Apple's path to Platform Confluence
Apple's ecosystem, especially the App Store, makes it a perfect candidate for platform confluence, even though it's traditionally a "hardware company."
Apple's first ever remote WWDC last week emphasized three big shifts:
The shift from in-person events to online keynotes
Apple's shift to its own chips
Apple's platform Confluence
That online keynote and format was fantastic. It makes you question why they needed an audience in the first place.
The shift from Intel's chips to ARM was a long time coming and will take about 2 years to complete. It makes sense for an integrated system such as the iPhone, iPad, or Mac.
The Platform Confluence is a trend that has increased with Apple's focus on services. But one thing at a time.
Almost every company in the world falls into a few categories: marketplace, SaaS, eCommerce, Consumer, Hardware, Licensing, or Data. The customer acquisition strategies look vastly different for each of them; so do their Platform Confluence approaches.
Apple clearly falls into Hardware and recently pushed more into services (TV, app store, music).
Then there are services:
Apple TV - shows and movies
Apple Music - music subscription
App Store - app downloads
iCloud - storage
iTunes - Movies and other content
Apple Books - digital books
Apple Pay - NFS and digital payment
Apple Care - warranty
To complete the ecosystem, we also need to take apps into account that provide valuable user data:
Now, how do these pieces come together?
Can hardware companies create ecosystems?
In last week's article on Platform Confluence, I explained how big platforms bring their sites and apps closer together to understand and monetize users more efficiently.
Aggregation theory describes the shift of power from supply to demand, growth based on zero marginal cost, and direct relationships with users. Platforms like Google, Facebook, Amazon, and others were able to become aggregators because of the internet.
The next step in the evolution of aggregators is Platform Confluence: the combination of several apps and sites owned by the same company into an ecosystem in which user signals and ads reinforce each other.Platform Confluence Theory
But how does that apply to a company like Apple, a hardware and design company?
The point lies in the monetization model. Apple doesn't sell ads, they sell services and hardware a.k.a. sign-ups and sales. As such, their growing understanding of users should lead to more people sign-ups for iCloud and more sales of iPhones. And I'm not talking about sneaky ways to load your memory so you buy more storage.
There are a couple of ways I see Apple pushing their Platform Confluence forward. First, apps will run natively on Mac, which seems like a small step but actually means that Apple can trace app usage across almost all hardware products. That removes friction within the ecosystem - just like Facebook allows you to advertise across several apps and sites - but also increases lock-in effects. More installed apps on your phone, iPad, and laptop mean you're less likely to replace one of these devices with another brand.
Second, Apple doesn't rely on ads but on customers buying devices. That's why the new default opt-in for app tracking that's coming with iOS 14 is a smart move. Advertisers will get less data from Apple products, which hurts but not Apple's business. Instead, Apple can position itself as company that cares for privacy and has the best interest in mind for its customers.
Apple's synergies and lock-in effects are the result of elegant collaboration between its devices and services. But not all parts of the strategy are hits.
Where Apple misses
One big question mark is why Apple doesn't invest more into it's podcast ecosystem. podcasts.apple.com is surely not optimized for Search - but why? I can tell by looking at the landing page that no SEO (or designer) has worked on this.
Wouldn't it be great if users could discover podcasts on Google and leaving Google less market share?
Google is already grabbing real estate from Apple in Search with their podcast integration. Also, notice how Youtube provides results right below podcast snippets as more publishers upload their audio material to the video platform. A double whammy for Google.
As I wrote in Who builds the first audio search engine?
My personal opinion is that Apple has the biggest drive and chance to actually win here. An audio search engine would create an attractive moat and user acquisition loop that fits the business, could be created with the new focus on services and brainpower, and the user base is there.
However, in the end, everything is open. When Google became successful, nobody thought that another search engine could kick Altavista, Yahoo, or AskJeeves off the throne. And look what happened.