The war of ecosystems, customer lock-in and loyalty

If we accept the thesis that in smartphones there has been a shift  from a battle of devices to a war of ecosystems, we also need to understand what it means to customers, customer loyalty and lock-in.

  • What are customers choosing when buying a smartphone? A brand, a design, an easy to use device, an app ecosystem, a platform?
  • How easy is for customers to move from one platform to another?

I would argue that once a customer invests in a platform, he/she is more likely to stay with that platform due to the ecosystem-based competition. Inspired by The Android (in)adequacy: How to tell if a platform is good enough by the post of Horace in, I am writing my point of view here.

In the pre-apps/pre-Apple world, switching platform or device was relatively easy. Mobile phones and smart phones were primarily communication devices and stickiness was mainly driven by inertia, brand and probably the phonebook.

But the app economy has changed that. First of all, investing in apps for a certain platform makes users continue with the same platform. Second, now customers buy a device with the app ecosystem and expect to find their favorite apps there.

The app ecosystem does not provide a lock-in. Apps are generally not expensive and applications seem to be hit-based and they become “obsolete” . It is also the case that applications are not generally exclusive to a single platform as they are usually ported to the main smartphone platforms.

In summary, apps are becoming an hygiene factor. In order to compete, a platform has to have a strong base of “must have” essential apps (e.g. Angry Birds, Facebook, Twitter). After that, the platform does not acquire a competitive advantage. That´s the need for the next wave of ecosystem “lock in”.

The next level of stickiness is represented by the ecosystem, defined in a more broader sense than the app ecosystem. Apple gives us an example, with the iCloud, iOS AirPlay and FaceTime features. If you are part of the Apple ecosystem your devices are seamlessly synchronized using the cloud, and you can nicely stream content between them. If you buy an iPhone you may want to buy a Mac and Apple TV. And so your family members and friends, if you want to have FaceTime with them.

If your devices are part of one ecosystem your experience is great, if they are not, you may not have those experiences or eventually have degraded/fragmented experiences.
This is a battle of ecosystems and the different platforms are creating switching barriers.

For a platform is certainly very important and essential to be good but probably it just needs to be good enough to retain customers if its ecosystem is competitive. Once customers invest in one ecosystem they are less likely to switch.  The nurturing and growth of the platform ecosystem is the next step to customer loyalty (and lock-in).

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