Digital platforms expanding into the Internet of Things could challenge the Apple-Google duopoly, writes Carsten Sørensen.

So, there is another line of iPhones out – big deal? The iPhone 8, 8 Plus, and the X all launched this autumn. The iPhone X – or, for people without knowledge of Roman numerals, the one-phone-ten – has a brighter and more advanced screen, can recognise your face with its 30,000 dot Facial ID, and has a number of other improvements over previous models. It is not cheap, which has resulted in the collective Internet imagination going in hyper-drive with commenters on Twitter sarcastically suggesting they will sell a kidney as payment.

In most ways, a new version of this iconic device, which kicked off the dramatic shift in the way most people access the Internet, will always disappoint because of the high expectations consumers place in it. The iPhone has – more than any other consumer product – excited a broad global public. No one queued around the block for a new mobile phone before the iPhone arrived a decade ago. Now it has become a tradition for the faithful, and for those making a handsome return on their time by reselling the sought-after device.

Device UX

Apple co-founder Steve Jobs returned in 1997 to a struggling company and negotiated a cash injection of $150 million from Microsoft, along with Bill Gates’ promise that their Office suite would continue to be supported on the Mac. Now Apple is one of the world’s most valuable and richest firms. On the surface, this has been largely attributed to the success of the iPhone, but digging deeper, it is fundamentally owed to Apple’s stubborn obsession with user-friendly human-computer interaction. Design thinking and user experience (UX) are now trendy concerns for many organisations including Apple’s competitor Samsung – but it has always been at Apple’s core.

Apple’s untiring attention to the user experience (UX) was a defining factor in positioning the smartphone as a dominant consumer technology. The iPhone gestures focused on dynamic finger movements with the bouncing of lists, and tapping, dragging, pinching, sliding and rotating has now become an integral part of the smartphone experience, irrespective of manufacturer and operating system. Combining such gestures with a highly responsive touch-screen has allowed the small screen to seem much bigger and more useful for a great variety of tasks, whether doing work or just being.

This user-friendliness has placed smartphones permanently close to our bodies, instantly available for interaction. The shortening of the distance from intent to action raises serious concerns about addiction, first coined for the business people armed with email “crackberries”.

The iPhone as a gateway to the app ecosystem

While Apple has led the development of handheld digital devices – which has forced all manufactures and service providers to invest in the user experience – an improved UX is just a small element of the smartphone revolution. The transition from a user-friendly web-browsing mobile telephony device to a general-purpose gateway offering access to an ecosystem of millions of apps is the cornerstone for both Apple and Google’s recent mobile successes.

Steve Jobs initially resisted opening the iPhone to any outside developers, but his hand was forced by the Apple board of directors pointing to the fact that users in their tens of thousands were voting with their feet and “jailbreaking” their Apple devices. I was one of them, and less than half an hour after I had purchased my first iPhone at the Chicago Apple Store, it was jailbroken back at the hotel and all sorts of apps were installed on a device that was only intended to allow open access via the Safari web browser. The official opening of the iPhone to outside developers a year after the launch of the phone – regulated by a strict quality assurance process – enabled third-party developers direct access to Apple consumers globally.

Generative digital platforms

The resulting digital platform opened up a multi-sided market which led to an explosive growth in smartphone apps, providing an end-to-end integrated development and delivery mechanism between developers and consumers. With installed bases of around 2 million iOS apps and 2.2 million Android apps, other firms looking to enter the market have found it very difficult to compete with this duopoly. Indeed, the then Nokia CEO Stephen Elop pointed out in his 2011 Burning Platform Manifesto that device quality was much less important than commanding a digital platform. Smartphone platforms are generative in that the digital resources they provide their community of developers can produce results entirely unanticipated by the platform owner, but also ones that possibly challenge the owner’s interests.

Apple and Google’s successful command of the dominant generative digital platforms – with millions of active customers and their credit cards – implies that there is relatively little to do in the way of scale, as the market is reaching maturity. Hopefully, the diversity of available apps, the user-friendliness of the device and operating system, along with the lock-in of consumers having invested in purchasing apps, render existing users loyal to the platform.

Platform owners can hope that a new phone lures some people to switch from the competitor platform, however further innovation is necessary to enable a broader scope of engagement. The iOS story is one of new phones enabling new services through new sensors, new integration of other platforms, and new devices, such as TV-boxes, tablet computers, smart watches, home automation support, and voice-activated entertainment devices. In this light, the iPhone X is an essential part of Apple’s strategy to forge deeper relationships between developers and consumers built upon this core device. This is possible because the mobile phone is often paid through a line-rental agreement, which enables the user to upgrade their smartphone regularly. Furthermore, the upgrades of apps and operating system can be fully automated by the end-user, thus allowing for a rapidly moving and homogenous installed base of devices.

Internet of Things will possibly challenge the Apple-Google duopoly

Full-stack services, provided by a single app that supports users with a wide variety of their everyday communications, coordination, scheduling, and commerce needs, such as Tencent’s WeChat, impose a challenge to this kind of platform arrangement. Most users spend almost all their mobile phone time within this one app, therefore making a switch from one device and operating system provider to another very easy. Also, the diversity of the device ecology when digital platforms expand into The Internet of Things will possibly challenge the current duopoly of Apple and Google.

In addition, several articles have sought to draw attention to the dangers of smartphone face recognition, such as the iPhone X’s headline feature. In the concrete case, the face print is stored securely on the chip and not in the cloud. Similarly, fingerprint data from touch-id is also stored locally on the phone in a way that makes it impossible for others to retrieve. Nonetheless, other technologies on other platforms increasingly seek to gain more user-friendly services through cloud-based synthesis of fingerprints and faces, thus adding fuel to two essential debates; our right to privacy, and the need for digital platforms to be subjected to regulation. With the growing importance of digital data and the increased centralisation of private data within global digital platforms, there is a need for a comprehensive discussion of how to regulate the platforms serving as market makers and as aggregators of such datasets.

So far, this debate on how to understand both the innovation dynamics of digital platforms and their regulation is in its infancy. Much work is needed, and little reliable data is available from the traditionally highly-secretive platforms.

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Carsten Sørensen struggles to maintain academic impartiality as he has been a so-called “fanboi” of Apple since 1983, when he first programmed an Apple Lisa, and considers it his “football team,” supporting it in good as well as bad times. He is also a Reader (Associate Professor) in Digital Innovation at LSE’s Department of Management (carstensorensen.com).

Since the 1980s he has researched the digital transformation of work, for example through mobile technology and digital infrastructures. Carsten has published a number of papers on Information Systems (scholar.carstensorensen.com) and has been affiliated with a number of Danish, Swedish and British institutions. He has for a number of years assisted and assessed digital start-ups, and has actively engaged for 25 years in academic consultancy and executive education with a broad range of organisations – IMF, Microsoft, Google, Huawei, PA Consulting, Samsung, Orange, Vodafone, Intel, GEMS, to name a few.