Not Hip to Be Square?

Hundreds of iPhone app developers are in “sit around and wait” mode over porting their apps and services to webOS. For many, action could be prompted by webOS users’ requests for their services. For some, it’s their lack of knowledge concerning Palm’s available “porting” tools leading to the delays. Then, there’s the guys who simply don’t want to risk spending time developing for Palm’s latest OS until they see if it survives.

This past weekend I had a conversation via Twitter with Square co-founder Tristan O’Tierney. Through several tweets, O’Tierney explained that his company (which gives iPhone and Android users the ability to swipe credit cards on their devices) saw webOS as a flawed system, showing no true signs of success.

“We’re still playing wait and see with webOS. Not many signs it will be successful yet.”

My goal was to advise O’Tierney, as I do many other app developers, that Palm has tools in place to save on development time and port apps to an additional audience, requiring a smaller financial investment. The Return on Investment (ROI) on an already-developed iPhone app is much lower because porting it to webOS does not require a complete rebuild.

O’Tierney then explained how webOS had a significantly smaller user base, then ended the conversation with this:

“Like SJ says: pick the winners early, save yourself a lot of trouble in the future.”

The statement is nothing new. Many startups and currently-successful founders and CEOs utter these words to the masses, especially to investors. However, such a statement is often used to excuse companies who are ignoring millions of other potential customers.

In 2007, when the iPhone was first announced, Blackberries and Treos were the big players. What would O’Tierney have done then? Would he have abandoned the most popular devices in order to focus on one that cost way more in terms of production and to the users themselves? Would he have abandoned those devices – that had very loyal user bases – and jumped in with both feet to concentrate solely on the iPhone?

Focusing on iPhone development first tends to make sense for any company wanting to hit the ground running. It has, by far, the largest pay-for-app user base, and is widely used by key business folk. Next in line is Android, and, after that, it’s pretty much a free-for-all depending on which developer you talk to. These companies, though, are missing the bigger picture when it comes to building a solid business plan.

The goal for companies seeking the broadest audience shouldn’t be developing for only the “big” platforms, but for all possible OS devices. Why? Because “little guys” matter, sometimes even more.

Square, for example, could be missing out on some rather large clients – ones that could account for a decent percentage of transaction fees. After all, replacing portable, yet expensive, machines with smartphones is very appealing to companies who sell products and services at conferences and conventions. It’s also appealing to locally owned restaurants that deliver.

There’s more, though. Companies like Square needn’t be ignorant of potential competitors. I advised O’Tierney that there’s already competition in the works. The thought that every Square-using iPhone toter would stay with them simply isn’t logical when other services may offer better integration with existing bank accounts, and better reporting methods. The fact Square hasn’t infiltrated the same platforms as, say, Foursquare, Gowalla and even Oprah mobile makes the argument to bring in additional, competing services more compelling.

Cornering every smartphone with a service doesn’t guarantee others won’t enter the arena, but it can lessen the impact if you have loyal customers across all platforms.

Another myth about picking the “winners”, as O’Tierney said, is that there’s no guarantee they won’t be the big fish tomorrow. Argue all you want that nothing can outperform the iPhone, but no one can predict the future. In fact, Square, like any other company, was formed despite a huge risk that users – despite any surveys or studies – would even want to swipe cards on their devices, or that they’d trust Square, an unknown, with their money. So, Square took a risk, and in turn, asked users to take a risk. But when it comes to welcoming in a smaller number of risk takers? That’s a whole other story.

I love Square’s core business model, and would love to see it cater to every possible user. Unfortunately, like many other companies, their current success has made them think the rest of us don’t really matter.