“Once in a while a revolutionary product comes along that changes everything.”
Those were Steve Jobs’ words when he launched the iPhone seven years ago.
It was a strong opening that was reinforced by the event’s tag line, “Today Apple reinvents the phone.”
It wasn’t an idle boast, the iPhone was a leapfrog development – using Jobs’ words – over the existing clunky smartphones and it changed the entire industry and spawned some new ones.
Smart Company’s Yolanda Redrup asked me for a few comments on her story on the iPhone’s birthday and her questions triggered some thoughts on just how the iPhone changed the mobile phone and telco industries.
A triumph over orthodoxy
Apple’s iPhone triumph was born out of the established players’ orthodoxy; companies like Nokia, Blackberry and Palm were wedded to the idea that a tactile QWERTY keyboard was essential for a smartphone.
Those keyboards took away nearly half the real estate on the phone, Jobs called it “the lower forty”, and it made surfing the net a painful task, let alone watching videos or movies.
Full featured keyboards made making calls difficult as well. One of the barriers of adopting smartphones was that using the things as phones was quite difficult.
By having software keyboard and dialling pads that only appeared when needed, Apple solved the problems that faced smartphone users.
Disrupting the telcos
The other orthodoxy in the smartphone industry was that the telcos were essential gatekeepers. Nokia and the other incumbents put the needs of telecommunications companies over users of their phones.
As a consequence email and web browsing capabilities of the existing smartphones were crippled as the telcos tried to lock their customers into their own proprietary networks rather that giving them access to the public internet.
With the iPhone, Apple broke out of that telco dominance and started to dictate terms to the phone companies. This wouldn’t have been possible if the iPhone hadn’t been a far better, and much more popular, product.
Building the app store
Another area where the iPhone disrupted the phone companies’ business was with the App Store. Every smartphone had its own add-on programs but they were expensive with poor functionality and developers had to build versions for every company’s operating system.
Both the telcos and the phone vendors could see that app stores were a potentially lucrative area but systemically failed to execute on the idea with clunky and expensive software.
The App Store showed how smartphones should work and coupled with music, another area where the handset vendors dismally failed, Apple is now earning over a billion dollars a month from iTunes.
Technological change
Some of the iPhone’s success was due to technologies maturing; earlier smartphones were crippled by slow data connections over 2G or CDMA networks and cloud computing, or software-as-a-service as it was then called, was just beginning to mature as a technology.
Cloud services and 3G connectivity meant the iPhone could hand off most apps’ processing needs to the service provider, something that the earlier smartphones couldn’t do because the technology wasn’t there.
That connectivity did come at a cost, the iPhone and its competitors created huge challenges for telcos as they struggled to meet the data demands of their enthusiastic web surfing customers.
Looking at the future
While the iPhone came to dominate the smartphone market, that dominance didn’t last as Google Android devices started to flood the marketplace. Now Samsung is as big a player as Apple and a wave of cheap Chinese products are now flooding the industry.
For Apple and the other smartphone vendors the opportunities now lie in the internet of things (IoT) as connected cars, workplaces and homes require a device to control them. That device is often the smartphone.
In the next few years the market battleground is going to be creating the applications, platforms and ecosystems around these IoT technologies and its no coincidence that Apple has partnered with BMW on providing software for their smartcar.
Jobs finished his iPhone presentation with the Wayne Gretzky quote, “I skate to where the puck is going to be, not where it has been” and committed Apple to always being where the market is going to be.
Where the market is going to be in the next seven years is anyone’s guess, but it would be dangerous to count Apple out.
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