It’s the ecosystem stupid.

Ok, so everyone is talking about Apple these days. There was a good Fortune article on why Zunes don’t matter, regardless of how good they might be. (The Trouble with Zunes) This got me thinking.

Windows is obviously a very successful product for Microsoft. (Captain Obvious.) The reason it is successful is because it created a very powerful ecosystem – developers, CPUs, hardware vendors, etc. I once saw a really insightful slide (from some analyst – no idea who or where to find it again) that showed how much Dell / HP / Compaq (shows how old the slide was), Intel, and Microsoft, spent on R&D and how nearly impossible it would be to catch up with that. Clearly it was right – no one has caught up. I think it missed the developer angle – the ability to develop interesting applications coupled with the right development tools and a critical mass (of consumers for the apps) is very powerful. And even more difficult to overcome.

Apple seems to get this on several levels:

  1. The basic ecosystem: creating a linked system (a closed one is easiest) that just works from end-to-end is critically important. That’s why ipod+itunes has seized the music space. It’s also why once they get AppleTVs and AppleHomeServers right they’ll control the living room. Unless Microsoft wakes up and recognizes not just the importance of this ecosystem (I think they do) but that the only way to win is through a fully linked-up, coherent ecosystem, Apple is going to win this war too.
  2. Design matters: Not just industrial design, but also interface and system design. And, probably more importantly, it is a heck of a lot easier to design a great product when you control the whole ecosystem. System design – basically how everything that is involved works together – is the hardest parth and is, again, made inherently easier in a closed system. Bill Gates is a great system designer. The problem is that at Microsoft I don’t know who else is. If there is one (or a group) it’s probably either the Office team (brilliant integration of formerly disparate applications to make them so co-mingled it’s hard to imagine them not being a suite) and/or the Xbox team (this is a good system Xbox 360, Xbox live, Xbox first party, and Xbox thrid party.)

Apple (or maybe just Steve Jobs) clearly gets these two things. They also have the inherent power and charisma of Jobs at the top which forces everyone else to at least try to think like him. I’d wager that everyone working on a product team at Apple is always thinking “omg, omg what if Steve comes in here and looks at my product – he better be blown away”. When everyone is thinking like that, you get 100x better outcomes. I’m pretty sure there aren’t many people thinking that way at Microsoft these days.

The third axis of tech power, Google, is somewhere in the middle. They have a lot of really smart people thinking up really smart things. However, I’m not sure they have a lot of system thinkers running around. All their stuff seems like amazing spot solutions with little overall cohesion. That’s why Android (their phone effort) has little (imo) chance to unset the iPhone. If they really got someone in there thinking about the overall system, this could change. It’s not beyond repair in my opinion.

If you want a clear example of this, look at their authentication system. Admittedly they are trying to fix this, but it’s pretty bad right now.

BTW, it’s hard to do this stuff. As an entrepreneur I try to do it everyday. It doesn’t always work out the way I hope – ecosystems (and systems in general) are pretty complicated and it is hard to figure everything out. It’s even harder to do with the limited resources of a start-up.

So, what do you think ?