I sometimes like to gloat when I find out that I’m right, but I’ve learned after almost 15 years in the mobile business, that it’s not wise to do so with technology. Early last year in 2010, I was in a meeting where we were debating Apple iPhone and their dominance, or rather their potential for continued future dominance. The discussion surrounded around data we had received showing that the market was fragmenting (more operating systems, more app stores, etc) and that Apple was going to have more competition. Some in the room thought that it didn’t matter, that Apple would control dominate the mobile phone market similar to how they own the iPod/music market. I, along with a couple others, was of the opinion that it was different in that the iPod market didn’t have mobile carriers, operating system vendors, or developers to contend with, and that Apple’s mobile strategy was on the trajectory of following their 80s PC strategy.
6 months later, when we started to see the explosive growth of Android, I felt a bit vindicated. Luckily I didn’t gloat. 3 months later Apple announced their Verizon partnership, and developers (the fickle bunch) were starting to focus on the iOS platform again (partly due to the ease at which to analyze usage from the AppStore).
I still think there are lot of reasons that make it difficult for Apple to own the entire market though. The three largest ones:
1. People like to be different: Even if Porsche was able to make a competitive car in every single customer segment, there will always be someone who wants a Beemer X5 over a Porsche Cayenne. Not everyone wanted a Ford Model T car either. Fundamentally people want choice. Beyond a set standard of capabilities, which we are nearing for mobile phones, consumers look for capabilities or services that allow them to distinguish themselves. I was surprised when earlier this year, I was at a friends place and their daughter, who is 12, commented ‘oh you have the same phone as my dad (an iphone]’ but in what almost seemed like disdain! She then followed up with ‘I want an Android’. She’s 12 – it’s not like she had done the tech due diligence… she just didn’t want the same thing as her parents.
2. Everyone wants a slice of the pie: Apple wants to control the ecosystem end-2-end. But you can’t realistically expect Motorola, Qualcomm, Flextronics, and all the other players to sit on the sidelines can you? In the 80s the Mac ecosystem was without a doubt the better platform, but yet the Wintel stack won. Why? Because everyone else wanted in on the party including developers who are getting frustrated with constantly having to jump through Apple’s hoops. All those other players will do what they have to lock up partnerships, distribution channels, manufacturing capacity etc. The history books are littered with technologies that win because of product marketing versus pure technology capabilities (Betamax vs VHS anyone?). Android is banking on this. They are tying up with every manufacturer and carrier out there who is currently missing out on the iPhone party. They’re pushing price points down, tying up distribution channels with the operators, and providing incentives to developers to jump over as well. As soon as they fix their app revenue model, you’ll see even more developers target the platform. Remember the calculator boom in the late 80s and early 90s when you would walk into Radio Shack and see counter after counter of just different models? Wait til Casio, JVC, and all the other HW manufactures decide they want in and start flooding the market with every form factor of mobile phone imaginable. Apple’s model isn’t compatible with that.
3. Brand loyalty. Apple has huge cache in North America – and as their recent rush in Japan showed, they have it abroad too. But I wouldn’t discount other brands yet. My contentious view has been that AT&T went for the short-term money in their deal with Apple but in the long run killed off their long term prospects by giving away their customers to the Apple brand. iPhone users are Apple customers not AT&T customers. In Europe and other markets, the carriers are not so dumb. Vodafone knows that their brand is a status symbol, and the Nokia brand, although languishing, has huge cache in Asian markets where the name is synonymous with the term ‘mobile phone’, similar to how Starbucks is with ‘coffee’. Eventually those companies are going to figure out how to leverage their brands to attract customers again – Nokia is going get their strategy right eventually. And Vodafone is still on a global rampage.
The mobile industry is constantly changing. The players, the partnerships, the business models, and the services, they are all constantly evolving. 4 years ago, who would have predicted that Apple would be as dominant as they are today, and that the US would be leading the way in mobile innovation?
I still firmly believe that Apple will not own the lion’s share of the market. They will be dominant, and may become the Porsche 911 of mobiles, but I don’t think they will compete, nor do I think they want to compete, in the other segments. I think Android wants that – and it makes more sense for them as Google is all about Search ubiquity.
Who knows, maybe after next week’s Mobile World Congress, my view will change. The only thing I firmly know – the mobile industry is an ever changing game and we are still at the beginning. To quote my favourite movie ‘Greed is good’ – there is a lot of money in mobile and everyone wants a slice of the pie.
What do you think? you want to go take a stab at predicting what’s to come?