Bits And Buzz, by @JeremyChone

Undeniably, Apple, with the iPhone, has revolutionized the mobile market. Apple did what all mobile device manufacturers and service providers have dreamed of and failed to do for so many years, which was to make the phone an Internet device. A decade from now, nobody will argue that Apple was the company that reinvented what a phone could be.

However, the big question is how long the iPhone will stay the leader of the category it created. Will Apple maintain its market leadership against an ever-growing number of mobile device manufacturers and a variety of well-supported, open, modern mobile platforms (i.e. Android, and maybe Windows Mobile)? Most importantly, will Apple succeed at keeping mobile developers under its control?

Some will argue that Apple has already won, and that as long as Apple continues to innovate, it will keep its leadership for the following reasons:

1) Innovation always wins: iPhone fans would point out that innovation and product quality always wins, and given that Apple is the most innovative company, it can’t lose as long as it continues to innovate at its best.

2) The AppStore is unbeatable: A more mathematical argument would say that the AppStore, with its hundreds of thousands applications and billions of downloads, is the mammoth of the mobile application market and that its momentum cannot be broken. And as Microsoft Windows applications have made Windows stick (even through Vista), iPhone applications define the iPhone so uniquely that even a 2-year-old can tell the difference. 

3) Apple’s marketing is unbeatable: Finally, one could point out that in consumer product marketing, Steve Jobs’ genius combined with the Apple savoir-faire makes Apple an unbeatable marketing powerhouse. In fact, Apple has perfected its marketing machine so well that the industry has even taken Apple’s marketing cues. Every six months or so, the industry goes into a frenzy around an elusive product that Apple might launch in the coming months (or year), and before Apple even drops its first ink on the subject, the tech news is completely consumed by an unidentified new Apple dream product (e.g., Apple’s tablet). I actually believe that Apple pioneered social marketing 20 years ago without telling anybody about it. Apple understood that great marketing is about entertainment (not education) and that entertainment is maximized when it is people-initiated.

Now, the other side of the argument would look at computing history and try to understand why the Apple Mac did not win (even though its single-digit market share has grown slightly the last couple of years). Why is the PC market 90% Windows and 10% Mac, though Mac has always been recognized as a better computing system? In other words, what makes the better product fail to win? Here are some possible explanations:  

1) “It’s the ecosystem, stupid”: Apple’s product strategy is focused mainly on user experience excellence, and to accomplish this goal, Apple does not hesitate to take drastic strategic measures. The safest way to control product quality is to constrain its environment to avoid any possible unknown and unwanted side effect. Apple mastered this art by always keeping all pieces of the system (i.e. hardware and software) under its sole control. In the case of the iPhone, Apple went even further by taking complete control over the application distribution as well, a first in the software industry. While one could argue that these decisions allow Apple to offer products of superior quality, the flip side is that this model limits how far Apple’s product can scale. Product innovation and quality are only two aspects of the user experience, and the ecosystem surrounding a product is also an important characteristic. Microsoft’s strategy of using a more open architecture and business model allowed them to fully utilize the weight of the whole industry to its advantage, which eventually led Microsoft to grow into the monopoly we love to hate today. Apple’s excessive control is good at creating micro-systems and best-in-class product, but Apple won’t be able to maintain its market lead (i.e. the mobile market) by going it alone.

2) Not invented here: Apple is pushing its iPhone application control even further by preventing the distribution of competitive applications. While Apple has been very talented at making their current model very attractive for developers (for the first time, mobile developers can make money developing mobile applications), Apple’s excessive control of application distribution might not scale for long. We are already seeing some high-profile developers leaving the platform and even some great applications, such as Google Voice, being rejected on questionable grounds. Just to be clear, the problem is not that Apple controls what gets into their AppStore but, rather, that the AppStore is the only way to distribute iPhone applications. The biggest issue with Apple’s approach is that it slows down the very thing that Apple wants to accelerate: innovation.

3) The Web will eventually win: Finally, Apple’s complete control over application distribution is diametrically opposed to the Web model. While today, the mobile Internet industry is still in its infancy (i.e. client/server model), the most likely scenario is that the Web will eventually steal the day, and most mobile applications will migrate to the Web as they have for the PC. When (or if) this happens, applications won’t be a key differentiator of any one mobile platform anymore, and therefore, iPhone applications’ head-start won’t be as relevant anymore.

Now, following the second set of arguments, the obvious top contender is Google Android. While Android will not be able to claim to have revolutionized the mobile phone form-factor, it might well be the next Windows of its category, leaving iPhone as the “deluxe” category for item collectors, locked fans, and the nostalgic. Although Google still have some learning to do from Steve Jobs, Google has strategically made the Android platform very open, partner- and developer-friendly, and even managed to show off its own vision of what the hardware should look like (i.e., Nexus-One) while keeping its hardware partners excited and engaged in the platform. In other words, we are witnessing a déjà vu where Apple goes solo while its top contender is building momentum in the industry momentum (see Reuters Google’s Android platform poised to take on iPhone).

Nevertheless, this does not mean that Apple will shrink back to a single-digit market share anytime soon. However, one thing is certain: if you believe in learning from history, the iPhone cannot stay the course if it does not want to get Windows’d by Android.

So, who will win the mobile market?

• Android will Windows’d the iPhone in the next 5 years.
• iPhone will remain the leading mobile smart phone for the next decade.
• Windows Mobile will make a surprise comeback and steal the day.

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Related articles:

• 2010-01-15: Reuters, Google’s Android platform poised to take on iPhone
• 2009-11-19: Paul Graham, Apple’s mistake

• 2009-11-11: Insidefacebook.com, Facebook’s Joe Hewitt Quits iPhone App Development Due to Frustration with Apple
• en.wikipedia.org/wiki/Jailbreak_(iPhone_OS)

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Posted: Wednesday, January 20th, 2010
Tags: Mobile.
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