Analyst Watch: Windows Phone and the app economy
By Al Hilwa
May 22, 2013 —
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Related Search Term(s): Windows Phone
We have seen this movie before: In the 1990s (to be precise), after IBM and Microsoft invented the PC and after Apple redefined it graphically with the Mac, PC market shares started to take a decided turn toward Windows PCs. We have been living in a 90%-plus PC market ever since.
The key driver for this network effect of device adoption was the software and hardware ecosystem that developed behind the PC. Strategists everywhere have since observed similar effects in technology adoption in other markets, dissecting this PC history to try to divine how mobile platforms are likely to evolve. In fact, such sticky network effects are what many vendors are trying to achieve by positioning themselves as platforms.
Vendors love platforms because platforms generate ecosystems, and ecosystems make technology adoption durable. Platforms are vessels for applications, and so to create successful platforms, a strong software ecosystem is essential. Birthing a platform requires a virtuous cycle of a growing user base and a growing application base that is built to monetize the user base, which in turn attracts more users to the platform. Where does Windows Phone sit in this dynamic?
The state of the market
Windows Phone has been making slow but steady progress, having recently passed BlackBerry in quarterly shipment numbers. According to the latest IDC data, market share for the first three months of 2013 show Android running away with 75% of new shipments, with Windows Phone edging out BlackBerry at 3.2%. The iPhone captures most of the balance at around 17.3%.
These numbers show the outlines of similar ecosystem dynamics to the early years of the PC market, but the smartphone market is potentially an order of magnitude bigger. It stands to reason that there could be more than two surviving players. History often repeats itself, but rarely in the same way.
As the smartphone market matures, it shows signs of both consolidating and diversifying at the same time. Mozilla has birthed a new mobile OS and shipped phones with a couple of carriers. Samsung has promised to produce Tizen phones as it winds down its Bada proprietary smartphone platform, a victim of the ecosystem war. Nokia continues to make its Asha line of phones smarter, pushing its unique low-end app ecosystem. Finally, BlackBerry has launched a couple of new devices on its promising new platform, and intends to fight hard for third place in the ecosystem wars.