The iPhone Effect

When Steven P. Jobs announced the iPhone early 2007 he started by saying that every now and then a revolutionary product comes a along that changes everything. Having been part of two such products, the Macintosh and the iPod, he boldly announced that Apple would bring to the world three new revolutionary products. First one was a wide screen iPod with touch controls, second was a revolutionary mobile phone, and the third was a breakthrough internet communicator. Of course these were all the same product and the product was the iPhone. That day, Apple changed the mobile industry and this is know as the iPhone Effect.

Barcelona, Spain in February is all about mobile phones. The city hosts the annual Mobile World Congress.  The 2007 congress was in shock. With their usual mobile offering the move by Apple caught the mobile industry by surprise. That year, a lot of touch screen phones were introduced but mysteriously enough few prototypes and mostly pictures. As it takes the telecom industry 12-18 months to generate a new product, the mobile handset makers didn’t have time to respond.

What Apple did was a classic new disruption business move. The focus of handset makers was always on the hardware and the design of the phone itself. Software and the user experience was important but secondary. The mobile operating systems (OS) were old primitive system that were developed during an era of limitation, both of the hardware and the bandwidth. Coming from a computer hardware and software company, maybe the iPhone should be called a handheld computer with voice as one feature.

The first important thing about the iPhone is the touch screen interface. Previous business class phones like the Blackberry had a full qwerty keyboard and this was considered very important in the industry. Steve Ballmer, CEO of Microsoft responded when asked about the iPhone, by saying that “… it doesn’t appeal to business customers because it doesn’t have a keyboard which makes it not a very good email machine.” Classical Prevailing Technology Trap. What Ballmer failed to recognize was that touch interfaces had become so good that they could actually work as keyboard.

Another important thing about the iPhone is the software. Apple introduced real operating system into the mobile phone. They took an industrial strength OS, the MacOS, and adapted it to a smaller device. Then with really elegant user interface the iPhone is super easy to use. Compare that to Nokia’s menu system which were at the time probably designed by engineers who put more emphasis on ordering features in a logical tree hierarchy than what is important to users.

With an industrial strength software like the MacOS software, the iPhone had the potential of becoming an application platform. This was something the old handset makers were not capable of doing so easily since their OSs were built with totally different requirements. Apple started the mobile App revolution and lunched the successful App Store.

Another  things with the iPhone is the use of the Internet. The mobile phones up to this time focused on mobile browsing and using simpler and lighter versions of HTML. The iPhone completely changed this by simply using the web as it was and provided an excellent browser that was easy to use with touch input. The mobile web became obsolete as there was not mobile web, it was only web. Early 2008 Google reported that iPhone users searched the site 50 times more than other mobile phone users. Vic Gundotra, head of mobile operations at Google was quoted saying “We thought it was a mistake and made our engineers check the logs again.”

The iPhone is a very good business case study. It offered new value to customers, namely giving them powerful handheld computers with voice functionality. This is an example if of new market disruption by offering functionality to customers that was not in the market before.

The iPhone story is also an example of how the adjacent possible concept works. Given technology development, each cycle will open new possibilities. The iPhone came when when it was possible to put a real computer OS in a small device. It was also possible to build touch screen technologies and use touch as input.

When Apple started to offer phones many people were surprised. What is a computer company doing offering phones? These markets were totally separteded. But as technologies improves, new possibilities open up. Long has it been predicted that mobile phones and computers would merge. Apple made good on the bold statement. The iPhone was a revolutionary product in three ways: wide-screen with touch, computer as a phone and a new way to browse the web.