For the launch of the iPhone Xs and iPhone Xr launches, we list ten things Apple changed forever.
The iPhone was a real innovation. My litmus test for innovation is whether all of the products and a category become similar to the innovative entrant. For example, there weren’t many horses and buggies after the motor vehicle. By this test, some technologies like microwaves or hybrid cars would not be considered innovative, at least not as innovative. Beneficial things, but not useful enough to render what came before completely obsolete. There is no doubt whether this applies to the iPhone; phones looked and behaved much differently before the iPhone, and now we all have iPhones or iPhone-like multitouch smartphones.
We published a viral post about how the iPhone was developed, and it wasn’t as straightforward and smooth as you would imagine.
Now we are going to look at the impact of the iPhone. Another marker of innovation is that is changes society in ways far beyond the product itself. It revolutionalizes its own industry, it changes or eliminates adjacent industries, and it creates entirely new ones.
Why are we talking about product innovation? What does that have to do with brands? Innovation is the biggest agent of change for brands. Innovation is one of three things that can unseat established brands, the others being societal trends in tastes and the economy. Mobile phone brands before the iPhone and after are completely different, as you will see below.
Reduced what people were willing to pay for software.
We went from gladly paying $60 for software to scoffing at $6.
Have you ever been browsing the App Store or the Google Play Store and thought: “5.99 for an app? That seems expensive.” Well, we were willing to pay far more than that. Before the iPhone and the App Store, it was common to pay $60 for software.
Apple pushed developers to list their software at 99 cents, and the price point stuck. It worked for Apple because a buck is well below the threshold for an impulse purchase, so you could try something and not care about the money if it did not work out, which was important because there was no system for refunds on uninstalled software.
Apple knew this would work because they disrupted the music industry with the same pricing model; you filled your iPod with 99 cent singles, and gone were the days when we bought an album for $19.99. This left the music industry a fraction the size it was before, and the same thing happened with the developer community. Apps are now a hard way to make money, and serious software has had to go to a subscription pricing model.
Made Apple the biggest company in the world.
The iPhone 3X the market cap of the company, and it is on its way to being the first trillion dollar company.
In 2011, Apple edged out Exxon Mobil as the world’s most valuable company with a market cap of $360 B dollars. Now it is almost double that size and may become the worlds first trillion dollar company.
Almost half of that value is Apple’s brand, as we discussed in our definition of brand equity. No company in the world is better at turning innovations into customer relationships.
It is important to note that Apple’s value was growing quickly before 2008 thanks to the iPod and the iTunes Store. But the chart ramps up even quicker after 2008, and that is all iPhone, iPad, App Store and services.
Changed Apple’s primary business… and may again.
The iPhone took over the iPod as the top seller, and iPhone related services may take over again.
The iPhone accounts for between 45% and 65% of Apple’s business depending on the quarter. Before the iPhone, the iPod was the money maker and before that, the Mac.
Some say that Apple services around the iPhone such as Apple Care, Apple Music, and their upgrade service may surpass the revenue from the hardware. This would be a monumental shift, because if Apple’s ongoing relationship with customers becomes more valuable than the hardware itself, they may start giving the device away. We are years away from this though.
BYOD: Bring Your Own Device
IT departments needed to start supporting devices people actually wanted.
Before the iPhone, you might have been lucky enough to have been given a smartphone and a laptop from your employer; the laptop was probably a Dell or an IBM, and the smartphone was definitely a Blackberry. Wanted to load your personal email or play a game on your phone? Too bad.
After the iPhone, there was a grassroots movement to bring your own hardware to work and have the IT department support it. The Mac made the computer personal, and the iPhone made the smartphone personal. It was an assistant in all parts of your life.
This not only became the norm for phones but laptops as well. And having a workforce spread between Windows, Mac, iOS, and Android meant that productivity software had to go to the one standard between all of them: the web. And thus, cloud software was accelerated.
Created App Stores and made the word “App” mainstream.
App replaced Application.
“App” is now in the public lexicon. Love it or hate it, blame Apple and the App Store.
Birthed Android which killed Nokia.
The iPhones launch changed Android’s direction which put it on a collision course with Nokia.
Android was founded in 2003 with the intent of creating a new operating system for digital cameras but quickly changed their focus to mobile phones. They were purchased by Google in 2005 with no public product to show for it, but some talented engineers such as Andy Rubin. All of this predated the iPhone.
