- The iPhone has become “an irreplaceable piece of infrastructure,” columnist Michael Gartenberg says.
- The device and its services seem too popular with users to ever be replaced.
- But a challenger will one day dethrone it, he says. Here’s how to see the signs of that change.
The iPhone – with iOS and the App Store – has maintained such a dominant position in the mobile industry for so long, it has reached the status of what is known as “irreplaceable infrastructure”.
Irreplaceable infrastructure is something that has such a strong hold on users that a competitor cannot get them to replace it. It has the following characteristics:
- High switching costs for replacement.
- Total or near-total standardization within an organization or market.
- Strong third-party and vendor support.
- Serves as a key underlying technology for other services and applications.
The New Jersey Turnpike is irreplaceable infrastructure. I’m not likely, even with the help of a few billionaires building high-speed underground tunnels, to ever stop riding on it. Coke and Pepsi are examples of substitutable infrastructure. I can drink Diet Coke in the morning and Pepsi that afternoon. There is no cost to change brand loyalty (except I always conclude that Coke tastes better).
Apple today benefits from the image of being the “safe choice” for users. It’s created a positive feedback loop for them that drives their customers further into their infrastructure: They buy other devices designed to work best with their Apple gadgets like Apple Watch and AirPods, along with Apple services like Apple Music and Apple TV+.
Many say that the power of the Apple ecosystem of hardware, operating systems and services, all linked with the power of the App Store, is unstoppable. Since no challenger today can topple Apple’s market position, they say it will only get stronger over time.
Despite this, it is inevitable that the iPhone and Apple’s ecosystem will be replaced by something else.
Empires rise and fall, from the Egyptians and the Romans to the Ottomans and the British to technology empires like IBM or Microsoft.
That’s an imperfect metaphor, I know. Apple will not cease to exist, nor will IBM or Microsoft disappear. The latter two, however, while both powerful and profitable, do not have nearly the dominant market or mind-sharing positions they once had. No one is suggesting that we break up IBM or Microsoft, as they are advocating today for Apple.
To explain how Apple will fall, I offer a framework for how technology cycles happen, a cycle that has applied to various technical innovations, from refrigeration to audio technologies.
Technology changes over time and goes through five phases:
- Multiple companies produce different technologies that serve the same user need.
- Market forces lead to one standard emerging as an irreplaceable infrastructure. Often, it’s not the best technology that wins market adoption.
- That standard is attacked by pseudo-challengers who imitate it but do not effectively displace it, because the pseudo-challengers do not offer significant enough differentiation or have different defects than the technology they are trying to displace. (But pseudo-challengers often have enough value to survive and co-exist alongside the dominant technology.)
- The standard reappears stronger than before and seems invincible to displacement.
- New and better technology emerges and displaces the existing standard.
iOS is in stage 4. It has achieved dominance and mind share despite being challenged by the Android operating system and a host of devices from the likes of Google and Samsung.
In order to replace apples-to-apples, any new technology that comes to the market must meet the following criteria:
- It must offer visible and demonstrable value and differentiation that can be directly exploited by end users. One reason the iPhone replaced flip phones was that it had a real web browser and a touchscreen with pinch-to-zoom functionality. It made using the internet feel more like you were on a computer than on a mobile phone.
- It must offer economic benefits to a marketplace of sellers. The iPhone offered apps, a whole new market for existing and new developers.
- It must offer clear economic benefits to hardware vendors. If conditions one and two are met, hardware vendors have a strong incentive to build systems to take advantage of the new technology and run upgrades.
I won’t try to predict what will eventually replace the Apple “i” ecosystem. That’s a fool’s errand. No one predicted the rise and rebirth of Apple under Steve Jobs. No one predicted the iPod and its influence on Apple sales. Certainly, no one predicted the iPhone and the impact it would have on the industry.
Some even greeted the iPhone with great skepticism and more than a little sarcasm.
But as chips grow more powerful and network speeds get faster and artificial intelligence gets smarter, the technology that turns the iPhone upside down could already be there in nascent form. The bigger question is: Will Apple produce it?