – one that illustrates the potential power of strategic control to keep new entrants and rivals at bay. It turns out that in today’s smartphone manufacturing, sapphire glass is a critical component due to its super-tough, scratch resistant properties – how many of us have dropped our iPhones and marveled at how – somehow – they didn’t break or scratch? In fact, they are an important component in the fingerprint scanners on Apple’s iPhone 5S.
In an absolutely classic application of the concept of a strategic control point, Apple has recently bought up enough sapphire glass to supply other companies for years, effectively buying up the world’s supply of sapphire glass for the next three years!
It’s all about strategic control. Imagine Canonical’s frustration. They’ve seemingly done everything right. They have developed a well-supported, open source, free operating system that is highly rated, sourced key manufacturers in a critical region of the world to manufacturer new smartphones based on its mobile operating system, only to find that a supply of a critical ingredient in the production of just the phones it wants to produced is owned for three years by a key rival: Apple. In a brilliant move akin to Minnetonka’s buying up the world supply of pumps when it introduced SoftSoap®, Apple can now focus on what matters most to their success in mobile phones – competing with Google’s Android platform with all other competitors safely at bay.