Apple

Apple had never built a phone before but …

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Written by Kamil Arli

It was a decade ago today when Apple introduced the first iPhone to more than a little bit of skepticism. The then-unprecedented pricing, starting at $499. According to Mark Rogowsky,  The all-touchscreen design, forgoing the physical keyboard that dominated the “smartphones” of the day.

THE FACT THAT APPLE HAD NEVER BUILT A PHONE BEFORE

The fact that Apple had never built a phone before. Even Steve Jobs wasn’t talking too big, suggesting Apple might sell 10 million over 18 months, just a few percent of total cell phone sales back then. But with all the question marks, there was a sense that something special was brewing.

A decade of iPhone (Photo credit: Apple)

A decade of iPhone (Photo credit: Apple)

The dominant smart device of the device was Research in Motion’s Blackberry. And company founder Mike Lazaridis asked simply: “How did they do that?” He was blown away by the amount of computing power Apple had squeezed into the iPhone, which though small by today’s standards had a then-astounding large 3.5-inch touchscreen. It was powerful enough to display videos, download maps, and act as a replacement for Apple’s iconic iPod music player. Jobs himself called it three products in one, “a widescreen iPod with touch controls, a revolutionary mobile phone and a breakthrough internet communications device.”

LESS NOTED THAT DAY WAS A SUBTLE CHANGE IN HOW THE COMPANY BRANDED ITSELF

Less noted that day was a subtle change in how the company branded itself. It changed its name from Apple Computer to just plain Apple. In retrospect, that wasn’t a signal of a reduced emphasis on computers, but rather an acknowledgement that nearly everything Apple makes has a computer inside it. Calling the company Apple Computer would be redundant in a way that has only become more apparent in recent years. Apple of course sells traditional personal computers that sit on desks or can be carried in a backpack. But it now also sells one you can wear on your wrist and another you can insert in your ears.

Still, the most powerful of them all is the iPhone not because it has the most raw power but because it is one that is nearly always with you and nearly always connected. And while iPhone may only be the preferred smartphone of about 1/4 of the world’s users, it nevertheless ushered in an era where people around the world are ubiquitously connected. Today, more than 2 billion people use smartphones and that’s expected to increase to basically everyone by decade’s end. Without iPhone, this revolution doesn’t happen anywhere near as quickly.

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TO UNDERSTAND WHY, FIRST CONSIDER THAT NEITHER BLACKBERRY

To understand why, first consider that neither Blackberry, nor Nokia, nor Microsoft, nor even Android was likely to push the envelope far enough, fast enough. The original concept behind Google’s smartphone OS was an evolution of what was out there, not the step change that iPhone brought about. But Apple did something critical beyond just reimagining the phone around a slab of glass, largely unadorned with physical controls. It also drove the scale economies behind the production of the parts necessary to power the touch revolution. And once that happened, everyone reaped the benefits.

The components that got massively cheaper thanks to iPhone? Small LCD screens, flash memory, touch technology, camera sensors. Apple quickly became the largest consumer of many of the parts that made up the iPhone, ruthlessly negotiated on price, and created an ecosystem of suppliers that would eventually supply an industry of numerous phone vendors. Screens, cameras, and memory now are everywhere — not just in smartphones. Snap’s Spectacles are possible thanks not only to tiny image sensors, but also low-power Bluetooth transceivers. The control panels in many airplane or gym TVs rely on cheap touch panels and screens that didn’t exist a decade ago.

While Apple often likes to criticize competitors who make devices that try to do too much, citing the hybrid laptop-tablets from Microsoft for example, one of the most significant impacts of iPhone and its smartphone competition has been the Swiss Army Knife nature of the devices. They replace not just a cell phone, but a camera, calculator, music player, flashlight, thumb drive, and so much more. Within a few years, the elimination of the wallet will become reality for many as payment mechanisms and even driver’s licenses go digital (or become irrelevant!).

