Venture Capitalist at Theory

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2 minute read / Jun 11, 2012 /

Why did Apple’s unwillingness to compromise finally succeed?

Apple has built the most successful tech ecosystem of the past ten years. And they have done it, surprisingly, by dictating the rules of that ecosystem.

Compare iOS and Android. To win, both needed to develop initially 2 but eventually 3 things:

  1. A mobile OS
  2. Mobile hardware to run the OS
  3. And later, the content ecosystem

Apple controls nearly every aspect of this stack, from the prices of books and movies, to the place where apps are downloaded, to the payment mechanisms, down to the advertising and user tracking.

Incredibly, this worked. The movie studios agreed. Book publishers agreed. App developers agreed. Users agreed (and supplied 400M credit cards). By total ecosystem revenue, Apple has built an ecosystem 6.5 times larger than Android: Apple has paid $5B to developers and Google less than $750M.

Each ecosystem and its history are very different. Apple’s early ecosystem commanded a very small group of die-hard developers to build complementary applications on proprietary hardware. On the other hand, Windows embraced commoditization of hardware to win share and build a massive ecosystem.

More recently, Facebook built an ecosystem as a by product of sheer user growth of their core product. Twitter created and destroyed their ecosystem of clients and are now building a new data ecosystem.

Apple will always be defined by its unwillingness to compromise. iOS is no different. The question I have is, why did this unwillingness to compromise suddenly work?

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