Three seemingly disparate news items – Facebook Home, Google’s alleged (and denied) bid for WhatsApp, and Apple’s removal of AppGratis from the App Store – together give convincing evidence that we are moving up the mobile hierarchy of needs. And that’s a concern for Apple in particular.

One of the more famous theory’s in psychology is “Maslow’s Hierarchy of Needs”; the general gist is that until lower order needs are met, we don’t really pay attention to or pursue higher order needs.

From Wikipedia:

Maslow’s hierarchy of needs is a theory in psychology proposed by Abraham Maslow in his 1943 paper “A Theory of Human Motivation”…Maslow’s hierarchy of needs is often portrayed in the shape of a pyramid with the largest, most fundamental levels of needs at the bottom and the need for self-actualization at the top…

The most fundamental and basic four layers of the pyramid contain what Maslow called “deficiency needs” or “d-needs”: esteem, friendship and love, security, and physical needs. If these “deficiency needs” are not met – with the exception of the most fundamental (physiological) need – there may not be a physical indication, but the individual will feel anxious and tense. Maslow’s theory suggests that the most basic level of needs must be met before the individual will strongly desire (or focus motivation upon) the secondary or higher level needs.

An interesting concept, but I’m not writing about psychology; rather, it’s the model that is exceedingly applicable to mobile.

There is a “Mobile Hierarchy of Needs”, and understanding what needs have already been met, and by who, helps clarify the current basis of competition, who the relevant players are, and who is winning or losing.

A quick overview of the levels:

• Hardware — At its most basic level, a mobile device needs to be functional. It needs to make and accept calls, maintain a data connection, have a functional screen and input method, etc.

  For more than two decades this was the center of all innovation in mobile, beginning with the Motorola DynaTAC 8000X in 1983, and arguably peaking with the Motorola Razr in 2004, a massive hit based on hardware alone. This era was ultimately dominated by Nokia, which offered the best technology in highly functional form factors. Some aspects of RIM’s success lay in hardware as well, particularly their keyboards.

• Software — Software refers to the core operating system, and usually means two things:

  1. The enablement of functionality beyond phone calls and messaging, such as email, web browsing, and media playback
  2. The overall ease-of-use

  RIM, Palm and Symbian led the way in adding additional functionality to phones; the iPhone famously made such functionality easy-to-use.

• Apps — Apps infinitely increased the potential jobs to be done by a mobile device. The App Store was launched by Apple in 2008, and both the App Store and iPhone market share exploded. At every keynote since then Apple executives have take the time to highlight the number of apps, the number of downloads, and the amount of developer payments. It remains an advantage for Apple today, particularly when it comes to new IP, but Android has significantly closed the gap.

  It is much more difficult to compete on the app level than on hardware or software because it requires the creation of a two-sided market: you need both developers and users. Without a critical mass of monetizable users, developers won’t build for a platform; without the particular set of apps that a user needs, they won’t buy into a platform.

• Services — Services utilize mobile devices as the interaction layer for a service hosted in the cloud. That interaction layer is usually delivered as an app. Some critical services such as maps, app and media stores, and email and calendaring are delivered as part of the OS; both iOS and Android let you supplement the built-in apps with alternative apps and/or services from the app store, but iOS does not let you change the defaults.

  There are a host of other services delivered through apps via the app store: social networking, video-on-demand, news, etc.

The iPhone completely upended the Mobile Hierarchy of Needs by delivering superior hardware, superior software, and a year later, a superior app store. These advantages peaked with the iPhone 4, which featured a retina screen, amazing build quality, iOS 4 which filled in the largest remaining functionality hole (multitasking), and a two-year-old app ecosystem that already featured 225,000 apps and over a $1 billion paid out to developers.

In the last three years, Android has largely responded on all three fronts:

• Hardware — High-end Android phones such the upcoming Samsung Galaxy S 4 and the HTC One feature higher resolution screens than the iPhone, and the One has build quality to match. Moreover, Android offers a nearly infinite array of screen sizes
• Software — Android 4.1 “Jellybean” finally addressed many of the Android UX bugaboos that made it more frustrating to use than an iPhone. Many, including myself, still prefer iOS, but the software “need” has been met
• Apps — Android Play now has over 800,000 apps; again, there may be a dispute about quality, and Android still gets buzzworthy new apps after the iPhone, but you can absolutely find what you need

The iPhone and, say, the Galaxy S 4 both have “good enough” hardware, “good enough” software, and a “good enough” app selection (and the end-game for “good enough” is commoditization and razor-thin profit margins). The next means of differentiation and competition is in services. It’s a competition that will be waged not only by the operating system vendors and device manufacturers, but also by pure service plays such as Facebook (on the big side), and outfits like AppGratis (on the small side).