Echo In The Ashes Of The Fire: Apple, Amazon Jump Mobile Stack

“There’s only two ways I know of to make money: bundling, and unbundling.” — Jim Barksdale

Over the past week, while everyone I knew wandered the streets playing Pokémon Go looking like a horde of hip zombies, I spent quality time with that dowdy old workhorse of mobile telecommunications, iMessage. But I’m not talking about the version of iMessage your grandma has, I’m talking about iMessage 10.

Installing the beta version of any new operating system is the digital equivalent of BASE jumping, and the only reason I installed iOS 10 beta was to get the new iMessage. Because, as we all know from Apple’s WWDC in June, iMessage is now open to third-party developers and has become, voila! a platform.

Many commentators have dismissed this move as Apple just playing catch-up with Snapchat, Kik and Messenger, and it’s true that what was on display at WWDC did give that impression: all those stickers and emojis and full-screen animations.



But something much more significant is afoot. By turning iMessage into a platform on which to build other services, Apple is positioning itself to leapfrog Snapchat, Kik and LINE, and land squarely in WeChat’s backyard. Where most messaging apps have focused on the content and style of communications (text, images, emojis, videos) WeChat has evolved into a fully-fledged ecommerce hub. As cool as free keyboards and stickers may be, a $10 ARPU is way cooler.

But WeChat has not had much success outside of China. Take a bus in Bangalore or a stroll, if you dare, on the beaches of Rio, and you’ll see people using WhatsApp and Messenger -- not WeChat.

When it comes to cracking this particular nut in the U.S., few companies are better positioned than Apple.

Consider their assets:

Massive consumer usage. iMessage is Apple’s most-used software by far. Even though the app hasn’t seen a meaningful update in years, today Apple customers send 200,000 messages per second though it -- roughly half the volume of leader WhatsApp.

Frictionless mobile payments. When Apple Pay was first announced, much of the excitement was reserved for contactless, in-store payments: old tech, and something the Japanese and Scandinavians have enjoyed for years. Within the larger context of mobile payments, the ability to use your phone to pay for purchases in physical stores is trivial -- how hard is it to use a physical credit card, really? Much more significant is what Apple Pay means for mobile. Any brand doing commerce through its app or mobile Web site now has the ability to remove all friction from the checkout process. We can expect the same smooth process when conversational commerce comes to iMessage.

A committed developer community. $50 billion -- that’s the amount of money that Apple has paid directly to developers over the years. There are 13 million registered Apple developers, and any new path to monetization that Apple gives them – iOS, tvOS, macOS – they will take. This will include iMessage (part of iOS), especially since some of them are developing for other messaging environments already (Messenger, LINE, Kik).

Control of the mobile stack. As impressive as the growth of Messenger, WeChat, WhatsApp, Viber, Kik, Line and Telegram has been -- and it’s been stunning, really --  at the end of the day, they live at the top of a platform stack owned and controlled by Apple. In mobile, the platform is everything, and there are only two. This is why Facebook keeps trying to insert its own layers into the OS through Messenger, a new kind of app-as-platform. As Ben Evans put it, every spring Facebook holds F8 and announces that “this is what interaction on smartphones will look like.” Then a few weeks later Apple and Google say, “Look, sorry kid, but hey, it’s not your platform.”

It’s possible that, as the latecomer to this particular party, iMessage might reap many of its rewards after all.

So, if chat bots built on messaging apps occupy the topmost layer of the mobile stack, what comes after? Is the logical next step to jump off the stack altogether, take up residence in our other natural environments -- homes, cars -- and interact through more natural modes of communication, like voice?

The mantra “platform is everything,” referring to the smartphone ecosystem, makes a lot of sense, and is the reason why Amazon launched its own phone (which, unfortunately, no one bought).

But perhaps the failure of the Fire Phone was a good thing for Amazon. Unshackled from the many burdens of supporting a smartphone platform, Amazon is now free to innovate in other areas of human-computer interaction.

Perhaps, in some unintended way, the success of the Echo was born in the ashes of the Fire.

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