Continuing the discussion in last week’s post, I will now address the other three challengers to the market: Google, Microsoft, and Amazon.

Google

Coming right up behind Apple, Google is the next biggest challenger for the loyalty of its users. Google already has the majority share of the search market–it just has to turn that lead into a lead for all of its services. In some areas it’s already leading: Maps, Android, Gmail, Docs, etc., but its current challenge is to get all of those services synced together.

Historically, Google early on established a model of positive feedback with the quality of their search engine and other offerings, but there was nothing essentially tying users to Google’s products. Old mail was stored on Gmail’s servers, but that could easily be ported to a new account (contrasted to Apple, whose ease of use and compatibility between Mac, iTunes, and the iPod [which could not be synced outside of iTunes] basically made it very hard to switch to a competing product). People could go use Google’s Search, Maps, Local, etc., but it was extremely easy for users to switch to other offerings, such as Bing, Mapquest, or Yelp. It also doesn’t help Google that physical devices tend to produce more impact than abstract ones.

Google is currently trying to wear away on Apple’s lead by building an ecosystem around its online offerings using its own ChromeBooks and devices that run its Android OS. These products tie down users to Google’s ecosystem. Android has been relatively successful because of two things: its openness and price. The OS is free for any company to use, a sharp departure to Apple’s philosophy of locking down ecosystems. Thus, more devices are pushed out, giving consumers more options, and thus higher market share (similar to Windows in the Windows v. Mac fight).

Google thrives on its web services, and has continuously been trying to tie users back to those services. The challenge for Google is to convince users to exclusively use their offerings and to tie them together, so users don’t view Google as having separate offerings–rather, a complete ecosystem to get everything done.

Microsoft

Microsoft, the late player to the ecosystem game, arguably has the hardest job in trying to win users over to its ecosystem. Besides starting 3 years too late on a phone and 2 years too late on a tablet, most people who would buy one of those devices have already bought into an ecosystem, if not with an Android or iPhone, with the iPad. Microsoft thus needs to offer compelling performance to tell users to make the switch to its Windows Phone, Windows 8, and Windows RT platforms. Unfortunately, it can’t really offer any migration paths between Google and Apple’s offerings, so Microsoft is stuck in a hard place.

Pity too, since the technologies look very promising. The Metro user interface style has been widely praised, and its easier than ever to sync documents and edit them using Microsoft Office anywhere you are. The one thing that Microsoft does have running for them, however, is familiarity, switching costs, and (to a slight extent) compatibility. Windows is the most used PC OS by far, and Microsoft can easily update those users machines to Windows 8. Corporate IT departments can also be loathe to switch to Mac, which won’t support the legacy software they run. Additionally, Windows RT also allows users to edit documents and presentations in full-featured versions of Microsoft Office, thus providing users with one feature no other tablet can offer. And with Windows 8’s app store, Microsoft can definitely lock users into their own ecosystems, because even if users aren’t using a Microsoft tablet, they can still buy into their ecosystem on their PC.

Microsoft’s challenge is to demonstrate to users that the benefits of their ecosystem is dramatically better than staying with either Google or Apple. If they can leverage their power with the living room through Xbox, the PC with Windows, and productivity with Office and convince people to switch (which is entirely possible!), they might just develop into a powerful force to be reckoned with. If not, it will remain a distant player in the personal device market.

Amazon

While not most visible, Amazon is also very far along in building its own ecosystem. Firstly, Amazon’s customer satisfaction, and therefore positive feedback, has been proven to be higher than any other company in the world, allowing it to retain customer loyalty. Amazon’s main offerings–its store and web services–generate enough revenue to allow this company to take a hit in other areas as an investment.

For example, Amazon’s Kindles are sold at a loss for each device, but because Amazon knows that this loss is offset by the purchases made for the Kindle, they are willing to subsidize the device. Thus, the Kindle line is able to undercut other eReaders and tablets, giving Amazon another major selling point. And because their Kindles are locked down, users are forced to buy books from Amazon’s own store, and read them on Amazon’s own proprietary Kindle software and hardware.

As such, Amazon uses its positive feedback for the marketplace to garner support for its other devices, and lower prices to undercut the competition for a slice of the pie. It’s been a successful strategy so far.

Lastly, building an ecosystem does not solely depend on the demand-side of devices. Customers want computers, tablets, and phones, but when looking into an ecosystem, they also want the apps and support that comes with it. Developers are often locked into one ecosystem by coding languages (Objective-C for Apple, Java for Google, C++/C# for Microsoft) and cannot easily migrate easily from one app store to another. One can argue that the iOS App Store is one of the main reasons why Apple devices are so popular. The same goes with the support after purchase (Apple Store, Microsoft Store!). Because in this new digital age, what matters is not the purchase (as Amazon has correctly figured out), but the company’s other offerings aside from the purchase. As companies increasingly vie for users’ loyalty, be prepared to see an influx of new tactics and services solely focusing on the ecosystem, because nowadays, that’s all that matters.