The smartphone ecosystem comes of age

A recent Nielsen report on the smartphone ecosystem highlights its consolidation and maturity, built around a few companies that have managed to become true leaders thanks to a consistent strategy and the right acquisitions. The data is garnered from the North American market, but the conclusions can be applied to most other markets, with some exceptions like China or Russia, or the substitution of apps like Facebook Messenger by WhatsApp.

The first eight most-used apps belong to two companies: Google and Facebook. Google’s YouTube (acquired in 2006) sits at number 3 and Google Maps (acquired in 2004) is in 4th place, in addition to Google Search, at number 5, Google Play in 6th and Gmail in 7th place, while Facebook takes first and second place with its own app and with Facebook Messenger (acquired in 2011), and includes Instagram (acquired in 2012) in the 8th spot. That the last two positions on the list are Apple Music at 9 And Amazon at 10 makes it clear that the smartphone ecosystem is already completely dominated by the so-called GAFA quadrumvirate, demonstrating the importance of knowing how to define a strategy and having the knowhow to acquire companies when required. Many of the acquisitions that have taken these companies to the position they occupy today were described at the time as madness.

Consolidation, reflected in the overwhelming dominance of a few players, has other consequences. Although 88% of Americans already have a smartphone, and the penetration of these types of devices in the world is growing systematically, most users now download far fewer apps than just a few years ago, which means that the dynamism of the ecosystem in general has been greatly reduced. Where once there was a land of opportunity for anyone who was able to launch an application with some success, the panorama is completely dominated by a few players.

Programming apps is now easier than ever before, but getting them to market is nigh impossible: the consolidation of the smartphone as a platform has taken place much faster and much more efficiently than happened with the personal computer. In the smartphone world, some of the major competitors, such as Google or Apple, also dominate distribution channels through their respective app stores. And while they pretty much have the US market evenly divided (iOS 45% and Android 53%), it’s a very different picture in other regions: in Spain, in July 2016, Android’s share reached 90%, and globally is 87%. In the smartphone ecosystem, Google is, and has been for some time, what Microsoft was in the PC world, except for the not so small detail that its product, Android, is still for the most open source.

It is now clear that betting on mobile ecosystems from the get go was a strategic decision. The current scenario is not written in stone, and even competitors like Apple, who dominate a significant part of the entire market, have had to carry out impressive launches and advertising campaigns to be able to place Apple Music in the Top 10. Through its application Amazon pretty much forced customers to use the smartphone. For newcomers, unless they are able to invent a whole category, there is now virtually no way in.

Most of us have our smartphone on us at all times, even returning home if we leave the thing behind, and we use it for more and more things. The sector is now controlled by a very few companies. The rest, as they say, is history. And as we all know, history is written by the victors.


(En español, aquí)