Tech companies want your loyalty, till death do you part

Apple’s expected to launch a new, cheaper iPad mini; Amazon’s new Kindles go on sale; Microsoft is unveiling its ‘big play’ in the shape of Windows 8 and its Surface tablet; and Google has another Nexus-branded phone to show off. And the thing they have in common? They want you to belong to them.

It used to be that tech companies sold you products and left you to it. Opportunities for making money were limited to selling you something new, or perhaps a lucrative warranty here and there. It’s the model the likes of Dell and HP peddled very successfully.

However, companies are now looking elsewhere to earn their crust. Apple, Microsoft, Google and Amazon are creating both software and hardware to form closed systems that we consumers are meant to buy into.

Following in Apple’s wake

Apple was undoubtedly the catalyst for this trend. The likes of the iPod, iPhone and iPad have catapulted Apple from a well-known, but largely periphery computer and software company, to the most valuable company in the world. It’s a persuasive argument if ever there was one.

We only need to look at Which? members for evidence. In our survey, three in 10 members own an Apple computer or iPad, but one in four had only become Apple users in the last 12 months. And many customers are buying more than one Apple product as they seek that authentic ‘all Apple’ experience.

It hasn’t made Apple universally popular, but the idea Apple is uniquely ‘evil’ in this respect is simplistic. All of the above are gunning for Apple’s privileged position, no matter what pledges to ‘openness’ they might make.

Are closed systems good or bad?

There are no easy answers here. Besides the obvious simplicity they create, closed systems also offer a level of security and trust that shouldn’t be underplayed. Curated stores like Apple’s (and Microsoft’s upcoming Windows 8 Store) provide peace of mind from viruses and the like. It’s nice to not have to share your credit card details to all and sundry, too.

But while we gain security and simplicity, the long-term implications are troubling. Take Amazon as an example. Some estimates suggest Amazon is responsible for nine out of 10 ebook purchases in the UK. Amazon should rightly take credit for creating a service that consumers love to use, but you can’t take your books elsewhere. Plus, as Rich Parris discussed earlier this year, what happens to all those books you’ve bought when you shuffle off this mortal coil? Closed systems like Amazon’s make digital purchases fundamentally importable.

Combine this with complete market domination, and the implications for you and me aren’t good. As a recent article in The Guardian suggests, such dominations arguably give Amazon an unhealthy advantage when negotiating with publishers. And should its domination lead to rivals wilting, it’s hard to see how the consumer wins by Amazon holding such power.

And this is why the stakes are so high this week. Because the likes of Amazon, Microsoft, Apple and Google aren’t just competing to sell a few shiny trinkets, they’re competing for your loyalty. And the loyalty business is good.

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