Mobile Strategies

Tablets, Mobile Devices

How Apple, Google, and Amazon remain the untouchable big three

22 July 2013 · By Dirk Barmscheidt

In an environment as competitive as mobile, why is the market still dominated by the same three behemoths? Because newcomers continue to make the same basic mistakes.

Why can’t anyone successfully attack Apple, Google, and Amazon?

We were all grateful to Apple that news sites could reach a new level with iPhones. The circulation revenues that iPads have generated in the digital world also have been made possible by Apple.

The transformation process in the publishing houses started by Apple was then accelerated by Google with Android.

Then came Amazon, which allowed publishers access to customers willing to pay more via the Kindle and the Kindle Fire.

Actually, publishers could have been very happy with this situation. Unfortunately, the brave new digital world has three basic disadvantages.

  1. Take it or leave it: It is currently impossible to negotiate major duties or features with one of the big three. Apple, for example, dictates price tiers and revenue sharing. The self-management process on Amazon Kindle is expensive and, in many areas, too complicated. Google’s Play store hangs behind Apple in terms of design by a good two years and is still not even offering a national store window.

  2. One-way communication: Contracts are not customised; advice is not welcome or heard; and joint development is impossible. In other business-to-business relationships, the parties work closely together on the development, such as in the automotive and engineering industries. Partners meet on equal terms. But in the digital world, there exists an asymmetry of power relations and rights.

  3. Lack of transparency: Publishers know next to nothing about what is going on behind closed doors at the big three. What new developments are planned? How can we improve future action from the past? Not even the most important figures are shared openly with publishers.

Based on the economic theories, a competitive environment like this invites innovative, aggessive, and customer-oriented companies. Such fast-growing markets normally attract more competitors.

But why do so many fail when attempting to attack the big three?

Three examples of failed attacks:

  1. Nokia: With the Microsoft alliance, everything should have been better. New smartphones were developed, and the brand was reinvigorated with a younger image. And yet: a 32% drop in sales in the second quarter of 2013. 

    With the sale of 7.4 million Lumia devices, the brand reached the highest level since the introduction of the series. Impressive, until you remember 40 million iPhones were sold in the same time period. 

    Why did Nokia fail? Inconsistency! The smartphones are technically OK, but lack a thrill factor. They’re stuck in halfway execution.

  2. Barnes & Noble Nook: The oldest and largest U.S. bookseller set upon the digital market early (2009). It developed its own tablet and launched a newsstand and app store.

    But earlier this month, after a 34% drop in sales in the second quarter of 2013, CEO William Lynch abrupty resigned. Amazon was able to increase profit and revenue in the same period again. 

    Why did the Barnes & Noble Nook fail? Task of the core competence! With the Nook HD, the bookseller left its familiar home ground and went into business with apps, videos, and games.

    A dangerous step taken much too early.

  3. Microsoft Windows 8: Using its vast resources, technical know-how, and unrivaled distribution strategy, Microsoft tried to overtake Apple and Google with its new Windows 8 operating system for smartphones, tablets, and PCs.

    Everything was newly developed. It became a design trendsetter. So why did Microsoft fail? Evolution not revolution!

    User behaviour takes years to develop and is extremely rigid. Even small changes to user interfaces and navigation led to massive customer complaints, because an intuitive use of the product is almost impossible.

This is not a software but a general phenomenon (see design changes in newspapers). Apple has changed a lot with iOS 7, but there’s still no change in the basic navigation logic. Evolution not revolution!

Of course, there is also a successful example: Samsung makes many things right in the development of new smartphones, outstripping Apple.

There is still plenty of room for smart entrepreneurs and businesses. It will be interesting to see who tries to attack the big three next.

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