How Apple Started the IPhone and Dominated

On 29 June 2007, Steve Jobs dropped a bombshell on the world. That day he unveiled one of the

most highly anticipated consumer technology devices in history: the iPhone. Over the preceding years Apple had been clawing back its reputation as a true leader in product innovation. The iPod – along with iTunes – had changed the way people discovered, listened to and stored music, displacing CD and MP3 players and providing consumers with a new way to purchase music. The iPhone would continue the disruption: it collapsed the power of a desktop computer into a device that fitted into your hand; it integrated wi-fi and mobile Internet access; and it allowed virtually anyone to write software that would operate on it – all within a beautifully designed handset.

The iPhone delivered such a punch because it combined a number of very significant innovations. First, it packed the power of a desktop computer into a mobile phone. Why was that critical? Because all that computing power would allow it to run a powerful operating system – or OS. That opened the door for Windows-like domination.

Second, Apple introduced the concept of the App Store. It was a centralised place where Apple would manage and distribute all the mobile computer programs (which would be called ‘apps’) created by developers all around the world. The iPhone was no phone: it was a true mobile computer – and developers were encouraged to create cool apps for it.

Third, the iPhone set a new benchmark for mobile hardware. Not only did Apple do away with the clunky method of entering letters via a numeric keypad, but they also replaced the pokey BlackBerry keyboard with a virtual one, thus freeing up more space for a larger screen (and more engaging apps). They also filled the iPhone with sensors such as GPS (Global Positioning System, to tell you where you are), a magnetometer (to tell you which direction is north), and accelerometers (to detect whether the iPhone is moving, and, if so, which way).

It was through the combination of all these innovations, launched at the same time, that Apple was able to set the stage for what would be a multibilliondollar-per-year app industry.

Over at Google, co-CEO Larry Page watched the iPhone launch and realized that mobile was going to become a dominant force. Since 2005 he had been talking to a developer called Andy Rubin about a rather secretive project called Android – a new mobile OS. After only a handful of meetings Page was so impressed by Rubin – and the technology – that he was ready to buy the pledging company and inject massive internal investments into the project. Rubin joined Google in July 2005 and, three years later, Google launched the first smartphone running the Android OS.

Android mirrored Apple’s entire ecosystem, but with one key difference – and ultimately a massive one. Android would run on open-source software. That meant that anyone in the world – from an individual developer all the way to a giant smartphone manufacturer – was allowed to use the Android software and tailor it to their own specific purpose. The Android OS could therefore be used, adapted and optimised for use on smartphones produced by competitors such as Samsung and BlackBerry. Apple, on the other hand, had taken a highly controlled, walled-garden approach with iOS (its mobile operating system). Apple would not allow anyone else to use the system, and iOS would run only on Apple-made hardware.

The diagram below shows how dramatically things have changed. When Microsoft launched Windows in the 1980s, it took 12–15 years for it to dominate 96 per cent of all desktop computers.

And yet, when you look to the right of the graph, you can see that iOS and Android have destroyed Microsoft’s near-monopoly in a mere five years. People have adopted mobile computing more than three times faster than they did the desktop.

This points in a fascinating direction: people don’t want to be artificially stuck behind desktop or even laptop computers. In fact, the data suggests that people want their computers to be as mobile as they are. And herein lies the massive opportunity with mobile – and, more specifically, with mobile apps.