It’s abundantly clear from WWDC announcements that Apple is working hard to lock users into the system by combining devices into one seamless experience (PC, mobile, tablet, home, wearables). What many people might not realise is that Apple is fighting just as hard to lock in developers.
[tweetable]iOS is now fully in the third stage of the ecosystem lifecycle.[/tweetable]
You see, platform strategies differ throughout the life of a developer-centric ecosystem. To get started, ecosystems must solve the proverbial chicken-n-egg problem by establishing a beachhead market. Once network effects are in place, ecosystems must expand fast to stay ahead of competing ecosystems, hopefully to arrive at a winner-takes-all outcome. We’ve written extensively on this blog how mobile ecosystems have done that by subsidizing some participants (developers) and by commoditizing others (e.g. handset makers in the case of Android). In the case of Android and iOS, that battle has been won. (More about that in Mobile Megatrends 2014 – just out!)
As the ecosystem matures, new platform features become less about acquiring new users to further fuel network effects. Apple is now defending its iOS ecosystem. Its focus has shifted to capturing and keeping the most valuable users. Tim Cook spent several minutes on stage to highlight that Apple is capturing users away from Android in China. The best users, obviously, not those buying $50 Android devices. Here’s how Ben Thompson over at Stratechery puts it: “[Apple’s Jony Ive implicitly acknowledged] that smartphones have reached the saturation point, especially in the premium segment that Apple has chosen to focus on. However, this is problematic because Apple needs to grow. There are two ways to do so: steal share from competitors and sell more to existing users. While the sheer number of announcements at Monday’s WWDC keynote was almost overwhelming, much of what was announced slotted neatly into one of these two strategies.”
But as we know, iOS is a two-sided platform. [tweetable]To keep the most valuable users, Apple needs to keep the best and brightest developers and entrepreneurs engaged[/tweetable], too. This is a top priority for Apple.
Locking in developers
If developers create apps first (or even only) for iOS, then Apple is sure of a steady stream of high-value, exclusive apps that make iOS devices more attractive to users. The goal of keeping valuable users is tightly intertwined with Apple’s ability to keep developers on the platform. It does so by making it more difficult and costly for developers to switch away from iOS development.
A first set of initiatives intended to lock in developers are SDKs like Touch ID and Metal that only make sense when there’s little fragmentation (Apple’s natural advantage over Android). Creating a login mechanism based on a fingerprint sensor only makes sense if a lot of devices have such sensors. We can reasonably assume that future Apple devices (all high-end) will, while the same cannot be said for mainstream Android handsets.
Nat Brown astutely explains how the same principle works for Metal, a low level graphics SDK: “Of the class of very advanced programmers who will jump on Metal are… the teams that maintain the game engines, frameworks, and toolchains used by 95% (perhaps 99%) of the games for mobile. Unity3D, Unreal Engine, and a few others simply dominate mobile gaming on both iOS and Android. […] Due to this I find it unlikely that the API itself will act to lock anybody into iOS from a classic API perspective – everybody is using an engine or framework and indeed tools much higher up the value chain. But… Metal could very well offer an iOS performance lock-in on mobile.The most realistic rendering games will look great on iOS until Google does deeper/better driver work on Android. As it turns out, that is crazy hard due to the diversity and fragmentation of Android hardware. In this respect, if Metal is indeed a 10x speed improvement or a 10x detail improvement, it may very well be a masterful move – non-iOS games from the same engines will just look lousy on Android. Wow.”
Then there are SDKs that are basically platforms inside the platform, like HealthKit and HomeKit. While there are alternatives out there (e.g. SmartThings and OpenHab in home automation, Human API and Validic in health), Apple might be the path of least resistance and easiest experimentation for developers who are just starting to discover IoT. Furthermore, Apple has a key advantage over its competitors. It can dangle the carrot of hundreds of millions of users in front of developers. As a developer, once you build on Apple, you can’t go back, except at a very high switching cost.
Apple also creates lock-in by embracing the cloud, as Ben Evans pointed out. In the Naked Android post, we wrote about how Google gains more control over developers by developing all the most valuable functionality into proprietary cloud services, not in the open Android OS. To some extent, Apple is doing the same. With the newly announced Apple-only BaaS CloudKit in particular, Apple is aggressively subsidizing developers. The free storage and usage levels for CloudKit are orders of magnitude beyond other BaaS providers and would cost tens of thousands of dollars on competing platforms if used all. Some services might not be economically viable without it. The more developers adopt Apple’s cloud services (including CloudKit), the more difficult it will be for them to abandon Apple or go cross-platform.
Two platforms, two identities
iOS and Android are naturally (and intentionally) developing distinct identities. As Evans mentioned: “It might get harder to make essentially the same app on both platforms. If a core, valuable thing you can do on one platform has no analogue at all on the other, what do you do?” As a result, developers who are serious about iOS will stick with iOS.
SDKs playing to Apple’s fragmentation advantage, new platform attempts (uncharacteristically focused on developers first before polished consumer products have appeared) and building out cloud tools for developers all serve to make it more difficult for developers to port iOS apps. This will help to ensure a profitable future for Apple for years to come.