Of Apple And Phone - June 11

IT is so common, unfortunately, for commentators and reviewers to left out Microsoft and its Windows smart-phones nowadays. Once a leader of the market, Microsoft now teeters towards falling profit and shrinking market share. Rubbing salt into the wound, it is watching, quite helplessly, how arch rival Apple Inc. and its hordes of Apple Church adherents are thriving. And certainly, after slashing iPhone's price to $ 99, it has quite some time to endure the embarrassment and conceding at the end. Perhaps, the media should start worrying the absence of Bill Gates and how Microsoft, tacitly, misses him.

Again, on the 8th of June, the pilgrimage of Apple worshipers to California had been filled with surprises and renewed excitement. Apple iPhone 3G-S (peed) had been proudly brought onto stage to the exhilaration of over billions of Apple enthusiasts. This latest addition serves to fortify Apple's grip as the leading innovation centre. Even with the rare disappearance of techno-wizard Steve Jobs, it seems that Apple Inc. is determined to seal the championship and leaving rivals Blackberry and Palm in misery.

The key towards Apple's success is the existence of network effect, something that Steve Job had bitterly missed out during the hey-days of Silicon Valley. The economics of networking could well be characterized into 3 ascending degree. First, it is vital for Apple and others to gain critical mass at the first place. Getting minimum number of users, as a start, to launch the product is more of a problem in Eastern countries. Apple enthusiasts are well dispersed throughout North America and Europe, creating the demand necessary to form a network of smartphone users. There, people are ready to use iPhone to substitute for mobile phones. This is easier, compared to the next degree where users form a network which it utilizes most frequently or having most closely-connected people using them. This is harder, as network "lobbying" occurs where peers or business contacts constantly influence and override the purchasing decision of an individual.

The Douglas consumer or in lay-man term- conspicuous consumption, tend to lead towards group of friends using the same brand of smart phones. iPhone has been particularly successful with its Apps Store where people download and share interesting application software among its peers. Compared to Blackberry, iPhone has more than 100 times more of its collection of applications. Sharing, quite self-explanatory, describes the gist of the networking value.

With people around the world using apps from iPhone, it is only natural for software programmers to "lock-in" into Apple's format. These programmers who find salvation in designing great software will only continue to generate better apps. The self-achievement is not an incentive managers would want to miss of its programmers. So, this virtuous circle will continue and Apple looks set to dominate the network.

Marketers will know better as in the case of smart phones, application and networking value has been the real consideration, rather than the performance and cost. And Steve is still watching over Apple. There's more than meet the eyes.