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This seems to confuse some people, the author is not saying Apple have a monopoly on smartphones. What the author is talking about is the locked-in ecosystem th

This seems to confuse some people, the author is not saying Apple have a monopoly on smartphones. What the author is talking about is the locked-in ecosystem that Apple owns, iOS and macOS (watchOS/tvOS). > Moreover, the advantages go beyond margins: the best way to understand both Apple’s profits and many of its choices is to understand that the company has a monopoly on not just MacOS but even more importantly iOS. That means Apple can not only capture consumer surplus on hardware, but developer surplus when it comes to app sales; that some apps are not made is deadweight loss that Apple has chosen to bear to ensure total control. The problem that Apple is having in China is that WeChat is the driving "platform" ecosystem, not the OS or the brand. In other words, people aren't buying iPhones for its integration with Apple services in China, which could lead to an increase in growth due to the halo effects. Instead, they run WeChat and they buy things through there, which leads to no growth in Apple's services and revenue. Which also means, the customers have no desire to buy another Apple device. They can do the same on any device that can run WeChat. If Microsoft sells a Windows Phone with WeChat as the default app for everything, they may have a hit in China but it would not be a sustainable hit because again, WeChat can run on iPhone or Android or any other OS.

MBCook 9y ago
Great summary.
bobsam 9y ago
To be fair Google has even more of the same problem as their services are blocked in China.
shmerl 9y ago
Why is normal competition considered not sustainable, and lock-in is viewed as a norm? Lock-in should never be a norm. Apple and MS are just too used to be monopolists and can't stand fair competition.
- eridius 9y ago
  Lock-in is a natural consequence of having a platform. It's perfectly normal and happens without even making any explicit attempt at having lock-in. Any time you provide a platform and people build on top of it, you have automatic lock-in. This has nothing to do with "fair competition".
  - shmerl 9y ago
    Lock-in can be avoided, if platform is designed to be open. It's only "natural" when non portable or non standard things are used. Problem with Apple and MS is that they use the later on purpose.
    - eridius 9y ago
      An "open" platform is still a platform with lock-in. The only thing "open" does is allow other vendors to decide if they want to support that platform too. But, for example, you can't take a web site and use it on a platform that doesn't support web pages (e.g. you can't browse the web on an AppleTV). > Problem with Apple and MS is that they use the later on purpose. There are really significant downsides to open platforms. They're harder to build, develop much more slowly, generally have a big issue with multiple implementations not actually behaving identically (just look at the development of the web for a plethora of examples), end up being design-by-committee which usually ends up as a worst-of-all-worlds design, etc. Companies like Apple and MS build closed platforms because that ends up being hugely better for their users. They don't do this out of a desire to have lock-in, lock-in is just a natural consequence of using closed platforms.
      - shmerl 9y ago
        As you said, open platforms allow untying them from specific owner. If you use any platform, it's a dependency, sure. In this sense it can be a hard to replace dependency. That's a separate problem though from platform being available from one place only. The later is vendor lock-in, which I was talking about. > There are really significant downsides to open platforms. Comparing downsides makes sense only if competition is on merit. MS and Apple don't compete on merit, because of the lock-in above. One of the glaring examples of this garbage is Apple banning competing browsers on iOS. > Apple and MS build closed platforms because that ends up being hugely better for their users. No, they do it to get that insane retaining percentage caused by lock-in. When they are forced to compete on merit, it quickly shows they aren't anywhere "hugely better", and often they are simply worse. The article highlights this point.
ryanmarsh 9y ago
How wild is it that it took less than 10 years for a platform spanning killer-app to emerge in the largest smartphone market in the world? To put it in perspective, this is like what the web did to Windows circa '99 - '05. Lesser examples might be spreadsheets or Adobe Photoshop.
- xiaoma 9y ago
  > "How wild is it that it took less than 10 years for a platform spanning killer-app to emerge in the largest smartphone market in the world?" It's not that wild considering that the iPhone hasn't even existed for quite a decade yet and Android has been around for an even shorter time.
LiweiZ 9y ago
> In other words, people aren't buying iPhones for its integration with Apple services in China, which could lead to an increase in growth due to the halo effects. Instead, they run WeChat and they buy things through there, which leads to no growth in Apple's services and revenue. Which also means, the customers have no desire to buy another Apple device. They can do the same on any device that can run WeChat. The root cause for this is it's a high-walled market. If you can compromise and be allowed to grab a spoon as an outsider. It's already a win. Just look at other big name service providers. Apple is a huge winner among outsiders in China market since they can make nice profit through physical product alone.
acchow 9y ago
tl;dr in China, WeChat is the Operating System and Platform and iOS is becoming "firmware".
deleted 9y ago
[deleted]
deeth_starr 9y ago
This is not an issue just for China. Naver/kakao in South Korea also are like this. Apps that are all-inclusive are the norm. It's because the government is picking winners. Ie, someone tied to the government. Edit: Alternately, West-style VC wasn't funding companies so Asian gov't stepped in.
Iv 9y ago
The market working around Apple's walled garden. I suspect no one at Apple is surprised it finally happens.

