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The Apple Maps Lesson: Build a Data Moat Around Your Business

By all accounts, the new Maps software in iOS 6 is well designed, an aesthetic improvement over the previous version, one that introduces welcome new features such as integrated turn by turn navigation and flyover. By most accounts, with the notable exception of reviewers granted early access, the new Maps application is also a disaster. From disappeared towns to phantom airports, the Maps application has been taking heavy criticism from users. The issues with the application are severe enough, in fact, that multiple parody accounts have already been already begun popping up on Tumblr and Twitter.

A secret, this is not. Nor is the problem difficult to identify; the problem is not the software, it’s the data.

As documented by the Atlantic, Google’s corpus of map data is the product of years of effort, with its maps curated from a mix of third party sources and data collected by either Google itself or – unbeknownst to most – every user of its Maps applications.

Depending on who you believe, this body of data puts Apple somewhere between “quite some time” and “400 years” behind Google in maps. It seems probable that Apple would agree, given that their transition away from Google Maps likely began well before the acquisition of Placebase in July of 2009, let alone the the Poly9 (7/2010) and C3 (8/2011) transactions. Three or more years after one of the best resourced companies in the world made the decision to build out mapping capabilities in advance of this move, Apple’s software is technically impressive but betrayed by a lack of quality data.

Data, unlike software, cannot be generated quickly. Which makes it, in business terms, an excellent barrier to entry. As Apple is discovering.

Fortunately for Apple, they appear well prepared to weather this storm with minimal damage. As has become typical with iPhone releases, Apple’s primary concern isn’t Maps but manufacturing enough devices to meet the demand. And while Maps will remain a problem for the foreseeable future, the combination of brand loyalty and ecosystem lock-in will keep platform defections to acceptable limits.

Most businesses, of course, are not Apple. And yet most software businesses today are competing on the same basis; competing as if the sales of software alone is a sufficiently compelling and projectable revenue model. Even without considering the value of the data, this is a problematic assumption. Open source, software-as-a-service and cloud are lowering costs for customers, and in so doing, lowering the revenue pool available to vendors. Prior to 2009, Apple was able to charge customers $129 for an upgrade to their operating system. Today the cost is $19.99. The operating system, it seems reasonable to assume, has not gotten six times easier to build. It’s simply worth less, as most software is these days.

What Apple’s current difficulty with Maps should highlight for every software business is both the importance of data and the difficulty of competing with it. Because even in cases where a competitor’s software is functionally superior – as in the case of Apple Maps – the company with the better data is likely to offer a superior overall experience. It’s not quite as simple as “he who has the most data wins,” because capturing data does not immediately confer the ability to use it, but it is increasingly clear that data based revenue models are not just here to stay, but the most likely avenue for revenue growth for technology companies moving forward.

The days of software being viewed as a standalone entity, separate and distinct from related data and telemetry, are numbered. Vendors that strategically leverage data to improve their software experience will enjoy not just a significant competitive advantage, but insulation from competition, open source or no. Data becomes the moat around your business. Those in the software industry, then, would do well to at least begin collecting data, even if the ability to leverage it isn’t yet developed. Because the alternative is being in Apple’s position a few years hence, and not in a good way: finding yourself ahead in software, but years behind in data. If Apple’s having trouble catching up, where will you be?

Categories: Data.

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  • http://blog.collab.net/ Jack Repenning

    Certainly true for mapping. Also for market segmentation and ad placement, and some other obvious wins. Not so clear it applies universally. To pick an old-school counter-example, the data required by traditional office productivity apps is brought by the user. To pick a new-school counter, on-line gaming is also of-the-moment.

    • http://twitter.com/sogrady steve o’grady

      @jrep:disqus: there are examples of the value of integrating data everywhere, i think. in the case of office productivity apps, to use your example, google has spent years learning in great detail exactly what features are used versus those that are not. this data is then baked into product design and direction. for something more user facing, it’s certainly possible to use data in office productivity apps to improve ad delivery, dynamically reconfigure product design or – in a user helping user example – seamlessly share templates and designs with other networked users. 

      software is useful. software and data combined are valuable.