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This is a thought piece speculating on Apple’s plan with Messages and iCloud.

Are you an iPhone user who uses the Messages app (what Apple calls its built-in text messaging app)? Have you noticed that some of the texts you send are blue and some are green? Some of you may have figured out the difference: Simply, the blue ones are going to another iPhone. The green ones go to a phone that Apple doesn’t recognize (acknowledge?).

Messages between iPhones never go through the carrier network, regardless of which kind of iPhone you have, and are free to the user. This is called iMessage, which Apple officially calls a feature of IOS 5. But it’s really a service that Apple provides free of charge using its own iCloud infrastructure. This system allows Apple to bind together its users with what I like to think of as a secret handshake.

Apple knows what your phone number is when you buy and register your iPhone. They use that database to automatically identify another iPhone and turn your text message blue. If it can’t identify the number (and sometimes network connectivity isn’t sufficient even for the very quick look-up action), the message stays green. If it’s green, it goes through the carrier SMS network and the carrier charges its normal rate. If it’s blue, it goes through iCloud only and is free of charge. So, sure Apple saves iPhone users money if they text each other. But there’s more to it than saving money.

Apple now has a real time database of the phone numbers of all of its customers, whether for iPhone or a cellular version of the iPad, which now likely is somewhere between 150M and 200M (discounted for iPhones that have been retired, of which I have at least three) and growing very rapidly. No other maker or seller of smartphones has those numbers, since the carrier is the primary interface and the carriers keep that database for themselves. The real value of when Apple negotiated its original contract with AT&T was exactly this: That is registered its own customers and is the primary interface (or orifice?) for the individual customer.

Notice the difference between green and blue text messages

This screen shot is an exchange with an investor in one of my portfolio companies to organize a phone call while I was in China and he was in California. Originally, I thought he did not have an iPhone because my first message went out in green, but that was a network problem (not surprising across that many networks). But my second message turned blue, so I knew that we both had iPhones. Once I know that, for instance, either one of us can use Facetime to do a video phone call (also done through iCloud).

Now that I’ve figured out the scheme behind the blue and green messages, I’m doubly impressed. It’s this kind of thinking that tends to lock Apple in to its customers: An mostly unannounced, undocumented feature that makes using iPhones together with other iPhone users different than using any other phone. In fact, it makes me feel like a member of a club. A secret club (maybe not so secret anymore). Those poor Android users will never know that us iPhone users have this kind of feature!

Even more impressive is that these features are all based on iCloud, which was the result of Apple’s stinging failure with Mobile Me. Instead of bulling their way through Mobile Me, Apple pulled in its horns, developed a different strategy and product design, and implemented it (relatively) quietly while it figured out how to improve it and make it work.

I’ve always believed that one of the best product design strategies ever is to leave something on the table for users. Design more than you tell your users about into the product or service. If you get them to use what you are selling them, then they have the opportunity to find that they got more than what you promised. You can’t possibly do anything more to improve customer loyalty than to under-promise and over-deliver. iMessage is just one feature; Apple has a laundry list of features and capabilities, documented or not, that end up taking its users by surprise; hence the company’s intense customer loyalty.

Stewart Alsop authored this post.

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