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Ecosystem: the winner takes it all

Ecosystem: the winner takes it all


The way your device communicates with other devices, and the way your ecosystem communicates with other ecosystems, is a fundamental decision that every company dealing in digital goods, both hardware and software, has to make.

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Abba iphone
Abba iphone

An ecosystem is more than just what apps you run, or what digital goods can be bought on a device; it's also the open or closed standards you support for application development, APIs, peripherals and connectors. The way your device communicates with other devices, and the way your ecosystem communicates with other ecosystems, is a fundamental decision that every company dealing in digital goods, both hardware and software, has to make. I think there are a few equally valid approaches for a company to take when building an ecosystem, but there are some important qualifiers. Let's discuss.

I think the dominant trend in the industry right now is what I'd call the "Apple Way." Apple has always loved having its closed off little ecosystems that frustrated and delighted users, usually in equal measure. With the iPod, however, Apple had a closed off big ecosystem. The iPod was basically a monopoly in the portable listening space for nearly a decade — in the world of dedicated music players, it still is. Apple's approach to an ecosystem like the iPod / iTunes juggernaut is twofold: offer an incredible device that people want more than other devices, and then generate buy-in that makes it hard to leave. Both elements grow the ecosystem, and eventually make it difficult to pick another device, even for a new user.

Apple's DRM'd music purchased in iTunes wouldn't play on other music players, and if somebody purchased DRM-free MP3s elsewhere, it wasn't as effortless to get it onto an iPod. Apple was so good at the iPod ecosystem that when it finally lifted the DRM from the iTunes Store (to be fair, something Apple had been advocating from the start), there wasn't a mass migration from the iPod — it was merely seen as a value-add.

Apple isn't the only company to take this our-way-or-the-highway approach. RIM's BBM is another popular example. I'll get a BlackBerry because it has BBM, and I'll convince my friends to get a BlackBerry because it has BBM, and now none of us can buy a different phone, because there's no equivalent pervasive service, and we'd all have to jump at once to guard against peer group fragmentation. RIM's ultimate failure wasn't in its ecosystem strategy, it was in its device strategy. It just shows that no quasi-monopoly is foolproof: if you don't continue to innovate, someone will come along and eat your lunch.

The problem with copying this sort of strategy is that the road is littered with failures, or user-hostile prisons. Microsoft tried to imitate Apple's closed music ecosystem with Zune, and failed miserably. Apple itself has tried to do a BBM-style move in FaceTime and iMessage, but instead of opening up FaceTime like it promised, Apple has kept it as a differentiator. They might make for a good ad, but since FaceTime and iMessage don't play nice with others, and because Apple is far from a majority in the smartphone space, they're ultimately limited in utility, and confusing for users.

Sony is the classic case of proliferating standards. It's almost a byword now. Sony builds its own version of almost every service or standard (music, movies, app stores, discs, memory cards), and rarely shares the love. Instead of making the Xperia Play the premier handheld for playing all Android games, Sony tried to create its own ecosystem, the PlayStation Suite, that could only really catch on if it really caught on. As it stands, the only PlayStation-certified devices are built by Sony, and the number of games in the Suite is laughable.

Carriers also seem to suffer from this disease of creating businesses that can only truly succeed if all others fail. They create a myriad of lock-ins, both monetary and mental, for users, and work hard to keep their networks incompatible with each other. Instead of sharing the load of network buildout, they duplicate efforts (to the tune of billions of dollars), and the user suffers because of it. Few people have to decide which car to drive because of which roads it's compatible with — car makers have found other ways to differentiate.

Now, I'd love it if everybody went about creating open standards, open operating systems, DRM-free distribution platforms, and that there was a single file format per document type. Unfortunately, most innovation in the tech industry is motivated by the opportunity to make money, and making money often requires offering a service that nobody else is offering, or nobody else is able to offer.

If a company is in the position to build an iPod-style monopoly, I can't blame them for trying (as much as I'll resist it and fight for an alternative), but most companies aren't in that position. So, instead of dooming their future by betting it all on a standard that can't hope to win, I think there are two solid options for most for-profits among us.

1. Build an "open" standard that grows and benefits the entire industry.


2. Build a "closed" ecosystem that can proliferate across platforms or devices and benefits everyone who participates.

My favorite is option number one, of course. That's where you get things like Wi-Fi, SMS, HTML5, and WebKit. Or the whole internet. The problem with Flash (a standard, but a closed one), ultimately, is that it wasn't a truly open standard that everybody could improve and build on. Its development and propagation was limited to the bandwidth of a single company, and therefore it turned into a target. Ironically, Apple, a company whose own QuickTime was once a potential competitor to Flash, was the one that pulled the trigger.

But option number two has a number of strong success stories to its credit. Netflix, Skype and Kindle are closed and proprietary in many ways, but because they have allowed themselves to proliferate across all devices, there's very little resistance to them on the part of users. Of course, they've spawned many competitors and imitators, with Apple and Google competing on all three fronts. Perhaps all three could die a Flash-style death eventually, and owned-by-everybody standards for digital content distribution and video communication could triumph, but for now all three are synonymous with the respective services they provide. They're Kleenex.

The step beyond an app that spans all platforms is an OS that spans all devices. Android and Windows are the huge success stories they are because they're good products, but also because any device manufacturer can benefit from the work Google and Microsoft have done.

Oh, and if your app or OS isn't great, or mature enough to spread across an entire industry, you really shouldn't bother. Even operating systems full of good ideas alone, like Windows Phone or MeeGo, aren't sufficient. An OS with a small market share is too expensive to maintain and support with the necessary app ecosystem, device portfolio, and rapidly progressing set of features. As much as it pained me, the merging of Microsoft and Nokia's efforts, and the death of Meego, was a very natural result of realism on the part of both companies. Through this paradigm, webOS, an upstart on a closed platform, hardly stood a chance.

When software or services or standards can't fulfill all (or any) of these requirements, they're usually a waste of my time — especially when entering a market with a clear and magnanimous winner. Samsung's ChatOn, Google's Google+ and Google Books, Amazon's Appstore, Apple's iBooks (and FaceTime, and iMessage, and Game Center, and Ping), Microsoft's Zune. Even Kobo and Nook as entire brands feel like a distraction at this point, though I understand that they're a necessary business model for both companies. I'm frustrated by the Kindle Fire as well, and I feel like the Fire and generic Android tablets need to team up and "synergize" or face continual irrelevance in the shadow of the iPad. Every time an Android device manufacturer spends another dozen million dollars on trying to dress up Android in a fancy new skin, or make another redundant Twitter app, I mourn for what could have been faster updates, better OS-integrated hardware, and maybe even improvements to the base OS itself.

If your product isn't "a rising tide" that "lifts all boats," then it better be good enough to be the only boat. Otherwise you're probably wasting my time. You're certainly wasting yours.