Why I say the iPhone birthed Android is because they had to “go back to the drawing board” according to the Rubin. The pre-iPhone version of Android assumed the presence of a physical keyboard like the Blackberries of the time and had to be recoded from the ground up for a touch screen only device.
Apple launched exclusively on AT&T. The exclusive was a necessity for Apple to negotiate an unlimited data plan, change infrastructure for ‘visual voicemail’ and keep the carrier out of the software. But this left the other Verizon, Sprint, and T-Mobile hungry for touchscreen smartphones and Google’s Android was the only one anywhere close to developing an operating system for these phones. And this was the birth of Android.
You might think that Apple killed Nokia, the former giant of the cell phone market. But it is evident from the graph of mobile phone operating system use, that when Android goes up, Nokia goes down. Android replace Nokia at the low end of the cellphone market and the developing world, two markets that Apple has no interest in.
Killed the MP3 player, GPS, and consumer camera.
A touchscreen plus some sensors eliminated many single function devices.
A touchscreen device is so powerful because the user interface can change depending on the task. The phone can virtualize any buttons it may need meaning it can do anything as long as it has the sensors for it. So add in a GPS, CMOS sensor, and a headphone port, and you have a navigation system, portable camera, and an MP3 player.
It is not surprising that the iPhone consumed the MP3 player / iPod market; the threat from smartphones with media players to the iPod was Apples prompt to develop the iPhone. But iPhone killed off so many devices that had single uses. The iPhone wasn’t just the camera, Mp3 player and navigation system that you only had with you, it was superior at all of these tasks because it was constantly connected to the internet. You could download the latest song or maps, or upload your images to social media far easier.
Set up Shenzhen to deliver innovation worldwide.
A local electronics renaissance popped up around the iPhone’s factory in China.
Apple does not manufacture the iPhone; Foxconn makes the phone. Foxconn’s iPhone factory is in Shenzen, China. That plant requires other factories to make simple sensors and chips such as the accelerometers and compasses allow the iPhone to know which direction it is pointed in.
This has sparked a local renaissance of electronics that the world has benefited in. OnePlus is a company that designs and programs phones with a fraction of the employees, resources and manufacturing quantities as Apple, LG and Samsung. Knowing that, you would assume they are making cheap phones to go after the world market, but they are making phones to compete with the best phones out of those companies.
How can OnePlus do this? They can quickly create working prototypes and learn lessons from them because their design and engineering lab is in the center of the electronics and sensor capital of the world. In a recent YouTube video by The Verge about OnePlus’ process, they mentioned being able to publish a spec and get a prototype nearly the same day.
The decrease in the cost of sensors from the mass numbers the iPhone and other phones are produced in have made new industries like drones and action cameras possible.
Always connected devices.
The iPhone enlightened us to the possibilities when the internet followed us.
We now just expect most of the devices in our life to be always communicating with the web. The new generation is called the “connected generation” because they will never know a time when the internet was not ubiquitous.
But this was not always the case. We connected to the web, did what we needed, and then disconnected. Dial-up modems that would tie up our phone lines while consuming expensive bandwidth had trained us into this behavior. Even the smartphones that predated the iPhone limited their constant access to email.
It took the iPhone to enlighten us to what was possible when apps could assume they had access. Streaming music, health and fitness data, maps with live traffic, and social media all became possible when the internet came with us.
As you read in our previous article, Steve Jobs insight was not the touchscreen or the motion sensors, but the possibility of a mobile device with universal connectivity.
The iPhone made the smartphone our primary computing device.
The smartphone replaces the PC as our computer and brought computing to the developing world.
I did not ever own the original iPhone, but I did own the 3G. I found it peculiar that you had to sync the iPhone with a computer running iTunes to set it up. The iPhone seemed to have everything my computer had and more. Thankfully, they started syncing my music over WiFi and then stopped requiring iTunes altogether. This was the computer.
Our mobile phone has become our primary computing device. We do our socializing, shopping, budgeting, and consume our media using it. If we use a computer, it is for productivity or specialized tasks.
For some of us, it is our only computer. It used to take a desktop or a laptop to engage with the world and get things done. Now, many people get by with only having a smartphone.
And for a smaller some of us, it is the only computer they will ever have. Many senior citizens skipped the personal computer, but have come to use an iPad. Many children do not own a computer except for their phone or tablet. But, most importantly, there is a vast number of people in the developing world whose only computer is and will ever be their smartphone, and it gives them new opportunities for commerce, engagement, and community.