Thoughts About The iPhone, Part 1
Sunday, October 24, 2010 at 4:01PM To paraphrase the old Chinese curse, “May you live in interesting times”...a current revolution has its focal point in a small 4.5 x 2.3 x 0.37-inch slab of sleek glass...the iPhone. Three years ago, the iPhone didn’t exist. Now it’s the most profitable smartphone in the cellphone industry—more profitable than its three top competitors combined! And it’s forced all its competitors to run to catch up.
It’s a classic breakthrough. A product that seems so obvious in hindsight, yet one that no one could imagine before its introduction. And even after it was introduced, pundits declared it would never succeed. Steve Jobs introduced the iPhone in January, 2007. It wouldn’t go on sale until late June of 2007, with only one carrier (AT&T). Although the iPhone introduction was well-presented in January, many smart people—pundits—declared it would be a failure (Thanks to Phillip Elmer-DeWitt):
“We’ve learned and struggled for a few years here figuring out how to make a decent phone. PC guys are not going to just figure this out. They’re not going to just walk in.” Palm CEO Ed Colligan, commenting on then-rumored Apple iPhone, 16 Nov 2006
“Apple is slated to come out with a new phone… And it will largely fail." Michael Kanellos, CNET, 7 December 2006
"The only question remaining is if, when the iPod phone fails, it will take the iPod with it.” Bill Ray, The Register, 26 December 2006
"Apple will likely have a tough time convincing application vendors to build specialized clients for the iPhone until the volumes are there, and the volumes could be limited by the lack of third-party applications – a Catch 22.” Jack Gold, J. Gold Associates, 10 January 2007
“The iPhone is nothing more than a luxury bauble that will appeal to a few gadget freaks." Matthew Lynn, Bloomberg, 15 January 2007
"Five hundred dollars? Fully subsidized, with a plan? It is the most expensive phone in the world and it doesn’t appeal to business customers because it doesn’t have a keyboard which makes it not a very good email machine… So, I, I kinda look at that and I say, well, I like our strategy. I like it a lot.” Steve Ballmer, Microsoft CEO, 17 January 2007
I am not sure how it will stand against Sprint’s Wimax (when it successfully launches) and its phones, which I am looking forward much more than over-hyped Apple iPhone.” Bhaskar Chitraju, Indews Broadcast, 18 January 2007
"iPhone may well become Apple’s next Newton.” David Haskin, Computerworld, 26 February 2007
“Apple should pull the plug on the iPhone… What Apple risks here is its reputation as a hot company that can do no wrong. If it’s smart it will call the iPhone a ‘reference design’ and pass it to some suckers to build with someone else’s marketing budget. Then it can wash its hands of any marketplace failures… Otherwise I’d advise people to cover their eyes. You are not going to like what you’ll see.” John C. Dvorak, 28 March 2007
“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.” Steve Ballmer, Microsoft CEO, 30 April 2007
“How do they deal with us?” Ed Zander, Motorola CEO/Chairman 10 May 2007
“Apple begins selling its revolutionary iPhone this summer and it will mark the end of the string of hits for the company.” Todd Sullivan, Seeking Alpha, 15 May 2007
"What does the iPhone offer that other cell phones do not already offer, or will offer soon? The answer is not very much… Apple’s stated goal of selling 10 million iPhones by the end of 2008 seems ambitious.” Laura Goldman, LSG Capital, 21 May 2007
“We Predict the iPhone will bomb. Which means that when the iPhone comes, Digg will likely be full of horror stories from the poor saps who camped out at their local AT&T store, only to find their purchase was buggier than a camp cabin.” Seth Porges, The Futurist, 7 June 2007
“The forthcoming (June 29) release of the Apple iPhone is going to be a bigger marketing flop than Ishtar and Waterworld combined. Because its designers forgot Platt’s First, Last, and Only Law of User Experience Design (“Know Thy User, for He Is Not Thee”), that product is going to crash in flames. Sell your Apple stock now, while the hype’s still hot. You heard it here first.” David S. Platt, Suckbusters!, 21 June 2007
“God himself could not design a device that could live up to all the hype that the iPhone has gotten.” Harvard computer science professor David Platt, 25 June 2007
We now take the iPhone’s success for granted but it’s worth taking time to look back at the skeptical environment in which Apple launched it and the many reasons for the skepticism. That makes the successful outcome an even more fascinating story. In subsequent posts, I’ll describe the four basic market strategies and Apple’s particular focus and strengths that led to this success.
Reader Comments (4)
I'll enjoy reading your articles. Often our views are very different, but I love to read your perspective. I learn something every time...
BTW Nokia is going to bury the iPhone. :)
Why do you think that they were so negative? I really appreciated your bringing all the bad buzz into focus and reminding me that it was not a done deal at all.
Thanks for reading Susan. I hope to answer your question when I describe (later) why I think Apple prevailed.
Reid: I can't speak to the iPhone, but having watched my teenagers destroy one iTouch after another, I'm no fan of Apple's handheld products. In my opinion, their devices lack durability. I'm still looking for the phone (or other handheld device) that can fall out of my back pocket, land in the toliet, and still work like a champ. If you know of a product that can take this abuse, let me know--I'll be the first in line. Your photos are great, except now I'm pining to get back to MN.
Best Regards,
Greg Ness