According to Pew Research, 64% of Americans now own smartphones. This critical mass, combined with advances in technology, has transformed your smartphone from a standalone unit into a platform up which a whole new generation of devices are being built.
Fitness trackers, watches, thermostats, televisions and even your car are all becoming connected accessories for smartphones. This is only the beginning. While mobile may be well on it’s way to becoming a mature market, connected devices are still in their infancy.
For consumers, it would seem that a wonderful new world waits. It is a world full of increasing convenience, information and ease of access. While the raw technological promise is certainly present, there are also major concerns over the way the industry landscape is developing.
Mobile in general, and now the accessory market by proxy, has become divided into two primary camps: Android and iOS. The two seem to have achieved a relatively uneasy balance. Apple claims the position of top smartphone manufacturer while Google owns the top space in the mobile operating system competition.
As the market for smartphones has become increasingly flat, both Google and Apple have set their sights on the accessory market. Flush with cash and looking for new growth opportunities, both see their respective mobile ecosystems as the primary avenue for expansion.
For consumers this would initially appear beneficial. When one company controls the operating system that links your phone, your watch, your car and your house, it is more likely that it will work seamlessly. This creates the best possible user experience.
But consumers are willingly marching into a trap. With every new accessory purchase they only raise their switching costs between the two platforms. Smartphone purchases tend to be subsidized. While a consumer might only pay $199 for a phone at purchase, the true cost is several hundred dollars greater. The remainder of the full cost is rolled into the monthly price of the two-year agreement.
Unsubsidized, accessory purchases will be significantly more expensive. That expense comes with an expectation of a longer product life cycle. There are very few things in the five hundred dollar and greater range that the average American expects to be upgrading every 18 months as they do their smartphones.
The best example of this is the car. Both Google and Apple are looking to enter the market. First with connected vehicle systems sold through existing manufacturers, but ultimately by selling their own wholly designed systems.
According to the most recent data, the average age of a vehicle on the road in America is a little over 11 years. By contrast, the average smartphone is upgraded every two years.
So if you purchase a car with Apple CarPlay integrated, chances are you will have a significant switching cost from the Apple ecosystem for over a decade. In other words, if you buy a car with Apple CarPlay, don’t expect to change to an Android phone any time soon.
Switching costs only grow with the number of devices that become connected. Both Apple and Google are only seeking to grow their portfolio. Your house, your car, your phone, and your body all present opportunity. It isn’t inconceivable that you could have a dozen or more devices that subscribe to either the Android or iOS ecosystem within a decade.
The chain of purchases is easy to follow. You own an iPhone, so you buy and Apple Watch. When both Android Auto and Carplay hit the market you choose Carplay so it works with your existing devices. When you go to choose technology for your connected home it’s really no choice at all. You almost have to choose products that subscribe to the iOS ecosystem if you want everything to work together.
This locks consumers into an ecosystem that could become extremely disadvantageous to them. In a fully connected world, it could cost many thousands of dollars and the hassle of replacing multiple devices to swap alliances. Not to mention the barriers to entry that this will create for new competitors wanting to enter any market in which the two giants play.
On the whole, it’s a choice between flexibility and interoperability. What we gain in seamless integration we lose in choice and competition. It’s still early in the evolution of the connected device market so it’s difficult to predict how things will evolve with any certainty. Current trends seem to point away from consumer choice. Historically that has never been a good sign. If we aren’t careful, that next connected device purchase might not really be any choice at all.
Post A Comment:
0 comments: