Marketing Is a Hype. The Mindset Behind Apple, Amazon, and Microsoft’s Monopoly
Apple, Amazon, and Microsoft aren’t great advertisers. Yet, they rule the tech industry.
I’ve always been fascinated by how Amazon, Apple, Microsoft do business. Much as they’ve consistently been competitors, no one could defeat the other. And so, the three of them beautifully monopolize the market.
Knowing the secret behind their monopoly has always lingered in my mind. What’s intriguing, though, is that none of the trio has the element of novelty. They all operate in a similar fashion. Yet, their stats are making innovative and futuristic businesses blush.
It turns out that these tech giants share the same mindset. A mindset that was injected into Amazon, Apple, and Microsoft from their inception to date. A mindset that looks weak from the outside; yet powerful from the inside.
In this post, I will walk you through the rationale behind Apple, Amazon, and Microsoft's monopoly. That’s, if appreciated, shall change how you see the market.
Quality/Marketing is Just the Tip of the Iceberg
Businesses are fighting over sales, relying on quality and marketing.
While quality might be important, it doesn’t seem to give a significant edge. Outsourcing from the best has never been easier. Supply chain management has made the finest remote labor markets accessible.
Marketing is, too, a flawed approach as everyone knows how to promote their products compellingly. Before the advent of the internet, marketing was really something. It was costly. And it wasn’t everyone’s cup of tea. Success in the field required outstanding elocution and negotiation skills.
Today, however, marketing channels are ubiquitous. Ask a 7-year-old about marketing, and he would tell you social media without skipping a beat. Social media marketing virtually replaced word-of-mouth marketing to the point that the outreach of information became borderless.
Interestingly, Amazon, Microsoft, and Apple are neither the best manufacturers nor the best advertisers. Yet, they managed to get the market to tip towards them.
As of April 2021 statistics:
It turns out that what gives Amazon and its neighbors the power to rule the tech industry is the platform thinking mindset.
Generally, businesses are split into two models: pipelines and platforms.
Pipelines are a traditional, proprietary, one-sided market governed by companies. In pipelines, businesses are competing over sales — the adage ” build a better mousetrap.” The model exists solely to urge people to buy—an inside-out thinking.
In contrast, platforms are a two-sided market powered from the outside in. Simply put, customers first, then the business. Platforms aim to provide an ecosystem housing prosumers (consumers and producers). It’s a household-like ecosystem.
“a platform is something that lifts you up and on which others can stand” — Mark Bonchek & Sangeet Paul Choudary.
Platform thinking enables Amazon, Apple, and Microsoft to enjoy financial gains jointly with their users.
For example, Amazon relies heavily on its external sellers to drive sales. “58% of all physical units that Amazon ships globally are from Marketplace sellers,” said Doug Gurr, former head of Amazon UK.
Both Amazon and the sellers reap success from the process. Doug comments, “So what you can see is that hundreds and thousands of small entrepreneurial businesses and tens of thousands of small entrepreneurial British businesses have been able to find in some cases extraordinary success.”
In addition, by shifting the wheel from pipelines to platforms, businesses tap into resources and talents they needn’t own. Apple is a good example of this.
In 2008 the app store was home to 380 000 developers who were behind 1.5 mobile apps. By the end of 2015, these apps had been downloaded 100 billion times, generating over $33 billion in sales. According to Apple’s 70/30 cut, $10 billion has been generated for the company without ever having to write a single line of application code. (Accenture report 2016)
Now, 20 million registered developers are on iOS…
By infusing platform thinking in their business model, Amazon, Microsoft, and Apple effortlessly drive sales without the need for marketing talent.
The “Network Effect”
Unlike most businesses whose only purpose in life is to sell, companies like Amazon and Apple pay little attention to “how to sell.” Rather they provide an arena where members sell on their behalf.
The power of platforms is drawn from what is known as the “network effect.”That is people, attracting each other to the platform. In other words, when many people use a platform, one feels compelled to join the team.
