Of all companies, it seems odd to me that Microsoft is so drastically behind the curve when it comes to apps for Windows 8 and Windows Phone. When you think about it, Microsoft was in the best position to create a better software-buying experience via an app store than anyone. Windows had 97- to 98-percent market share for the bulk of the PC era, and software played a key role in that dominance. Why has Microsoft only prioritized a Windows app store starting at the end of last year? It just makes no sense.
Similarly, Microsoft was in a growing position in smartphones with Windows Mobile. The company had tinkered with software stores, but the experience never really gained significant traction. Companies like Handango helped fill the gap, but again, much of what existed then is gone now.
The most robust third-party mobile developer network I witnessed when I joined Creative Strategies 13 years ago was the Palm developer community. In fact, the Palm developer community — in terms of passion, excitement, and quality of applications being developed — reminds me a lot of today’s iOS developer community. Microsoft never fostered the same commitment and passion for its mobile platforms as the Palm community did, even when Microsoft gained share and Palm itself began shipping Windows Mobile devices. Despite its efforts, Microsoft is still today struggling with weak developer interest.
As I think about the situation that Microsoft is in, it reminds me of the situation it was in with Internet Explorer for so long. Microsoft missed the boat on leading the Internet revolution, and now again it has missed the boat on leading the app revolution. All while it was in the best position to lead in both.
I like to point out that Apple beat Microsoft to the App Store the same way Netscape beat Microsoft to the Internet browser.
The Network Effect
In my opinion, Microsoft had the network with Windows throughout its desktop dominance. But when it comes to mobile, iOS and Android are the two platforms benefiting from the network effect.
In the book The Long Tail of Expertise, Alpheus Bingham and Dwayne Spradlin say:
In economics and business, a network effect (also called network externality or demand-side economies of scale) is the effect that one user of a goods or service has on the value of that product to other people.
The economics, in terms of monetary opportunity for developers — as well as the critical total addressable market achieved by both Palm and then with Apple — created a strong network effect. This is still going strong for Apple today.
Android also has a network effect, but it’s a different kind. While it’s true Android has the lion’s share of the smartphone market, we also know that simply looking at Android’s market share does not singularly indicate the strength of a platform or its value to developers or consumers. Engagement is consistently reported as lower on Android than iPhone, and developers are continually facing economic challenges of making money with Android.
Being in Silicon Valley, I get to meet with a lot of software startups. Android to many of these software companies I meet with is treated as a secondary priority. Rarely do I meet with a company creating software for Android first or only. If this platform was doing well for the masses, then I would imagine we would see more exclusive applications and I would see more software startups getting funded for Android-only development. This is simply not the case. Android is benefiting from the network effect of iOS, however, as developers are generally taking their iOS-first apps to Android eventually. Android has achieved a degree of the network effect by default, and on the heels of the iPhone.
This network effect is a key area that is driving both iOS and Android. This network effect has created long-tail applications.
Long-Tail Applications and Developers
Chris Anderson helped popularize the concept of the long tail with his book called The Long Tail: Why the Future of Business is Selling Less of More. The concept, in short, is that there is value in having large quantities of something (apps, in this case) that appeal to smaller groups of people. Another way of describing would be simply to say that having a successful long-tail model means having massive quantities of niche content.
A successful long-tail strategy, the one that I would argue creates the highest degree of loyalty to a platform or service, is one that has all the mass market goods (the popular items) but also has large quantities of goods that appeal to smaller groups of people. When we apply this theory to apps only, iOS and to a degree the Google Play store are in the discussion. Popular apps may be the most profitable, but long-tail apps are often the most discoverable.
Imagine being a Windows Phone or BlackBerry user for a moment. Your friends or family members are all talking about the new apps they’re using for things like health and fitness, education, gardening, sports and the like. They all rave about these great apps that they love and that are adding value to their lives. These apps don’t exist on your platform and probably won’t for a long time, if ever, unless a critical mass is reached. Which, of course, is not going to happen without long-tail apps and long-tail app developers. It’s a chicken-and-egg problem.
Or imagine your kid’s sports team starts using an application to help manage schedules and parents’ assignments, but it only exists on iOS or Android. Your favorite grocery store, magazine, or brand comes out with an app, but it’s only available on iOS or Android. Your kids’ schools offer mobile apps, but they’re only on iOS or Android. The workout video series you just bought has an app, but it’s only on iOS or Android. I hope you see my point.
Windows Phone and possibly BlackBerry may get the popular apps from the big developers, but where these platforms really suffer is in the long-tail apps and content, which is the driving strength for the mass-market appeal of iOS and Android. Only iOS and Android are attracting long-tail developers at the moment.
Developing a critical mass of long-tail apps and the developers who will continue to make them is the biggest single hurdle I see for Windows Phone, BlackBerry and any other platform that aspires to enter the market. Without long-tail apps and developers, these alternative mobile operating systems will continue to struggle to find customers for their products until the same long-tail apps make it to their platforms.
That’s if they make it to their platforms, of course.
Bajarin is a principal at Creative Strategies Inc., a technology industry analysis and market intelligence firm in Silicon Valley. He contributes to the Big Picture opinion column that appears here every week on TIME Tech.