The iPhone's "Vicious" Cycle

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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.

  • Ivy

    Awesome post, Daniel! Very well written.

    A positive version of a vicious cycle is called the virtuous cycle, I think. http://en.wikipedia.org/wiki/Virtuous_circle_and_vicious_circle

    Btw, I think you missed the “i” in the “vicious”. 😀

  • Thanks! Typo fixed!! 😀

    Gosh… “Viscous” cycle… How did Chemistry get involved into this… 😛

  • Liked the article considering it’s different from most of the reporting materials surfacing hot on the net now abt the new iPhone OS.

    What Palm did is essentially ‘improving’ what the previous iPhone software can do but what it lacked are ground breaking ideas, a compelling platform for developers, a web store ready to rock and roll and lastly, I think… getting back it’s core users.

    From the keynote, you can see how much Apple has answered consumer’s call. Everybody rejoice. Developers loves it too, Apple worked their socks off just so they can develop apps with minimal fuss. It goes a long way when Apple continues to satisfy both ends and everyone else plays catch up.

  • I still believe Palm wasn’t trying to make an iPhone wanna-be with the Pre, and natural UIs today are just a natural progression of great mobile phone user interfaces.

    Unfortunately, thanks to the App store, that only got successful thanks to Apple’s brand at the beginning, the iPhone’s audience is now so broad, it meets the needs of anyone from casual users to power users, potentially taking over the ENTIRE smart phone market, thus endangering Palm and their new WebOS platform.

    Thus even if Palm did provide a great platform and store, developers would still think twice about spending time and effort to develope for the WebOS instead of the iPhone.

  • Great article. I was thinking the same thing before the announcement too: Apple could basically kill off all competition if 3.0 delivers.

    3.0 delivered on almost all fronts. If they delivered background processes, and somehow increased battery life in the next iPhone significantly enough, it would have been a complete game over. Nevertheless, their implementation of push notifications seem to be very well thought out and makes it possible for current generation iPhones to work well with 3.0, which is significant and does make sense over background processes (for now at least). There’s so little room left for competitors to pick on, as compared to 2.0 which really is kinda crippled in many ways (IMO).

    I think android (and palm pre if it doesn’t turn out to be a flop) still has some fighting chance left, but I agree its gonna be very hard now if 3.0 works smoothly as intended. I still see huge potential in the android marketplace if they manage to solve or minimize compatibility issues between devices, but as always the brand power of apple is going to be hard to beat.

    The next big chance for a turnaround would most likely be when major hardware/architectural changes in mobile devices start to get released commercially (OMAP4, Tegra, micro fuel cell technology), that’s going to totally change how mobile devices are used in our lives. Devices are going to get much more powerful, have a few times more battery life, and that could happen as soon as the end of this year or the middle next year. I see a chance for apple to fall from the top if apple fails to adjust well enough to those new advancements, or if competitors are able to capitalize fast with a product before apple can react. Still, its a slim chance, as apple would probably have gained a huge majority of the market by then, making the iPhone even more attractive and harder to give up.

  • Daniel

    The funny thing about your vicious cycle, though, is that it’s possible for someone to get caught in the cycle and get stuck with “bill shock.” Oh, I’ll just buy one more app. Oh, how about that one?

    There was a video I thought was interesting at http://www.newsy.com/videos/smarter_phone_wars/ about the global response to the Pre-iPhone 3.0 battle.

  • Pingback: Counterpoint: Apple’s iPhone 3.0 Software()

  • Thet

    Really liked this article. Made me realize in context what Apple is doing! I think the business strategy is pretty admirable.

Daniel
Daniel Tsou is our fabulous host, who decides mostly what we talk about and basically calls the shots, Yes, he does. I, writer of this bio on Mr Tsou is very much afraid that by commiting this post to words, I will be dragged off in the night by a black Truck, or a Segway more like. Other than that, Daniel is tall, lived for a period of time in Venezuela and Spain, and is enthusiastic for all things tech.
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