Monday, January 09, 2017

The iPhone turns 10

Hard to believe it's been 10 years since Apple first unveiled the iPhone. Steve Jobs introduced the then-radical touch-based device for the first time 10 years ago today - January 9, 2007 - at the (now-defunct) Macworld convention at the Moscone Center in San Francisco. It was available in 4 and 8 gigabyte versions, and cost either $499 or $599 U.S.

On-stage at the keynote, Jobs said, "We're introducing three revolutionary products - an iPod, a phone, and an internet communicator. Are you getting it? These are not three separate devices. It's one device. We are calling it iPhone."

Not fully baked

It's easy to look at an iPhone today and take all of its features - from the mega-capable camera to the endless choice of apps - for granted. We shouldn't, because that first version was somewhat incomplete, and it took some time after its initial intro for the full vision to take shape.

In the beginning, there was no App Store - the device only ran the apps that came installed from the factory, and Jobs only reluctantly opened up the platform to third-party apps a year later. Canadians were out of luck for a year-and-a-half, as Rogers only started selling the second-generation iPhone 3G in July 2008.

The first iPhone had no camera - that came next year. The device was comically small by today's standards, and for much of the next decade Apple stubbornly trailed the industry's push toward steroid-injected big screens. Still, iPhones remained aspirational beyond their relative feature set, and whenever a new one was introduced, customers lined up around the block - often for days - for the privilege of being the first among their friends to have one. As an analyst, rarely have I witnessed a tech product so consistently cross over into mainstream news.

Rewriting the smartphone script

Smartphones existed then, of course, but the market was dominated by BlackBerry, Palm, Nokia, Motorola and Microsoft. Devices were expensive, clunky and mostly business-focused. Famously, BlackBerry and Microsoft dismissed the iPhone as a toy, saying its lack of a keyboard and design-centric focus on consumers left it dangerously unable to meet corporate needs. I wonder what Jim Balsillie and Steve Ballmer are thinking today.

History, of course, had the last laugh. While Apple didn't invent anything completely new, it took dead aim at the things that didn't work on the smartphones of the day and re-engineered its phone to address them. For example, existing smartphones were awful at displaying web pages - either they displayed stripped-down pages, took forever to load them, or failed to do so entirely. The iPhone introduced a multi-touch screen, pinch-to-zoom and a full-blown Safari browser that made pages just as accessible and usable on the phone as they were on a full-blown computer.

In all, most of the iPhone's features had been seen before, but on Apple's device they were better integrated than anything else on the market. Apple's "It Just Works" design methodology ensured anyone could get stuff done simply by taking the device out of the box and touching it. The concept of mobile devices as compromised penalty boxes died with the iPhone's introduction.

The result

Today's iPhone is now a fixture in boardrooms, dorm rooms, kitchens and everywhere else. BlackBerry has an almost-invisible global market share and no longer designs or makes its own devices. Nokia imploded, was bought by Microsoft, which then single-handedly ran the business into the ground and wrote the acquisition down by a staggering $8 billion. HP bought Palm, then shuttered it. Motorola floundered for a while before being absorbed by Lenovo.

Google's Android mobile operating system was already in development at the time of the iPhone release, but early prototypes largely echoed the BlackBerry user experience. The arrival of the iPhone forced Google to completely overhaul its roadmap for Android, and it ultimately became a me-too, touch-based, app-driven operating system.

Pillar of a new ecosystem

The iPhone almost single-handedly drove Apple's growth for much of the last decade, and is now responsible for 2 out of every 3 dollars in revenue. Its technology also laid the foundation for Apple's broader mobile ecosystem, namely the iPad and Apple Watch.

The iOS operating system was extended to accommodate the larger-screened devices - a crucial factor in driving early consumer acceptance and adoption of tablets, as it used familiarity to overcome longstanding market doubts about the viability of tablets - and then shrunken down to enable the Watch OS code for the smaller-screened wearables. iOS was also extended to the Apple TV product line, with its tvOS operating system using a similar app-centric architecture to build a marketplace and attract innovation.

Clouds gather

Fast-forward to 2017, however, and things aren't so rosy in iPhone-land. Sales have slowed over the past 2 years thanks to a maturing smartphone market and accelerating competition from Android (which in 2016 accounted for 86% of handset sales, up from 80% in 2015), Apple is under pressure from investors and analysts to find the Next Big Thing to fuel its next chapter, and repeated misfires (iPad sales are slowing, Apple Watch sales lead the smartwatch segment, but still haven't broken out, its TV-based revenues are languishing, and the latest Macs are being criticized for their elevated price and ahead-of-their-time connectivity) have left observers wondering if we've already seen Peak Apple.

My $0.02: While Apple's next chapter may still be something of a blank page, it's difficult to imagine the company would be anywhere near as dominant as it is if it hadn't introduced the iPhone 10 years ago. It very much was one of those magical once-in-a-very-long-while products that completely changes the rules of the game. Sometimes, though, it isn't 100% obvious on day 1.

Related readings:
Related Blog Entries:

No comments: