Mobile Platform Wars Only Beginning

Smartphones, tablets, and their digital ecosystems have had a stunning impact on a range of industries in just a few short years. Those platforms changed how we work, how we shop, and how we interact with each other. And their disruption of traditional product companies has only just begun.

The first casualties were the entrenched smartphone vendors themselves, as iOS and Android devices and their app marketplaces rose to prominence. It's remarkable that BlackBerry, which owned half of the US smartphone industry at the start of 2009, saw its share collapse to barely 10% by the end of 2010 and to 1% today, even as it responded with comparable devices. It's proving nearly impossible for BlackBerry to re-establish its foothold in a market where the number of apps in your store, your additional cloud services, and the momentum in your user community are as important as the device.

A bit further afield is the movie rental business. Unable to compete with electronic delivery to a range of consumer devices, Blockbuster filed for bankruptcy protection in September 2010. Over in another content business, Borders, the slowest of the big bookstore chains, filed for bankruptcy shortly after, while the other big bookstore chain, Barnes & Noble, hung on with its Nook tablet and better store execution -- a "partial" platform play. But the likes of Apple, Google, and Amazon.com already have won this race, with their vibrant communities, rich content channels, value-added transactions (Geniuses and automated recommendations), and constantly evolving devices. Liberty Mutual just voted on the likely outcome of this industry by reducing its investment in Barnes & Noble.

What's common to these early casualties? They failed to anticipate and respond to fundamental business-model shifts brought on by advances in cloud computing, app ecosystems, and user devices and communities. They failed to recognize that their new competitors were operating on a far more comprehensive level than their traditional product competitors. Competing on product versus platform is like a catapult going up against a precision-guided missile.

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