iPhone at 15

Computerworld, September 23, 2021

The iPhone is 15 today!

It was launched by Apple Inc. exactly fifteen years ago—on June 29, 2007—though it had previously been showcased by Steve Jobs on January 9, 2007 during his keynote address at the Macworld Expo in San Francisco: “Today, we're introducing three revolutionary products. The first product is a widescreen iPod … the second is a revolutionary cell phone … and the third is a breakthrough Internet communication device.”

It took the audience a while to realize that Jobs was not talking about three devices, but a single device that performed all three functions. No one could have appreciated at the time the impact iPhone would have in the coming years, while some dismissed the innovation altogether. Steve Balmer, Microsoft Chief Executive, said in 2007, “There’s no chance the iPhone is going to get significant market share. No chance.”

Fifteen years on, it is time now to explore the impacts of the iPhone in our lives, on business, and on Apple Inc. itself.

The iPhone, which now accounts for about 52% of Apple’s total annual sales, made Apple what it is today – America’s first three-trillion-dollar company on January 3, 2022 (though briefly), tripled its market capitalization in less than four years. As of March 31, 2022, Apple was the most valuable company (based on market capitalization) as well as the most valuable brand in the world. By now, of course, there are several competing brands in the smartphone category, with Samsung’s Galaxy having the largest unit sales among all brands, though the iPhone continues to have the highest profitability among all smartphone brands.

The iPhone—more accurately, the smartphone—has utterly transformed how we live, work, learn, communicate, and play. As the futurist Ray Kurzweil said in 2012, “A kid in Africa with a smartphone has access to more information than the President of the United States did 15 years ago.”[i] Smartphones have helped create billion-dollar companies, like Uber and Airbnb. A smartphone is often the first device we look at when we get up in the morning and the last device we see before going to sleep. With a smartphone, everyone is a photographer now! And, with WhatsApp, Snapchat, Instagram, and other social media platforms, millions of people worldwide seem to have found their voice and inherent creativity. For instance, smartphones completely transformed the business of photography and activities related to photography to a scale quite unimaginable just a decade ago. In 2022, 54,400 photos are taken every second, or 1.72 trillion per year. Approximately 90% of the people who have ever taken a photograph did so on a smartphone, not having ever owned a conventional camera.

iPhone’s voice-activated digital assistant Siri is trained to perform such tasks as answer queries, control devices, check email, send text messages, schedule wakeup calls, even read bedtime stories. It can understand and speak in 20 languages and is available in 30 countries. Last year, there was an interesting case of a child doing homework by asking questions of Siri. A few months ago, I happened to say “OK” in response to something at home, when I was close to my iPhone. Siri came alive and said, “I am OK, are you OK?” In 2016-17, when I was a visiting professor at Rutgers Business School, Newark and New Brunswick, I was surprised that many undergraduate students came to class without paper, pen, or a laptop, doing much of their work on smartphones. Recently, while driving on Virginia State Route 28, the GPS on my iPhone warned me, “speed check ahead,” and sure enough there was a police officer on a motorbike stopped by the side of the highway checking vehicle speeds.

With some $900,000 worth of applications embedded into it, the iPhone has disrupted several industries, including photography, healthcare, telecommunication devices and services, gaming, PC and laptop, GPS, news media, and many others. As shown in Table 1, several technologies that were once considered luxuries or near luxuries come standard in the iPhone. In addition, most smartphone owners install dozens of other apps on their devices that increase smartphone functionality significantly. The iPhone even disrupted Apple’s own iPod, a portable music player, which itself—along with iTunes—had previously disrupted the digital music industry. At the time of iPhone’s introduction in 2007, iPod was a $5 billion business for Apple. Steve Jobs cannibalized it by introducing iPhone despite internal objections to the idea.

Table 1: Over $900,000 Worth of Applications In a Smart Phone (as of 2011)

* Year of launch

Source: Peter H. Diamandis & Steven Kotler, Abundance: The Future is Better Than You Think (New York: Free Press, 2012), p. 316

Apple launched the App Store in July 2008, which allowed millions of independent software developers to build and sell software (apps) to smartphone owners. According to Wired , a monthly magazine that focuses on emerging technologies and their impact on culture, economy, and politics, “[T]he App Store will almost certainly stand as Apple’s most important contribution to both the tech industry and society in general, even more than the phone itself.” With the launch of Android’s Google Play in October 2008, mobile phone users now have access to some 5.5 million apps in the two app stores as of the first quarter of 2022—with 3.3 million apps in Google Play and 2.2 million in App Store.

In emerging and developing nations, the smartphone has had much greater impact for billions of people who previously did not even have access to a landline, a cellular phone, a computer, or the internet. They now use it as their only computer (and telephone). According to a 2016 World Bank study, more people in low- and middle-income countries have access to mobile phones than to water and electricity.

Kodak (Eastman Kodak Company) is a classic case of industry disruption caused by the iPhone (and other smartphone brands). A 130-year-old US company, Kodak was once a household name for its film business and, as of 1990, had 145,000 employees and $19 billion in annual revenues. Kodak’s film business got disrupted as new technologies and new competitors emerged. With the advent of digital photography, the company, hesitant to cannibalize its cash-cow film business, moved into digital photography only in the late 1990s. (Ironically, it was Steven Sasson, a Kodak engineer, who invented the first digital camera in 1975). Kodak’s performance has since been on a downward spiral (Table 2). It filed for bankruptcy in January 2012, emerged from it in September 2013, but serving only niche markets and selling nothing directly to consumers. By December 2021, it had only 4,200 employees and $1.15 billion in revenues. Although Kodak’s performance had been declining since the 1990s as analog photography was being disrupted by digital photography, true disruption happened with the emergence of the iPhone in 2007, social network firms like Facebook (especially WhatsApp), Google, and Tencent, and cloud storage.

Table 2: Eastman Kodak Company—Some Metrics

On the downside, with video cameras in doorbells recording everything and everyone passing by (accessible on the iPhone), virtual digital assistants listening in, and smartphones tracking us almost always, there is little today that is hidden from the iPhone.

“You can run but can’t hide” is truer now than ever!

--------------------------- [i] Andrew McAfee & Erik Brynjolfsson, Machine, Platform, Crowd: Harnessing Our Digital Future (W.W. Norton & Co., 2017)