The White iPhone 4

The White iPhone 4

Friday, July 9, 2010

What Happens When Everyone Has One? The Smartphone Omega Point and the Future of iPhone

In 2010, smartphone owners are still only a small segment of society.  We surf the web, download movies and music and more all while on the go.  We hold in our hands the future of computing.  But it won't always be so.  Someday soon, the entire user base will be installed.  In that world, where will iPhone fit?

The automobile.  The telephone.  The television.  The personal computer.  These were all once elite products, that not everyone had adopted.  There was a time when frugal people would say things like, "An automobile?  No thanks.  I'll stick to my trusty old horse."  Or when skeptics would say things like, "Television will never take off.  Radio is the only thing I or anyone else really needs."

But eventually, all of these products and more have found almost ubiquitous adoption.  From cars and landlines to DVD players and personal computers, you can probably think of hundreds of products that once were new technology, that not everybody bought into right away, but now everyone can't live without.  These things are now as basic a part of life as forks, knives and spoons.

New technologies are constantly joining these ranks.  For example, Finland just made broadband access a legal right.  So what about smartphones?

For the purposes of this article, I'm calling the point at which a technology becomes ubiquitous or universally adopted that technology's omega point.  At that point, manufacturers of that technology are competing for an already-installed user base.  Usually, this means competition between companies for market share is tighter.  It takes more to get loyal customers to switch than it does to get new customers to pick a side.

A great example of this is in personal computers.  As long as a competitor doesn't have too much of an edge in making a widely adopted product, market share will be about static.  That's why nobody really cares if they've got an HP, a Dell, a Gateway or a Vaio.  They're all pretty much the same animal, and each of those companies has to fight really hard to gain even a little on one of its competitors.  Even Apple, who offers a distinctly different and higher-quality product, has to battle it out for small changes in market share because of the difference in price.  When the user base is fully installed, it's hard to get them to budge one way or the other.

I have no doubt in my mind that companies know this concept.

So with the smartphone omega point sweeping up quickly, where does the iPhone fit into the picture?

1. It Was the First

Apple's iPhone, like Henry Ford's model T, broke through a barrier, and became the first smartphone widely adopted by non-business consumers.  Sure, Blackberry was technically there first, but it wasn't something you really wanted, it was something your boss made you carry around.  Like Ford's cars, Apple's smartphones will be destined for a prominent role in the future marketplace.  However, as we all know what kind of cars Ford produces, the comparisons between Apple and Ford seem incomplete.  Apple's a luxury brand with a bit of a European design bent.  If we're comparing smartphones to cars, Android platforms are really more of a Ford-like smartphone.  So while iPhone's firstness is important, it's obviously not the deciding factor.

2.  It's the Most Luxurious

While Ford did it first, it could be argued that the likes of Mercedes Benz, Alfa Romeo, Jaguar, BMW, and Ferrari did it best.  The Europeans took the concept of the automobile and turned it into an art.  iPhone did the same thing to smartphones.  iPhone 4 is, strangely enough, uniquely European in its design proclivities.  Clean industrial lines, a minimalist aesthetic, and a functional yet luxurious user experience are all hallmarks of that design philosophy.  We seem to be getting warmer.

3.  It's Got the Richest Ecosystem

Apple's got iTunes, the App Store, iBooks, tons of 3rd party app developers, the likely soon-to-be-reinvigorated Apple TV, a slew of high-end PCs and laptops, and a potentially strong cloud presence with MobileMe.  All these things make owning an iPhone better, and switching away from one harder to do.

So with all of these factors, iPhone is battling it out with Android, Palm, RIM and Nokia for the easiest-to-grab share of the market.  Once those numbers solidify, it's going to be knock-down drag-out warfare for the hard-to-win elderly demographic and the harder-to-win convert demographic. 

Based on the above factors, it seems to me that Apple looks to land in a slightly better place than it is in the PC-Mac balance, because it was first, and because of its ubiquitous ecosystem.  Its luxury status will keep its market share smaller, however, and I'd bet we can count on Android to play the smartphone-for-the-masses counterpoint to Apple's fashionable luxury exclusivity.

What are your thoughts?

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