MBCook 9y ago

Great summary.

bobsam 9y ago

To be fair Google has even more of the same problem as their services are blocked in China.

shmerl 9y ago

Why is normal competition considered not sustainable, and lock-in is viewed as a norm? Lock-in should never be a norm. Apple and MS are just too used to be monopolists and can't stand fair competition.

eridius 9y ago
Lock-in is a natural consequence of having a platform. It's perfectly normal and happens without even making any explicit attempt at having lock-in. Any time you provide a platform and people build on top of it, you have automatic lock-in. This has nothing to do with "fair competition".
- shmerl 9y ago
  Lock-in can be avoided, if platform is designed to be open. It's only "natural" when non portable or non standard things are used. Problem with Apple and MS is that they use the later on purpose.
  - eridius 9y ago
    An "open" platform is still a platform with lock-in. The only thing "open" does is allow other vendors to decide if they want to support that platform too. But, for example, you can't take a web site and use it on a platform that doesn't support web pages (e.g. you can't browse the web on an AppleTV). > Problem with Apple and MS is that they use the later on purpose. There are really significant downsides to open platforms. They're harder to build, develop much more slowly, generally have a big issue with multiple implementations not actually behaving identically (just look at the development of the web for a plethora of examples), end up being design-by-committee which usually ends up as a worst-of-all-worlds design, etc. Companies like Apple and MS build closed platforms because that ends up being hugely better for their users. They don't do this out of a desire to have lock-in, lock-in is just a natural consequence of using closed platforms.
    - shmerl 9y ago
      As you said, open platforms allow untying them from specific owner. If you use any platform, it's a dependency, sure. In this sense it can be a hard to replace dependency. That's a separate problem though from platform being available from one place only. The later is vendor lock-in, which I was talking about. > There are really significant downsides to open platforms. Comparing downsides makes sense only if competition is on merit. MS and Apple don't compete on merit, because of the lock-in above. One of the glaring examples of this garbage is Apple banning competing browsers on iOS. > Apple and MS build closed platforms because that ends up being hugely better for their users. No, they do it to get that insane retaining percentage caused by lock-in. When they are forced to compete on merit, it quickly shows they aren't anywhere "hugely better", and often they are simply worse. The article highlights this point.

ryanmarsh 9y ago

How wild is it that it took less than 10 years for a platform spanning killer-app to emerge in the largest smartphone market in the world? To put it in perspective, this is like what the web did to Windows circa '99 - '05. Lesser examples might be spreadsheets or Adobe Photoshop.

xiaoma 9y ago
> "How wild is it that it took less than 10 years for a platform spanning killer-app to emerge in the largest smartphone market in the world?" It's not that wild considering that the iPhone hasn't even existed for quite a decade yet and Android has been around for an even shorter time.

LiweiZ 9y ago

> In other words, people aren't buying iPhones for its integration with Apple services in China, which could lead to an increase in growth due to the halo effects. Instead, they run WeChat and they buy things through there, which leads to no growth in Apple's services and revenue. Which also means, the customers have no desire to buy another Apple device. They can do the same on any device that can run WeChat. The root cause for this is it's a high-walled market. If you can compromise and be allowed to grab a spoon as an outsider. It's already a win. Just look at other big name service providers. Apple is a huge winner among outsiders in China market since they can make nice profit through physical product alone.

acchow 9y ago

tl;dr in China, WeChat is the Operating System and Platform and iOS is becoming "firmware".

deleted 9y ago

[deleted]

deeth_starr 9y ago

This is not an issue just for China. Naver/kakao in South Korea also are like this. Apps that are all-inclusive are the norm. It's because the government is picking winners. Ie, someone tied to the government. Edit: Alternately, West-style VC wasn't funding companies so Asian gov't stepped in.

Iv 9y ago

The market working around Apple's walled garden. I suspect no one at Apple is surprised it finally happens.