Game Theory in a Wireless World
Link: http://mashable.com/2016/09/08/apple-wireless-obsession/#R16IdPNyOaqp
Possibly the most talked-about news story in the past 24 hours has been the launch of Apple’s iPhone 7. For the most part, the new phone’s updates seem to be fairly predictable, but by far the most notable and controversial change from previous models—and from electronic devices in general— has been the removal of the headphone jack. Already, countless articles have been written in response to this announcement, concerning issues from health risks, to the compromise of audio quality, to the general inconvenience of adjusting. But one of the most interesting aspects at play here is how this change will affect us at a broader level. This initial removal of a headphone jack raises the question of whether we are facing an entire societal shift into a world where everything is wireless. Since this question is now on the table, both Apple and its competitors must predict the answer: they must decide whether wireless technology is truly going to take off—and if so, how soon—while also considering the choices of their competitors and the responses of consumers. These interconnecting factors relate these choices to the thinking behind game theory.
The author of the above article hypothesizes that perhaps Apple chose to eliminate the headphone jack because it is banking on a breakthrough in wireless technology that would enable features like wireless charging, which would transition us to a technological world in which the majority of electronics are truly wireless. In terms of game theory, Apple has created a new game between itself and its competitors by taking a step in this direction. Companies like Google and Microsoft must now decide how to respond. In developing their own new electronic devices, should they join Apple in limiting the need for wired connections? There is both risk and potential reward in jumping on board this new wireless train or staying put, depending on whether wireless technology does take off and what percentage of devices become less compatible with wires over the coming years.
As in game theory, each company’s choices will impact its competitors. For example, assume that the iPhone 7 does very well, and wireless technology actually does grow fairly quickly. During that time, Apple should have been investing further in wireless technology, and its competitors would have benefitted from doing the same. However, there is the possibility that instead, the iPhone 7 is met with negative feedback, and consumers turn to other companies to provide them with devices that have the headphone jacks they prefer. Companies must decide now to what extent they wish to commit to a wireless future, without having seen the outcomes and without knowing what their competitors are going to do. They have to risk being too progressive and turning people away from their products, or remaining too stable and getting left in the dust.
To some, Apple’s removal of the headphone jack may seem like the change of one small feature on one phone model. However, this seemingly small change has brought to light a whole new question of where technology is headed and how quickly, and competing tech companies must use the principles of game theory when deciding how to react.