By Betsy Morris
Ten years ago, hailing a cab meant waiving one's arm at passing
traffic, consumers routinely purchased cameras, and a phone was
something people made calls on.
The iPhone, released a decade ago this month, changed all of
that and more, sparking a business transformation as sweeping as
the one triggered by the personal computer in the 1980s. Apple
Inc.'s gadget, and the smartphone boom that followed, gave rise to
whole new industries, laid waste to others and forced new business
models.
By essentially compressing a powerful, networked computer into a
pocket-size device and making it easy to use, Steve Jobs made the
internet almost ubiquitous and fundamentally altered decades-old
consumer habits in areas like music and books. What's more, the
functionality packed into the iPhone made it a digital Swiss Army
knife, supplanting existing tools from email to calendar to maps to
calculators.
"It combined size, power and personalization," said Paul Nunes,
managing director at global consulting and services firm Accenture
and author of "Big Bang Disruption," a book about transformational
technologies.
The upheaval triggered by the iPhone, and the launch of Google's
Android operating system for smartphones the following year, led to
new innovations like apps that continued to transform industry.
Entrepreneurial coders and upstart businesses could now reach
consumers directly, creating new modes of shopping, entertainment,
travel and more. App stores today offer an estimated 3.5 million to
3.6 million choices, including games, fitness programs, shopping
and dating, according to audience-measurement firm Verto Analytics
Inc.
Apps also made it easier for big companies to connect with
customers: airlines use them to expedite flight check-ins, banks to
handle check deposits, and restaurants to automate ordering.
That activity has been a catalyst for the growing dominance of
tech-industry titans. Alphabet Inc.'s Google and Facebook Inc. now
get the bulk of their advertising revenue from mobile-ads. Together
with Apple, Microsoft Corp. and Amazon.com Inc., they are the five
most valuable companies on the stock market today. Ten years ago,
only one of the top five was a tech company.
Along the way, smartphones disrupted communication. By offering
faster, easier ways to communicate -- text, photo, video and social
networks -- "the iPhone destroyed the phone call," says Joshua
Gans, professor at the University of Toronto and author of the
book, "The Disruption Dilemma." "It's funny we even call it a
phone."
Smartphones didn't start social media. Facebook launched in 2004
on desktop PCs. But they made social networks and messaging apps
like Facebook's WhatsApp, Instagram and Messenger, along with
Twitter, Snapchat and others, pervasive and indispensable. As of
March 31, at least 1.94 billion users were checking into Facebook
at least once a month.
As mobile audiences grew, so did the time individuals spent on
their phones. Average usage had risen to 73.8 hours a month by June
of last year from 68.2 hours the prior year, much of it on social
media, according to a report by comScore released later in
2016.
Advertisers have redirected their spending accordingly, wreaking
havoc on established news companies. In 2015, total mobile ad
spending in the U.S. overtook print ad dollars, according to
eMarketer. Last year, Facebook captured 14% of the $190.6 billion
global digital advertising revenue, second only to Google's 32.8%.
And in the first quarter of 2017, Facebook's 49% rise in revenue
was largely fueled by online advertising.
Smartphones have also laid waste to the camera industry -- even
as they made photos more relevant than ever. Digital camera
shipments fell 80% between 2010 and 2016 to 24 million, according
to the Camera & Imaging Products Association. Among the
casualties: Eastman Kodak Co., the iconic film company that was
already reeling from the onslaught of digital cameras. In 2012, it
declared chapter 11 bankruptcy and has reorganized to focus on
commercial imaging markets.
Most photos taken today aren't printed and kept, but tweeted,
messaged or posted. That gave rise to the $20 billion-plus IPO in
March of Snap Inc., the disappearing-messaging app. It calls itself
a camera company.
Smartphones have paved the way for new technologies that have
led to faster production cycles and unpredictable competitors, says
Accenture's Mr. Nunes.
Garmin Ltd.'s navigational device technology was groundbreaking.
In 2005, sales of its GPS devices were exploding despite retail
prices of $700 and above. Within four months of the introduction of
the iPhone, equipped with Google Maps, Garmin had gone from posting
record earnings at the end of 2007 to missing expectations in early
2008. Its stock, which was trading around $100 at the end of 2007,
had fallen to under $20 a year later. The company has since
diversified into wearables and other markets besides autos; its
stock is now trading in the $50 range.
As existing businesses evaporated, the iPhone spawned new
industries and business models. Ride-hailing firms Uber
Technologies and Lyft are built on apps; a smartphone is the price
of entry for both riders and drivers.
From the days of the phonograph, people have owned music,
whether vinyl records, compact discs or downloads from iTunes. The
smartphone accelerated a move away from that concept to effectively
renting music from subscription services like Spotify and Apple
Music.
Artists and labels, who earn far fewer royalties on these new
services, have fought the move but for a flailing music industry,
streaming has this year been a shot in the arm. A doubling in paid
streaming music subscriptions last year drove an 11.4% increase in
retail revenue to $7.7 billion -- the industry's biggest gain since
1998, according to the Recording Industry Association of
America.
Nowhere has the smartphone's impact been more pronounced -- or
unexpected -- than in telecommunications. A month before the iPhone
was launched, Randall Stephenson, chief executive of AT&T,
Apple's exclusive partner in the U.S. at the time, told a financial
audience: "I believe the iPhone is going to be a game changer."
It was, but not in favor of telecoms. The iPhone became such a
hit with consumers, who lined up and camped out for days to buy it,
that it tipped the balance of power. Manufacturers like Apple could
now set tougher terms and demand more concessions from
carriers.
Wireless companies were able to capitalize on soaring data use
for a while, as consumers became more addicted to their
smartphones. But the shift to data plans from texts and calling
minutes made it easier for users to treat their cellphone service
like a commodity.
Wireless service revenue among the top U.S. carriers grew 5.9%
in 2008, the first full year the iPhone was on the market,
following years of double-digit growth, according to investment
bank UBS Group AG. Revenue, which has been falling in recent years
amid increased competition, slipped 1.6% last year.
Many carriers are now rushing to diversify their revenue streams
as their customer bases stagnate -- most developed nations already
have more active smartphones than people -- and persistent
competition keeps them from raising prices.
--Drew FitzGerald contributed to this article.
(END) Dow Jones Newswires
June 23, 2017 05:44 ET (09:44 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
Apple (NASDAQ:AAPL)
Historical Stock Chart
From Sep 2024 to Oct 2024
Apple (NASDAQ:AAPL)
Historical Stock Chart
From Oct 2023 to Oct 2024