Let’s take a simple example; the telephone. Pipelines are the top part of the image above. The relation between companies and consumers is linear. This means that in order to sell, the company should call and convince the consumer. The middle and bottom parts, however, demonstrate a platform network. Companies don’t have to interfere. Users call and encourage each other to buy. The bigger the network, the merrier.
Apple managed to fully leverage the power of the “network effect.” If you ask someone why they buy Apple products, they probably won’t provide any quality/price rationale as an answer. Apple is not viewed as a product but rather a lifestyle or a club membership — Apple people consider themselves VIPs. And people simply crave joining the club.
The “Chicken and Egg” Problem
Gone are the days where the primary focus of businesses is “how to sell.” The current trend is “how to link.” Businesses that manage to provide the best ecosystems for their users are most likely to succeed.
However, while platforms enjoy exponential growth due to their vibrant communities, they are the hardest businesses to launch.
Platforms, indeed, suffer from “the chicken and eggs” problem at their inception. No one likes to join an empty platform. However, and to mitigate losses, businesses start small then scale later on. Thus, many platforms undergo significant changes in their lifetime.
For example, Amazon transitioned from a mere bookstore to a shopping store, cloud provider, and on-demand video streaming service.
Users, Users, and Users all the Way
While seeking the answer to what makes Amazon, Microsoft, Apple great platforms, a flashback to their debut is worthwhile.
Amazon as a bookstore, Microsoft as a software development company, Apple as a computer manufacturer had little to no funding. Yet, they broke the records later.
The reason is that these platforms were and are obsessed with users. Jeff Bezos notes that Amazon’s priority is to “figure out what they [users] want, what’s important to them.” Steve Jobs used to overstress the importance of consumers to his employees while building the Apple empire.
Platform thinking helps such monopolies better care for their users. They have proved to the world that consumers are not cash cows. And that despite having an empty pocket, consumers are still the top priority. Best of all, they provide money-making schemes to support their users.
For example, Amazon offers a package of selling services like Merch by Amazon, allowing users at no cost to design and sell t-shirts on the platform. Amazon, therefore, as a business, offers lucrative business opportunities to its users.
Owing to the excessive care provided, people find themselves tied to these monopolies. As a result, and in some cases, they ditch other services to fully dedicate themselves to such platforms. The proverbial “ do good. And good will come to you”.
Other businesses are left behind because they believe they can easily fool consumers. Whether by advertisements, rebates, discounts, and so on. While these manoeuvres still work, they don’t attract mass users. You simply can’t fool everyone.
“Time is Money” and the “Watchdog”
Technology is making clocks spin faster, and as a result, time has become more valuable. Tech giants like Amazon exist to solve the “time is money” problem. They offer an all-in-one ecosystem in which consumers can promptly get things done.
For example, one can purchase a Dell laptop from Amazon without having to visit the parent website at roughly the same price point.
Furthermore, platform thinking benefits the userbase as platform administrators monitor every operation, transaction, and interaction between users. Knowing that a judge is watching over the house urges users to abide by the rules of the game and avoid deceptive actions making platforms way better and safer than even physical shops.
I still vividly recall the day when I was sold a counterfeit console power adapter for the price of an authentic one. It was from a physical shop. Although I gave the seller the choice to either substitute the adapter or give me back my money, he refused to do so. The experience taught me that there is always risk in two parties' deals. And if this face-to-face transaction had been conducted on a platform, the dispute would’ve been fairly resolved.
Platforms ensure a convenient, safe, and fair ecosystem for consumers.
Platform thinking isn’t a new trend. It’s been out there for years. Hidden and quiet. It remained in the shadow because it requires patience. And, much as goes the saying “patience is a virtue”, being patient is easier said than done.
Because Amazon, Apple, and Microsoft patiently grew to like, learn from consumers, they have maintained high standards accommodation to them. Not only locally but globally, which makes them great platforms.
“Your most unhappy customers are your greatest source of learning” — Bill Gates, co-founder of Microsoft.
It is of note that while many businesses adopt platform thinking, they fail to provide the best ecosystem for their users. Perhaps due to poor customer support, lousy interface aesthetics, recurring system downtimes, and more. And that leaves them behind.