BUT PERHAPS THE GREATEST IMPACT HAS BEEN IN THE BROAD AREA

But perhaps the greatest impact has been in the broad area that has come to be known as “disruption.” While some proponents of disruption theory have spent much of the past decade arguing why the iPhone doesn’t truly fit their particular model, the reality is the device once popularly known as the “Jesus phone” has been something of a plague for countless competitors. It left Nokia and RIM, the dominant players in mobile phones, shells of their former selves. It denied Microsoft any meaningful entry into the small-screen market and put an end to the dream of “Windows Everywhere” that had been that company’s goal for a decade or more.

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And it crushed many more dreams along the way. Apple has garnered upwards of two-thirds of mobile device profits in much of this decade, reaching as high as 91% recently, according to Strategy Analytics. Most of the rest of the industry’s profits have gone to Samsung, leaving everyone else as profitless or money losing. That means the hundreds of millions of Android devices sold by LG, Huawei, Xiaomi, HTC, et al. have come without any real gain for their corporate parents. There’s been a narrative that eventually low-cost Android phones would be “good enough” to meet the needs of the average consumer and high-priced iPhones would go by the wayside. But in a world where nearly no one makes money selling them, it’s at least as likely that many will step aside from the smartphone business in the coming years finding that subsidizing Google’s global ambition isn’t in their interest.

One challenge would be deciding what else to build as smartphones have not only swallowed up old school gadgets like the calculator but also more modern ones including the computer itself. While it remains true that creating multi-column spreadsheets or 50-page legal briefs is beyond the capabilities of most folks on a 5-inch smartphone, computing has become an inherently mobile task for many. That’s a large reason why PC sales have been falling steadily even as the global economy has dug out from the recession of 2008. And though tablets really only became viable in 2010 with the introduction of iPhone’s big brother iPad, even that category is suffering at the hands of smartphones.

Which in a way makes the question about disruption so completely absurd. A decade ago, if you wanted to do any real computing, you sat down at a desk, ran something in Windows (maybe on a Mac), and “wireless” meant you had the good fortune of not needing a cable to reach to reach your home or office WiFi network. Today, as with Apple itself, we don’t generally think of these tasks as “computing.” We just use whatever app we need, often downloading one on the fly, to solve whatever problem we’re dealing with at the moment. We carry with us enough processing power to handle tasks the desktop computer of 2007 might have choked on and enough bandwidth to watch video in decent quality almost irrespective of where we are.

But for all the success of the smartphone, Apple finds itself again at a crossroads. The era it ushered in with iPhone likely represents a peak in the history of consumer electronics. Apple has sold more than a billion iPhones and before it makes the last one will have made hundreds of billions in profits from them. No new device will ever be able to sell to more people and it is unlikely any will command the kind of margins Apple has been able to maintain.

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Many believe the next wave in technology won’t in fact require sophisticated devices at all, with machine intelligence existing in a cloud around us, accessible by voice interfaces like Apple’s Siri and Amazon’s Alexa. If that does come to pass, it could blunt Apple’s advantages in elegantly integrating hardware and software into an aspirational package desired the world over. There are clear signs the company is aware of this, though sometimes the shaky performance of Siri might suggest otherwise. While today’s Apple Watch requires an iPhone nearby for many functions, a future version likely won’t. And Apple’s AirPods are a great first take at on-the-go voice computing. Indeed, Apple’s two devices seem to comprise 2/3 of the successful smart-wearable trio made to date (with those Snap Spectacles being the third).

For its part, Apple believes there’s much life left in iPhone: “[It’s] an essential part of our customers’ lives, and today more than ever it is redefining the way we communicate, entertain, work and live,” said Tim Cook, Apple’s CEO. “iPhone set the standard for mobile computing in its first decade and we are just getting started. The best is yet to come.” The rumored iPhone 8, due this fall, promises a new OLED screen and perhaps some rethinking of a design that hasn’t changed much in the past few years. It represents a chance for Apple to look ahead to the next 10 years where iPhone very likely will be eclipsed as the center of everything. On iPhone’s birthday today, the company can look back to what Jobs said at its launch for inspiration:

You know, there’s an old Wayne Gretzky quote that I love,
‘I skate to where the puck is going to be, not where it has been’
And we’ve always tried to do that at Apple.
Since the very very beginning.
And we always will

About the author

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Kamil Arli

Editor of DigitalReview.co. Digital Media Consultant

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