Yet, the feature comparisons about the hardware devices are a red herring.
Consider how Apple developed a sizeable lead with both its App Store and iTunes. According to the NPD Group iTunes downloads comprise 69% of all U.S. legal digital music download with Amazon trailing at 8% during the first half of 2009. Once a consumer starts using an application store ecosystem inertia takes hold–users no longer take the time to even consider whether there are alternative options, much less exploring and comparing those options. Although music can be purchased from other sources, it is simply more expedient to buy it in iTunes. Instant gratification and inertia are powerful competitive forces in today’s hectic world.
Customer Choices Today Are More Important Than You Think
We usually think of technology markets as very fluid–today’s winners are tomorrow’s losers. But when it comes to customer time and attention, the stakes are very high. In a well-designed customer ecosystem switching costs are quite significant–not in dollars but in time.
Figuring out what is portable from one device to another (say via switching from a Kindle to an iPad) and learning a new system are all quite costly in terms of time. And therefore few customers will be willing to change. Who wants to fiddle with migrating movies and eBooks to a new ecosystem when family, work, and personal pursuits demand so much of our attention? In a Time-Value Tradeoff the odds are always in favor of the incumbent.
The cold (though increasingly hot) war between Apple, Amazon and Google is all about gaining a foothold in a larger land-grab for customer time and recurring revenue streams. The iPad is yet another way to expand Apple’s share of customer entertainment time–which is exactly why Amazon and Google are desperate to counteract it.
Viewing the world through scarcity of customer time and attention, we can understand why so many players are jumping into the application store game: Blackberry, Nokia, Microsoft, as well as Amazon and Google (including the curious Google Wave App Store). Who wouldn’t want to own the toll-road to the customer?
There are only 24 hours in a day-and even less than that in terms of attention. No wonder the behemoths of tech are pulling out all the stops to grab their share today–and lock in their share for the future.
Adrian C. Ott has been called, “One of Silicon Valley’s most respected, (if not the most respected) strategist” by Consulting Magazine. As CEO of Exponential Edge® Inc (www.exponentialedge.com), she helps businesses gain market advantage in an exponential economy. Follow her on twitter at @ExponentialEdge
Adrian is the author of the forthcoming book The 24-Hour Customer: New Rules for Winning in a Time-Starved, Always-Connected Economy (HarperCollins, August 2010).
This blog reflects the author’s opinion and does not represent those of clients and affiliates.
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