iPhone Fortune Cookies
On January 9, 2007, at the Macworld Expo, Steve Jobs unveiled a product that would forever change the landscape for cellphones: the first iPhone. Speculators ran rampant saying that Apple would likely garnish at least a 7% market share by 2016! What’s funny is that Jobs said that Apple would be happy with just 1% of the market, a market which at the time was already selling a 100 million phones:
So game consoles. 26 million game consoles were sold in 2006 worldwide, actually a little smaller than you’d think. It’s not such a big market. Digital cameras dwarfed it at 94 million. MP3 players 135 million. And PCs, about 209. Mobile phones, just about a billion last year, worldwide. So what does this tell you? What this tells you is, that 1 percent market share equals 10 million units. This is a giant market. One percent market share, you’re going to sell 10 million phones. And this is exactly what we’re going to try to do in 2008, our first full year in the market, is grab 1 percent market share and go from there. So we’re going to enter a very competitive market, lot of players, we think we’re going to have the best product in the world, and we’re going to go for it and see if we can get 1 percent market share, 10 million units in 2008, and go from there.
What Jobs didn’t say was that the market was already dominated by the Blackberry and Windows Mobile devices. Many speculators wondered if the iPhone could even remotely compete since it didn’t have any enterprise support nor any Microsoft Exchange support, the two things all businesses require out of the smartphones they buy.
Even Microsoft CEO Steve Ballmer couldn’t help but laugh at the iPhone:
Baller went on to say in a USAToday interview:
There’s no chance that the iPhone is going to get any significant market share. No chance. It’s a $500 subsidized item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I’d prefer to have our software in 60% or 70% or 80% of them, than I would to have 2% or 3%, which is what Apple might get.
Ballmer would have to wait and see just how much market share Apple would get with the iPhone.
On June 29th, 2007, the first generation iPhone is released to the public. Right out of the gate, Apple sold an estimated 500,000 iPhones in just the first weekend, with one million iPhones sold by September. By the end of 2007, Apple sold nearly 4 million iPhones. Not only did they meet expectations, they exceeded them by capturing a 26.7% share of the smartphone market by the end of 2007. Keep in mind that they attained these numbers without enterprise support and on just a single carrier. It’s an amazing product launch on many levels!
Even then there were many who doubted the future success of the iPhone, still claiming that Apple could not keep up with their success without enterprise support and without the ability to install native applications. Well, their doubts were put to rest when, on March 6, 2008, Steve Jobs and company announced the beta release of the iPhone SDK as well as a first look of the iPhone 2.0 software. And what will the iPhone 2.0 software provide? You got it: native ActiveSync support for Microsoft Exchange!
By May 2008, Apple’s iPhone market share slipped a bit and fell to a 19.2% marketshare. My guess is that companies just aren’t ready to buy into the iPhone yet till they see the official release of the 2.0 software.
Another gripe about the iPhone was that it didn’t have 3G. Well, in true Apple fashion, they announced on January 15, 2008 at the Macworld Expo the release of the next generation iPhone, the iPhone 3G. Granted, the only things they added was support for 3G and built-in GPS, but it still pretty much closes the gap for any complaints that business users have.
So with all the hoopla, what is it about the iPhone? Why is this thing so darn popular? And does it really deserve all the hype and attention it’s getting?
As a fellow iPhone owner, I can tell you that it deserves all the hype. I used to administrate a good handful of Treo 700w’s and 750’s and I’ve played with quite a few Blackberry’s as well. None of them came close to the innovation and slickness of the iPhone. Simply put, Apple did indeed make one hell of a jump ahead of the competition. They created a phone that works unlike any other device of its kind.
Many other manufactures have tried to duplicate the success of the multi-touch interface of the iPhone but have failed. And why would they? Apple has had a history of creating really well designed interfaces for the past five years. Any company that even remotely wants to compete has to step up their game now and come up with something that is just as innovative. Even then, innovation is only a fraction of it. The other part is the fact that the iPhone just plain works.
The only real competition I see for Apple is Google Android, an open-source mobile operating system that some manufactures are already developing for. Android has plenty of potential but it remains to be seen whether it can capture the enterprise market. In many ways, Google Android will be the Linux of the smartphone market. I’m sure there will be developers creating apps that allow for such things as native Microsoft Exchange support.
So where does that leave the rest of the competition? Will Apple dominate the market and leave Windows Mobile and Blackberry in the dust? I don’t think so and I honestly don’t believe Apple will monopolize on the market either. After all, not everyone will find the iPhone to be the perfect fit for them. Some people will simply prefer a Blackberry, Treo, or some other smartphone over an iPhone.
I personally love the iPhone. And just because I’m an Apple fan doesn’t mean that I think the iPhone is the only good smartphone on the market. Again, I think Google Android holds a lot of promise. If someone was to come along with a phone that offers better features, a better interface, and more I might consider it. Apple doesn’t rule and know all; they just happen to be the one company who is designing some of the better products right now. Any company can come along and do it better. They just have to design something better.
As to what the future will hold for the iPhone and what the next big thing will be, no one really knows. Guess we’ll just have to wait and see.
Update [June 24, 2008]:
I share John Guber’s sentiments on the expectations of Google Android and how it compares to the iPhone:
My obsession is with wonderful, thoughtful software and gadgetry. I love the iPhone because it’s fucking amazing, not because it’s from Apple. It’d be fantastic if even one Android-based phone is as good or better than the iPhone.
The openness of Google Android is what makes me think it’ll end up being the Linux of the mobile OS market. And John is right, Android does have the potential of being better than the iPhone in many ways. After all, anyone with both Mac and Linux experience can see the potential of both platforms and the strengths of each. I don’t see why Android would be any different. But one thing is for sure: unless developers embrace the platform Android won’t stand a chance, which we won’t see till the first Android phones are released on the market.
June 23rd, 2008 at 6:34 pm
Don Reisinger of CNet made an interesting post regarding Google Android. His take: “I’ll believe it when I see it”. He does make some very valid points though. Funny thing is that this is exactly the same sort of stuff that many of the companies who distribute Linux have received: 1) You need to differentiate yourself from the competition, 2) You’re products are kinda wonky, 3) You need to learn something about the industry, and 4) You need to find ways to create revenue with this business model. Eight years ago no one believed that Redhat, Novell, SuSE, and others would ever survive, but these companies have managed to survive and offer ways of monetizing on open-source software. Google in many ways has been doing the same thing. The problem is though is that they’re moving into undiscovered territory with Android. How successful this venture will be remains to be seen.