The Apple iPhone dominates the smartphone market. It has the best features and the largest installed base, and most importantly the best application ecosystem, with thousands of third-party applications which enable the iPhone to do lots of additional things. Also rans include RIM’s Blackberry, and Palm’s Pre. There is an interesting challenger from Motorola called Droid, which runs Google’s Android system; it is getting high marks for an open application development environment. Still no significant challenge to Apple seems possible.
Google announces their Nexus One phone! It is the best implementation of Android yet, slick, capable, and pretty. Reviewers like Walt Mossberg in the WSJ like it. Momentum changes. The market story becomes Apple vs Google. There are comparisons made at the feature level, and at the application ecosystem level; most give an edge to Apple for their large base, but tip Google for a better development environment. The feel of the market has changed overnight, because of Google’s forward movement in their platform. Suddenly it appears to be a two horse race.
Palm announces the Pre Plus! It is newly available on Verizon, the largest cell network, in addition to Sprint, the smallest, and has spiffy feature improvements such as a “hotspot” feature which enables it to serve as a WiFi hub (!) Importantly Palm opens application development entirely, enabling Adobe to ship Flash for this platform; neither the iPhone nor Android support Flash. The story becomes Palm’s comeback. The feel of the market has changed overnight, because of Palm’s forward movement in their platform. Suddenly it appears to be a three horse race.
And so we see how quickly markets can change. A competitor does something, and the market dynamics shift. The change can be subtle, but once the playing field shifts everything repositions. Tomorrow RIM might announce changes to the Blackberry platform, and then it could be a four horse race. Or Apple could announce something new, tilting the market once again to reassert their dominance.
This delightful dance shows how important it is to keep chugging, keep trying to understand what customers want, and what developers want, keep making improvements, keep iterating. The phone competition is especially interesting because the entrants are not just products, they are platforms; each phone OS not only provides a raft of features to consumers, it enables a much larger raft to be created by third-parties. The shifts in phone features don’t move the market as dramatically as the shifts in application ecosystems; that's the power of forward movement in platforms.
What will happen? Who will win?