iPhone exit barriers
The point that software investments create a moat (in this case, keeping customers in á la Win32 rather than keeping upstart competitors out á la deepwater petroleum exploration) is workable only if (a) the applications people continue to use are not in fact freely available on competitive platforms, and (b) the paid applications aren't basically toys of which people grow bored.
Maybe sudoku is addictive enough that buying it keeps you invested in it, and (b) won't work for it. However, how long exactly do you expect a user to play Super Monkey Ball after mastering every level? Maybe they will want to keep it so they don't lose their high score ....
On the other hand, applications like ePocrates are free downloads wherever they exist. Sure, you need a username and password -- ePocrates keeps the keys, and you can't use the free downloads without good IDs -- but the app itself doesn't have any barrier to being replaced on another handset.
There is certainly a possibility that iPhone software -- or music -- could foster lock-in, but I'm not convinced this is a sure thing. I think the better possibility is that Apple's development environment is such that developers, given a choice, will build for iPhone. I don't think Apple's current pricing creates a barrier to the customers paid-app developers want to chase with commercial smartphone applications. Thus, I think application quality and diversity will create the lock-in (if any) rather than investment in specific applications.
You know how folks complain here that Windows games get all the love and care in optimization and tweaking so they're faster? If Apple controls the platform with the mindshare among developers and the sales among users, it'll have the platform with the developers' love and attention. Ideas like focusing a major OS release on performance-related technology (massive parallelization, GP-GPU support, etc.) suggest Apple wants to build a dream platform to achieve this very kind of thing. Apple is marketing to developers, so developers will make the platform more able to market to the masses.
And yes, I think that down the road Apple really will try for the masses. The economics of hardware suggest that's where the future is, and Apple benefits from being able to offer both hardware and software upgrades -- and now, thanks to the growing App Store, upgrades of third parties' software.
The hardware is being commoditized, and though Apple might be able to continue distinguishing itself with industrial design, the per-unit profit will decrease as overall costs of components decrease even if margins remain high. Sure, this trend has been in the works for decades and it won't end box profits any time soon, but Apple may be looking out at the distant future here.
Of course, software engineers have been very obliging in making applications whose demands grow over time, so that even newer hardware is barely sufficient to the tasks set before them. Rather than computing power getting cheaper, it's also very likely that in some very common classes of machines the power will instead get greater at similar prices (e.g., handheld computers are cheaper, but maybe notebook computers will remain in demand with high performance until there is no discrepancy with desktop hardware or beyond, and of course that day may never come given growing performance requirements of software).
Interesting stuff.
Take care,
--Tex.
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