While an awful lot has been written about the Apple ecosystem, the recent release of the Apple AirTag got me thinking about it once again. We just had the AirTag in our applications lab so we could image it in support of iFixit’s initial teardown, and we were able to get a good look at how AirTags compare to similar products we had X-rayed from Tile (RIP?) and Samsung.
As expected, the Apple AirTags had some premium touches (an actual speaker and incredible materials), as well as some uniquely Apple shortcomings (no key ring). Features aside, AirTags represent another example of Apple’s influence on the consumer electronics landscape: its ability to carefully craft user experiences, as well as impact on other enterprises in the space. I’m also exceedingly interested to see the unique uses folks cook up for this “new” device.
I’m a big proponent of reducing friction. I admire those who have mastered it and am always on the lookout for ways to reduce friction in my own enterprise. In particular, I appreciate the times I experience it as a consumer. Within the Apple ecosystem, reducing friction and creating a seamless user experience across the entire family of products and services is, of course, a key strength. At the center of it all is the iPhone, and with each of its products and accessories working better with that core device than virtually every competitive product in every category, the (frictionless) choice for consumers is easy: choose Apple.
And, as good as they are at enticing users to make the decision to stay within the ecosystem when choosing complementary products, Apple has also managed to make their products extremely sticky. In addition to crafting great user experiences—and while there is little friction in adopting Apple products—making the decision to trade your iPhone and all its complementary products and services for a competitive platform is anything but frictionless. Genius? Evil? Evil genius? I’m not here to judge, but I do find it remarkable.
Will AirTags end up strengthening the bond between Apple users and the ecosystem? It is one of the reasons it will be so interesting to watch the ways in which people’s use of them evolve. They will likely be more than just a tool for finding things lost or stolen; you name it: keys, phones, luggage, wallets, bicycles, pets or children. While all of these things have already been done with Tile and other competitive products, the prospect of such devices now being able to utilize the breadth of the Apple network would suggest that new and creative uses for AirTags will likely eclipse those of their predecessors. This also begs the question: Does this spell the end for Tile?
As a reminder of Apple’s power to standardize a vertical, Figure 1 is a photograph taken during Steve Jobs’ introduction of the iPhone. That was the smartphone ecosystem prior to the iPhone: Moto, Palm, BlackBerry, Nokia. Since the iPhone, all smartphones look the same—a rectangular piece of glass. Those who didn’t adapt fast enough died. Same for the iPad. Same for the Apple Watch. Same for the MacBook. Same for the AirTag?
Figure 1: Steve Jobs shows the soon-to-be-defunct line of competitors during the introduction of the iPhone in 2007.
While Tile will likely continue to have a place in the market, its prospects for growth are dim. Tile, like others, can choose to make products that are compatible with Apple’s network, but consumers who choose them aren’t likely to have the same friction-free experience; knowing this, many (likely most) Apple users seeking to purchase tracking accessories will simply choose AirTags anyway.
Furthermore, migrating Tile users to the Apple network will only serve to cannibalize Tile’s own network, further damaging their prospects. Tile’s conundrum, as well as its likely fate, is nothing new, nor is it limited to those enterprises playing within the Apple ecosystem, but there is something unique about the challenges for those who wish to make complementary or competitive products to those of Apple. There’s a long list of products and apps that have found it increasingly difficult, if not impossible, to compete for the affections of Apple users in the face of direct competition from Apple. The attrition of its competitors, whether predatory on Apple’s part or not, starts to smell of monopoly, with a heck of a lot more than Monopoly money at stake.
Apple's outsized reach and influence isn’t just limited to the extent of its own product and service offerings. Even titans like Google and Facebook aren’t immune to being jostled by Apple’s wake. Both find their business models affected by Apple’s seemingly altruistic shift toward user privacy with the release of iOS 14.5. With this otherwise innocuous update, Apple’s decision to make users actively decide whether the apps they use have permission to track their online activity, the very ground beneath the giants shifted.
Google and Facebook both generate massive revenue from the ad retargeting made possible by such tracking, and simply by revising the way in which consumers give permission to be tracked, Apple has exercised huge influence on how two of the world’s biggest companies do business. Facebook, of course, points out that they have also had an outsized influence on how businesses of all sizes are able to reach their customers. Altruistic? Idealistic? Predatory? Again, I’m not going to judge, but likewise find it remarkable.
Full disclosure: I am an Apple user and have appreciated and admired the consumer experience. That said, I’ve also long aspired to build a better mouse trap and I just hope that when I do, it doesn’t end up trapped in the Apple ecosystem. I also hope that Apple stays out of the X-ray business.
Dr. Bill Cardoso is CEO of Creative Electron.