Why Apple took the risk with Maps

Apple has enjoyed a significant app ecosystem lead, but Android has now caught up. This removes a unique iOS selling point, and it also makes it easier for iPhone users to switch to Android when they next upgrade. Apple needs new control points, and mapping is a key answer for them.

As the mobile game is shifting from hardware to services, Apple needs to have more deep services of its own, rather than relying on competition. Important mobile service platforms include mapping, commerce and payments, social, and search. Across these categories, other companies are in the lead, not Apple. Of all the things that Apple might invest their vast cash in, maps is actually an important and strategic control point.

Maps and navigation are very popular on smartphones all around the world. Location is one of the few ways people organize and understand their world, which is why maps are also integral parts of lots of different mobile services. So mapping is both a popular service in itself and an “atomized” ingredient in a range of other services.

Apple’s tough competition in mapping

The challenge for Apple is that mapping is an inherently complex game, and the competition is both far ahead and moving fast. Competition comes in the form of mapping-focused heavyweights but also nimble start-ups. At Fjord we’ve collaborated with both Nokia and Foursquare, two of the location pacesetters.

The Google Maps service is very popular, and Google is constantly enriching and evolving it. Google Earth, Google Street View, and photos from their Picasa service make the mapping experience more engaging. Their newly launched Field Trip application is starting to hint at proactive location services. With all their location investments, Google is starting to merge the digital with the real world.

Nokia acquired the global map business NAVTEQ in 2008, and has designed an end-to-end mapping offering. Beyond the maps on their own phones, Nokia’s mapping platform now powers lots of other services, including 90% of in-car navigation systems, Microsoft’s Bing Maps, and also the maps on Amazon’s Kindle Fire. Nokia allows you to scan your surroundings using Nokia City Lens, and they’re also busy mapping indoor locations like airports and shopping malls.

Foursquare – which like Apple defected from Google Maps recently – is a playful, engaging, and increasingly contextual service. When you realize that Foursquare intends to take on Google in search, it’s no surprise that they jumped ship. Foursquare is starting to put the billions of data points that their users have created to good use, as their focus is shifting from simple check-ins to smart recommendations.

Apple naturally knows that the competition is fierce and that the mapping domain is complex and fast moving. Yet it decided to create its own mapping platform, which will be an expensive move without obvious monetization options. It decided to get involved in order to reduce reliance on core competitors, to generate rich data that it can use in its own services, and to create a tighter link to other apps and services. Maps will become Apple’s smart service glue.

How Apple might use its mapping platform

Apple will naturally add new novel mapping user experiences, and its 3D flyovers is a first attempt. But the top priority for Apple will be to capture usage data to enrich its mapping platform. Google benefited from the crowdsourced location data generated on iOS. Now Apple will keep all that data goodness. The data is created both when people use the Apple Maps application, and when they use other apps or services that utilize Apple’s location APIs. The data will make Apple Maps smarter and more accurate over time.

The other priority for Apple will be to use its mapping platform to enrich its own services. A few predictions:

  • Siri will become significantly smarter, as she’ll learn a lot about locations, navigation, traffic patterns, and more.
  • Passbook, Apple’s hesitant entry into offers and commerce, will become truly smart. Apple will be able to control end-to-end solutions for location-based offers, recommendations, and payments that will compete with Groupon, Square, and Amazon.
  • Smart location metadata will be added to any photo or video that iOS users take, and the photos and videos will be able to be found and re-lived using location. User-created photos can also enrich any location entry, and Apple users might be able to “play” the media from any place.
  • The iOS calendar will take the location from your next calendar entry, it will calculate the time it takes to get there from your current location, and it will alert you when you need to leave.

When it’s more mature, Apple Maps will make a range of its services smarter, and the rich location data will also give Apple a chance of making credible and differentiated entries in key service domains like commerce, search, and social.

Apple’s dilemma

Seen from the outside, the “downgrade” from Google Maps to Apple’s own maps might seem like a dumb move. But it’s, in fact, evidence of Apple’s long-term bet on service platforms as strategic control points. In order to secure its own long-term prosperous future, Apple chose to risk alienating users with some imperfect maps in iOS 6, a decision it has publically acknowledged with an apology from CEO Tim Cook.

To preserve its iPhone and iPad profit margins and sales volumes in the future, Apple needs strong ecosystem glue, which attracts customers and keeps them in the Apple family over time. As the iOS app advantage has diminished, Apple is now betting on maps as the service glue they need to prosper over time.

Olof Schybergson is CEO and Co-Founder at the service design consultancy Fjord. Fjord has provided strategic direction and design for such brands as Citibank, Foursquare, Nokia and Qualcomm. You can follow them on Twitter at @fjord.