This seems to confuse some people, the author is not saying Apple have a monopoly on smartphones. What the author is talking about is the locked-in ecosystem that Apple owns, iOS and macOS (watchOS/tvOS).
> Moreover, the advantages go beyond margins: the best way to understand both Apple’s profits and many of its choices is to understand that the company has a monopoly on not just MacOS but even more importantly iOS. That means Apple can not only capture consumer surplus on hardware, but developer surplus when it comes to app sales; that some apps are not made is deadweight loss that Apple has chosen to bear to ensure total control.
The problem that Apple is having in China is that WeChat is the driving "platform" ecosystem, not the OS or the brand.
In other words, people aren't buying iPhones for its integration with Apple services in China, which could lead to an increase in growth due to the halo effects. Instead, they run WeChat and they buy things through there, which leads to no growth in Apple's services and revenue. Which also means, the customers have no desire to buy another Apple device. They can do the same on any device that can run WeChat.
If Microsoft sells a Windows Phone with WeChat as the default app for everything, they may have a hit in China but it would not be a sustainable hit because again, WeChat can run on iPhone or Android or any other OS.
Why is normal competition considered not sustainable, and lock-in is viewed as a norm? Lock-in should never be a norm. Apple and MS are just too used to be monopolists and can't stand fair competition.
Lock-in is a natural consequence of having a platform. It's perfectly normal and happens without even making any explicit attempt at having lock-in. Any time you provide a platform and people build on top of it, you have automatic lock-in. This has nothing to do with "fair competition".
Lock-in can be avoided, if platform is designed to be open. It's only "natural" when non portable or non standard things are used. Problem with Apple and MS is that they use the later on purpose.
An "open" platform is still a platform with lock-in. The only thing "open" does is allow other vendors to decide if they want to support that platform too. But, for example, you can't take a web site and use it on a platform that doesn't support web pages (e.g. you can't browse the web on an AppleTV).
> Problem with Apple and MS is that they use the later on purpose.
There are really significant downsides to open platforms. They're harder to build, develop much more slowly, generally have a big issue with multiple implementations not actually behaving identically (just look at the development of the web for a plethora of examples), end up being design-by-committee which usually ends up as a worst-of-all-worlds design, etc. Companies like Apple and MS build closed platforms because that ends up being hugely better for their users. They don't do this out of a desire to have lock-in, lock-in is just a natural consequence of using closed platforms.
As you said, open platforms allow untying them from specific owner. If you use any platform, it's a dependency, sure. In this sense it can be a hard to replace dependency. That's a separate problem though from platform being available from one place only. The later is vendor lock-in, which I was talking about.
> There are really significant downsides to open platforms.
Comparing downsides makes sense only if competition is on merit. MS and Apple don't compete on merit, because of the lock-in above. One of the glaring examples of this garbage is Apple banning competing browsers on iOS.
> Apple and MS build closed platforms because that ends up being hugely better for their users.
No, they do it to get that insane retaining percentage caused by lock-in. When they are forced to compete on merit, it quickly shows they aren't anywhere "hugely better", and often they are simply worse. The article highlights this point.
> MS and Apple don't compete on merit, because of the lock-in above.
That's bullshit. Of course they compete on merit. You don't have lock-in until you actually acquire the customer, and until they've been using your platform long enough to buy into the lock-in. The platforms are absolutely competing on merit in order to attract new customers, and to ensure the current customers are happy enough that they don't pay the cost of jumping platforms.
> When they are forced to compete on merit, it quickly shows they aren't anywhere "hugely better", and often they are simply worse. The article highlights this point.
You completely misunderstand the article. It's not saying iOS is not better. It's saying that Chinese users are using WeChat as their platform and largely don't care about the underlying software platform that WeChat is running on. For the most part it doesn't matter whether iOS or Android is better, because the Chinese users are completely ignoring that and using the common WeChat platform. So the fact that Chinese iOS users might switch to Android doesn't mean iOS is worse, it just means the fact that it's better is irrelevant.
Competing on merit means no dirty monopolistic tricks, like saying "you can only use our browser here. Tough luck if you want to use something better than that". So they clearly don't compete on merit when they make all those weird restrictions.
> You completely misunderstand the article.
I understand it well. The article says, that in China the situation ironically managed to undermine Apple's lock-in (though replacing it with Wechat lock-in). This way Apple only serves as another hardware option. So Apple has to compete on merit with other hardware makers.
> In other words, people aren't buying iPhones for its integration with Apple services in China, which could lead to an increase in growth due to the halo effects. Instead, they run WeChat and they buy things through there, which leads to no growth in Apple's services and revenue. Which also means, the customers have no desire to buy another Apple device. They can do the same on any device that can run WeChat.
The root cause for this is it's a high-walled market. If you can compromise and be allowed to grab a spoon as an outsider. It's already a win. Just look at other big name service providers.
Apple is a huge winner among outsiders in China market since they can make nice profit through physical product alone.
This is not an issue just for China. Naver/kakao in South Korea also are like this. Apps that are all-inclusive are the norm. It's because the government is picking winners. Ie, someone tied to the government.
Edit: Alternately, West-style VC wasn't funding companies so Asian gov't stepped in.
> Moreover, the advantages go beyond margins: the best way to understand both Apple’s profits and many of its choices is to understand that the company has a monopoly on not just MacOS but even more importantly iOS. That means Apple can not only capture consumer surplus on hardware, but developer surplus when it comes to app sales; that some apps are not made is deadweight loss that Apple has chosen to bear to ensure total control.
The problem that Apple is having in China is that WeChat is the driving "platform" ecosystem, not the OS or the brand.
In other words, people aren't buying iPhones for its integration with Apple services in China, which could lead to an increase in growth due to the halo effects. Instead, they run WeChat and they buy things through there, which leads to no growth in Apple's services and revenue. Which also means, the customers have no desire to buy another Apple device. They can do the same on any device that can run WeChat.
If Microsoft sells a Windows Phone with WeChat as the default app for everything, they may have a hit in China but it would not be a sustainable hit because again, WeChat can run on iPhone or Android or any other OS.