The Mobile War

CEOs should be aware of an approaching tech war — because its outcome is going to change their customers. 

As the Web becomes the AM radio of digital, the mobile App Internet will rise. This market will be dominated by two or three ecosystems — semi-closed worlds built on a closely fitting set of apps, phones, tablets, computers, operating systems, and partners. An ecosystem owner will possess extraordinary market power — able to dictate terms to content providers, customers, and application developers. It doesn't matter what you sell — insurance, pills, cars, energy, bonds — you'll be reaching many of your customers through these ecosystems in the future.

Who wins? Apple leads — many already happily live in the iOS ecosystem. While the company's footprint evolved haphazardly (whoever thought iTunes would become a trillion dollar commerce hub?), Apple's current level of integration makes it the gold standard.

Google is busily copying the Apple playbook with the Android ecosystem. That's why Google bought Motorola.

Then you have three contenders — Amazon, Microsoft, and Facebook. Amazon already has a strong position in tablets (via Kindle/Fire/Silk), but it has a fuzzy app strategy and no phone. Microsoft will build its own phones and laptop computers (to accompany its tablets), and an app strategy will emerge with Windows 8. But the company spent 10 years incompetently thrashing in the mobile space — not an encouraging pedigree. Facebook is way out of the game — too Web-centric and lacking any devices. But it will have to take action because fantastic post-social (POSO) alternatives to Facebook will blossom in the new ecosystems.

In the war, two factors are critical: apps and payments. Apps beget apps — they are the gasoline that powers an ecosystem. Advantage Apple (700,000 apps) and Google (675,000 apps). Payments are just as important — having a built-in system so users can easily and quickly pay for ecosystem services. Advantage Apple (435 million credit cards) and Amazon (152 million credit cards). Google and Facebook have negligible payment profiles — Microsoft has approximately 40 million credit cards via Xbox.

So it's obvious what you do if you're a CEO: You push your techies to support the Apple ecosystem — now. Next, you get ready to support a second ecosystem — most likely Google. Then, you wait — for 12 to 18 months — to see if a third ecosystem from Microsoft, Facebook, or Amazon can get traction. Your goal? To lead your category (be it insurance, specialty retail, banking) in the top two mobile ecosystems. 

Comments

Thanks

George,

Thanks for your excellent presentation at Connections 2012, the ExactTarget user conference. It was insightful and well presented. I can't wait to share your insights with the entire team when I return.

David

George, While I agree with

George,

While I agree with your 2 prong approach relative to consumer apps, I would take a diferent view regarding the strategy for the enterprise. A well designed service oriented architecture provides competitive advantage regardless of the channel and Apple and Google don't have the maturity when it comes to devices such as POS terminals, handheld devices, etc.

John

George, great blog. I love it

George, great blog. I love it when someone can crystalize so clearly what is going on. There are a lot of parallels here with the development of the film industry. There were three key players in the value chain - the creators of content, the distributors and the owners of the consumption point.

If anyone can dominate any of those three, they own the entire value chain. This is what apple did so well. They owned the distribution and consumption point (itunes and the device). By collapsing the value chain, Apple built the app economy.

Blackberry did that with email - but then apple broke the model.

So slowly the market will realize that it wont matter what the next iphone does, they will already be locked into the ecosystem. Like I am...in a household with a dozen apple devices including appletv, the cost to move to android is too high no matter what apple does with the next iphone.

(by the way - the apple watch with app access run by Siri commands is my bet on Apples next big thing!)

Wayne