This week marks 16 years since Steve Jobs, the late co-founder of Apple, unveiled the iPhone, which went on to become the most influential product of all time. It not only made Apple the world’s richest tech company but also changed the mobile landscape. Jobs introduced the iPhone at Macworld 2007, and teased the revolutionary device as a three-in-one product — “a widescreen iPod with touch controls, a revolutionary mobile phone and a breakthrough Internet communications device”.
iPhone paved the way for a modern smartphone design
Smartphones existed even before the iPhone came along — but they did not look like the way they do today. BlackBerry had business-centric phones with physical keyboards, while Nokia was making the communicator series, which almost looked like a mini-laptop. Once the iPhone hit the market, it introduced a design language that became the foundation of the modern smartphone. Designed by Apple’s star designer Jony Ive, who had proved his mettle with the iMac G3 and iPod in the past, the iPhone came with a glass slab with a single button at the bottom and featured a 3.5-inch multitouch touch screen.
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The design, the user interface, and the phone itself were different from anything else on the market. Copycat phones from HTC, Samsung, and other manufacturers started to surface based on the design template that the iPhone was based on, which still continues today.
iOS and the App Store changed how we use smartphones
The iPhone wasn’t perfect from the start. It lacked many key features, but Apple kept improving its capabilities with each new generation of the iPhone. Where the iPhone really shone was in its software. iOS was nothing like other smartphone operating systems. The user interface was simple, practical, and easy to operate. Because of iOS, the iPhone helped increase mobile Internet browsing and streaming.
But the biggest breakthrough came when Apple introduced the App Store in 2008, a new way to publish and distribute apps on the iPhone. It debuted with 500 apps, and today there are millions of apps on the App Store. Developers make billions through apps on the iPhone, which created entirely new businesses. Think of Instagram, Spotify, Uber, YouTube, and millions of other apps and services. The App Store made it easier for developers to build and distribute their software and simplified the process of finding the app an iPhone user wants to download.
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Apple’s strict policy of approving each app, and not allowing third-party app stores to run on the iPhone helped the company differentiate its offerings from rivals like Google’s Android, another dominant operating system but “open” in nature.
The apps turned the iPhone into an “everything” device, a single product that could be used for consuming news, socialising, entertainment, banking, and shopping.
A robust supply chain boosted Apple’s popularity
But the success of the iPhone was owed to factors beyond the smartphone market as well. Apple’s ability to produce millions of iPhones each year and to make them available around the world at record speed shows a massive and efficient supply chain at work round the clock in places like China where its manufacturing partners like Foxconn assemble the iPhone. The company designs the iPhone in Cupertino, California, purchases components from suppliers spread across many countries, sends the parts to factories in China and India, and then ships the iPhones to warehouses and then to retailers around the world.
Due to this robust supply chain, Apple manages to produce the iPhone at scale and sell them at profit. This strategy has worked wonders for Apple — mostly due to China and its business model. Tim Cook, who took over as CEO of Apple after Jobs passed away in 2011, is the architect of Apple’s supply chain, which has helped the company sell billions of iPhones and rake in hundreds of billions in profits. In 2017, Apple said it created and supported 4.8 million jobs in China.
But dependence on iPhone is making Apple less innovative
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The iPhone isn’t just a smartphone; it brings every Apple product together and tightly integrates everything in the ecosystem. The iPhone is key to Apple’s success, but the device that laid the foundation of a modern smartphone has also rendered Apple unable to innovate any more — a problem that many companies face when they become mammoth in size.
Regulators have gone after Apple’s monopoly, which it has due to its control over the App Store. Consumer activists have accused Apple of intentionally making its hardware products less reparable. Apple has taken many new developer-focused initiatives and introduced easy-to-repair programmes, but its critics feel those initiatives are not enough.
But Apple’s biggest challenge remains its dependence on the iPhone. This is not to say that the iPhone is dead or dying, just that it has slowed down, if not already peaked. In 2019, Apple stopped reporting unit sales, which suggested that the iPhone may no longer be as lucrative for the company as it was a few years ago.
That said, the iPhone is still the growth engine for the company and will continue to generate massive profits for some time. With Apple eyeing India as the next big growth market, the iPhone isn’t going anywhere.
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But investors want Apple to show where it is headed next. Apple hasn’t signalled what might replace the iPhone, but there is speculation that it is working on a ski goggles-shaped device, a mixed-reality headset, which could be ready for the showcase as early as this spring. A VR/AR headset isn’t likely to replace the iPhone immediately but it does appear that the company can no longer earn the seemingly unlimited profits it once did, and it can no longer depend on a single hit product to maintain its dominance.
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