When I heard that Apple was going to have an iPhone 3.0 sneak peak event this week, the first thing that came to my mind was “The Palm Pre’s going to be in trouble”, and sure enough, Apple took away some of the advantages Palm seemed to have on the Pre when they showed it off at CES this year, and they didn’t even release a new phone.

That actually made me think about what was going on with the iPhone, and the way they might actually do in the mobile phone market what the iPod did with digital audio players back in the day. Let me explain.

2 of Apple’s strengths we already know about

There is something that Apple has that no other brand or manufacturer has, and that is brand awareness. Their brand awareness helped people be aware of and be interested in their product. When Apple said they came up with a phone, it caught everyone’s attention, from geeks to average consumers. Even if Apple re-did the Motorola Rokr E1 and called it the iPhone, half the Earth’s population will hear about it within a week, and continue talking about it for months to come. However, if they actually did re-create the Rokr E1, the “iPhone” would end up just like the Apple TV today. Really cool product, but not as revolutionary as the iPod and the iPhone today.

That’s where their other strength, a strength that many companies including Palm have, great engineers and designers. Because the product they created was just amazing, people want it, and once they have it, they love it, not just because it’s Apple, but because it’s easy to use, and the features are useful. So what’s the point? Well, when you have these two, and have it well, you have…

An Ecosystem: The beginning of the “Vicious” cycle

This is where I realised that Palm is in trouble. In fact, everyone else is in trouble. Apple today is happily trapped in a “vicious” cycle (if you know a positive version of a “vicious cycle”, email me. I wanna know). And what’s the awesome part? Apple was smart enough to realise that they could get into that cycle and help get it spinning! Here’s how the cycle starts:

1. Apple announces iPhone
2. Because of their Brand awareness, people know about it (wheel starts to move)
3. Because they did an awesome job and impressed people, people want it
4. Apple, after a year, lets people write native apps for the iphone, and lets people buy it from the phone itself
5. Developers, thinking lots of people will buy the iPhone, makes apps for iPhone
6. Users, because of sudden increase of Apps (which they can see from the built-in store), buy iPhone, because more apps = more features
7. Developers because of increase in users, make more apps
8. Users, because of increase of apps, buy/stick with iPhone
9. And the cycle goes on and on and on

Then at some point, even when someone like Palm comes along and creates an awesome phone, because of that huge ecosystem that iPhone users have entangled themselves in, find it difficult to leave the iPhone platform! And non-iPhone users like me, seeing the growing feature-list of the iPhone, plus the thousands of apps, and GOOD apps while I’m at it, find it hard to choose something else!

The Palm Pre

Take the Palm Pre for example. I always advice people to choose their smartphones based on their needs. My needs? Powerful Personal Information Management (PIM). I.e.: Ability to sync with GCal over the air, and multiple GCals while I’m at it. Ability for me to switch between tasks quickly and to copy and paste between tasks so that I can come up with content for Tech65. The smarter it is at organising my personal data, the better. That’s why the Pre took my breath away. It could do all that well, and as a bonus, even pull information from multiple sources to make the data I already have even better. Why not the iPhone? Because it’s calendar software didn’t meet my needs and it couldn’t copy and paste, and there are so many others like me out there.

iPhone 3.0

That was before 3.0. The iPhone 3.0 software took away most of the advantages the Pre had save the physical keyboard and better camera because they beefed up their Calendar, and they added copy and paste. They essentially met so many power-user’s basic needs today. As long as Apple keeps its software up to date like they did today with features its competitors are having an edge with, they will always be able to force everyone else to a “level” playing field in terms of features, letting them take advantage of their unfair advantage: their self-expanding ecosystem. Sure, the Pre could do PIM better than the iPhone, but Palm is NEVER going to have as many and I even dare say as good 3rd party apps as the iPhone App Store has. That’s because thanks to that cycle, developers are rushing to the iPhone. And with the addition of letting 3rd party accessory makers interface with the iPhone’s software, they just stole the hardware ecosystem too.

Here’s a great example of how powerful this magnetic  cycle is. One thing I really want for a phone is a GTD app (i.e. a powerful to-do list). I use a Series60 phone today. Series60 has been around for years before the iPhone arrived. And for all those long years, they supported 3rd party apps. To date, I can hardly find a single good functional native GTD app for my phone. The iPhone’s App store, on the other hand, has only been around for less than a year, and I already lost count of the number of powerful GTD apps available. Of course, without the great developer tools, it wouldn’t be as prevalent as what it is today, but I can assure you that this cycle had a huge role in making that happen.

As a consumer, that matters a lot to me. When a new web service, for example, becomes succesful and really useful to me, I want a mobile app on my phone as soon as possible. And who do you think they’re gonna develope a mobile app for? That’s right, the iPhone. Even GoThere.sg, my favourite web service to date that I rely so heavily on today, is going to the iPhone with a native app. Will they build an app for Android or Palm’s WebOS? They might, but I’m sure they’re putting more effort on the iPhone version, unknowingly making the iPhone-cycle spin faster and faster.

Phone makers today can no longer go “I can do what the iPhone does, but better”, intentionally or not. If they want to sell, they need to have something that everyone would want that the iPhone doesn’t, and they need the world to know they have it. After the iPhone 3.0, that’s going to be really hard.

Will we reach a point where 90% of smartphones out there are iPhones? If the iPhone-cycle keeps accelerating at the pace it is today, and if it keeps its software up to date like it did today, it’s not too difficult to imagine that.