Apple’s iPhone, along with its operating system iOS and the App Store, has become so ubiquitous in the mobile industry that it is now considered an example of “non-substitutable infrastructure”.
This means that it has such a strong hold on its users that it is difficult for a competitor to persuade them to switch to an alternative. Non-substitutable infrastructure typically exhibits the following characteristics: high switching costs, near-universal adoption within a market or organization, robust support from third-party vendors, and the ability to serve as a foundational technology for other services and applications.
Apple has established a reputation as a reliable and secure option for consumers, which has helped create a positive feedback loop for the company. This has resulted in customers further investing in Apple’s ecosystem by purchasing other devices such as the Apple Watch and AirPods, as well as subscribing to Apple services like Apple Music and Apple TV+.
Experts suggest that the seamless integration of Apple’s hardware, operating systems, and services, all backed by the power of the App Store, creates an unstoppable force. Given that no current competitor can match Apple’s market position, it’s believed that the company’s influence will only continue to strengthen in the future.
Although the iPhone and the Apple ecosystem currently dominate the market, it’s only a matter of time before they are superseded by new innovations.
Throughout history, empires have risen and fallen, from ancient civilizations like the Egyptians and Romans to more recent empires such as the Ottomans and the British. Even in the tech industry, giants like IBM and Microsoft have eventually been overtaken by new players.
I acknowledge that the metaphor of empires rising and falling is not entirely fitting, as Apple is unlikely to disappear completely, nor did IBM or Microsoft. However, while both IBM and Microsoft remain successful companies, they no longer hold the same level of market dominance or cultural influence that they once did. Unlike the current calls to break up Apple, there are no comparable movements to dissolve these former tech giants.
To understand how Apple’s eventual decline may occur, I propose a framework for how technology cycles play out. This cycle has been observed in numerous technological advancements, ranging from refrigeration to audio technologies.
Technological advancements undergo a cycle consisting of five phases:
- During the initial phase, multiple companies produce varying technologies to fulfill a particular user need.
- Market forces eventually lead to the emergence of one standard as nonsubstitutable infrastructure, which is often not the superior technology but the one that gains widespread adoption.
- The standard technology is then challenged by pseudo-challengers who mimic it but fail to effectively displace it due to a lack of significant differentiation or differing flaws. However, these pseudo-challengers may still offer enough value to survive and coexist alongside the dominant technology.
- Despite facing challenges, the standard technology reemerges even stronger than before, appearing invincible to displacement.
- Finally, a new and superior technology emerges and replaces the existing standard, starting the cycle anew.
At present, iOS has reached stage 4 of the technological cycle. Despite facing competition from the Android operating system and numerous devices from companies like Google and Samsung, iOS has achieved dominance and significant mindshare in the market.
Predicting what will replace the Apple ecosystem is an impossible task. Steve Jobs’ revitalization of the company, the iPod, and the iPhone’s impact were all unpredictable. The following criteria must be met for any new technology to overthrow the Apple ecosystem: it must offer clear value and differentiation that benefits end-users, provide economic benefits for vendors, and offer economic benefits for hardware vendors.
Despite initial skepticism and even sarcasm, the iPhone proved its worth over time. However, as technology continues to evolve with faster network speeds, more powerful chips, and smarter artificial intelligence, it’s possible that the next technology to displace the iPhone is already in its early stages. The bigger question is whether Apple will be the company to create and introduce it to the market.
