VisionMobile: flywheel Effect of Android and iOS (why the opponent is stuck)

[Many analyses measure the mobile ecosystem environment by downloading app stores. But is this an economic manifestation? Business Analyst Stijn Schuermans quantifies network effects through The Apple and Google ecosystems and their market barriers.]
Flywheel effect of Android and iOS (and why their rivals are grinding to a halt)(The so-called network effect, more applications, more devices, and Mutual Promotion)

The holy battle of business is to sell products and drive business development, and raise the threshold for competitors. In the mobile field, Google's Android and Apple's iOS seem to have such a holy grail. Many of them have already been written in the power of the ecological environment. Large app stores with hundreds of thousands of applications have triggered speculation about who is the winner. But in fact, what is the impact of App Store advantages?

Our analysis shows that Apple and Google are indeed creating an ecosystem with significant network effects. Developers and mobile phone users create value for each other. On the contrary, Windows Phone, BlackBerry, and Symbian fail to enable such network effects. Their sales are dominated by others.

The following two figures show the relationship between application quantification provided by a specific platform and quarterly device sales of the platform. Scalability: the platform is attractive to developers, and the device sales volume is attractive to users. The guides are pushed from left to right to indicate the time.

For Android and Apple iOS, there is a strong surprising correlation between device sales and the provision of applications. It is measured by numbers between 0 and 1. 1 represents a perfect straight line. Their correlations are 0.96 and 0.97, respectively, indicating very tight management. There is no doubt that sales volume and application volume are mutually reinforcing.

This clearly proves that the Android and iOS platforms have strong network benefits. More devices are sold and platforms are more attractive to developers. They write more applications and hope more users can obtain them. Similarly, more applications are provided, and the platform provides more functions for users. users prefer to purchase a mobile phone that supports these applications. This has become a virtuous circle with positive feedback. This is so strong that it controls other aspects that can affect sales and application development, such as promotions and advertisements, and brings cool technologies to developers. The current position shows no decrease, that is, the increase in application production drives the increase in device sales, and vice versa. We can predict a certain point. For example, when 0.5 million applications are provided, it can cover most users without linear growth. However, this saturation point is still coming.

Another interesting phenomenon is the difference between the growth rate of iOS and Android apps and devices. Data shows that each quarter, Andriod devices have 0.22 million sales increments, and iOS only has 45 thousand, which allows Android Developers to write more than applications. This means that the ratio between users and developers (applications) varies depending on the platform. Some small consultations provide support for this. Android market has more free apps than Apple apps. This difference is more obvious in the download process. Android users seem to spend less on applications, as shown in data costs. 2/3 of Google's app advertising revenue comes from Apple devices, which also shows that Apple users prefer to pay data fees on their mobile phones.

In fact, Android users spend less money, which directly leads to less appeal to Android apps. Therefore, in view of the axis of the chart, additional users need to attract Android Developers to write additional applications, that is, each developer has more marginal users and compensate them for low transmission rates, this explains the slope difference.

What about other smartphone platforms, BlackBerry, Windows phone, and Nokia Symbian?

Here we can see another story. These platforms fail to start or maintain significant network benefits. Due to the effects of some official application development, the overall effect on sales volume is not produced, and vice versa. Since the network effect does not control the overall situation like Android and iOS, other factors are pushed to the front-end.

For Nokia, according to the agreement with Microsoft, Symbian became the victim of Microsoft as a vendor of Nokia's exclusive smartphone operating system, leading to the destruction of acceleration. Blackberry lacks innovation. Text Messages (selling points) are used as commodities, leading to the gradual loss of its territory. Although they have gained benefits in the early days, they are unable to maintain the ecosystem and thus lose their competitiveness to users. Windows Phone is a new challenger. Microsoft has persuaded developers to start writing software for the Windows Phone platform. Obviously, they tried to start the network effect, but the device sales could not keep up.

Network effect is a daunting obstacle for newcomers. Once the ecological environment is established, it is difficult for the members to be attracted to the competition platform, and its development momentum is difficult to suppress. At present, although the network effect has been reflected by its competitors, only Apple's iOS and Google Android can go forward in a flywheel manner. Their momentum drives sales and developers' popularity, however, you only need a small amount of extra investment. In the future, we can see the inflection point of the effect, but the positive feedback is as powerful as in the past. Their competitors are destined to catch up in vain.

Related Links: My articles on Industrial Ecosystem chain and Miscellaneous