The iPhone decade: How Apple's phone created and destroyed industries and changed the world
By: Kif Leswing
No doubt in my mind, the smart phone (and critically the iPhone) has profoundly influenced our behavior. It has changed the way we do business, conduct personal affairs and (crucially) how we interact with each other. The Apple watch (and other wearables) takes us one step further in our intimacy with intelligent technology.
My iPhone is the first thing I see in the morning, after its alarm wakes me up. It’s often the last thing I see at night, when I check a few emails or play a game before I drift off to sleep.
I’m not sure when my iPhone became essential to my life, but I’m not alone. In fact, it’s possible to look at the last 10 years as the iPhone decade — when smartphones went mainstream, created billion-dollar corporations, rearranged existing industries and changed the world.
In fact, you might be reading this on an iPhone right now.
The iPhone was first released in 2007, but at the dawn of the decade it was still a relatively niche product, confined to one wireless carrier and targeted at the early technology adopter. Now it’s a much bigger deal — in the first calendar quarter of 2010, Apple sold 8.7 million iPhones. In the first quarter of 2018, Apple sold 47 million iPhones.
Apple sold at least 1.4 billion iPhones during the decade, according to its official sales figures, and probably closer to 1.6 billion after this year’s estimates are added. Apple says over 900 million iPhones are in active use.
Apple’s iPhone unit sales are dwarfed by Google’s Android operating system, which has shipped billions of devices as well. But as revealed in Apple’s knock-down legal battles with Samsung — perhaps the highest-profile tech litigation of the decade — Google and its Android partners took a fair amount of inspiration from Apple’s iPhone.
The iPhone has also propelled Apple. In the last 10 years, Apple has gone from a large computer company with a profitable side business in MP3 players to a $1 trillion megacorp with operations around the globe and 137,000 full-time employees.
″ Unquestionably, it’s the most impactful consumer tech product over the past decade,” Loup Ventures founder and longtime Apple analyst Gene Munster said.
Replace everything in your pocket
The iPhone became intertwined in our lives because it replaced so many other devices.
Instead of a personal communicator with your calendar and notes, I use my iPhone. I don’t have an alarm clock anymore. It replaced in-car GPS devices. MP3 players. Flashlights!
“Fifteen years ago, we used the wireless phone to make a call. Today, we use it for everything else. It’s the remote control for our lives,” wireless analyst Jeff Kagan said.
Perhaps the best example of the iPhone’s transformational power is what it did to the camera. Some 109 million pocket cameras were sold in 2010, according to data from the Camera & Imaging Products Association . But in 2018, the last year for which full data is available, only 9 million cameras with built-in lenses were sold.
“Some products been absorbed, some have been completely removed from the marketplace, and that’s part of a free and open marketplace,” said Thomas Cooke, a professor at Georgetown University’s McDonough School of Business.
The iPhone has also created arguably as many new industries as it destroyed.
Ride-hailing companies Lyft and Uber are collectively worth more than $60 billion, and they exist only thanks to the always-on GPS location and high-speed wireless connections that became common with the iPhone.
“You can go through every feature of the phone and think of billion-dollar companies that have been created around them. It impacts almost every facet of our lives,” Munster said.
“The camera and Instagram. Location does anything from maps, like Waze, to advertising on Google Maps, to food delivery like Grubhub . NFC has enabled mobile banking, which is going to change the banking industry. Content consumption is video consumption now. YouTube wouldn’t be YouTube now without the iPhone,” he said.
The iPhone and its Apple-controlled App Store also became a massive business and gave app developers an easy way to sell to a global audience. In January, Apple said developers on its App Store platform had made $120 billion since it launched in 2008, with over $30 billion in 2018 alone.
A massive supply chain
Although the core idea of the iPhone did not change during the decade, the device itself became significantly more powerful.
At the start of the decade, the most powerful iPhone was the iPhone 3G, the second version of the device, featuring a slow Samsung CPU with one core running at 412 MHz. The iPhone 11 Pro, the latest major revision to the iPhone, comes equipped with an Apple-designed chip with a max speed of 2.65GHz in six cores. Modern iPhone performance rivals laptops , according to some tests.
The same level of improvement happened to the display as well. A top-of-the-line iPhone in 2010 had a 3.5-inch screen with 153,000 pixels. The newest iPhones can come equipped with a 6.5-inch screen with over 2.6 million pixels.
“Now that we’re on iPhone 11, if we went back and used the iPhone 1 or 2, it would be like going back to the Model T,” Kagan said.
The downside is that iPhones also become more expensive, at least upfront. The iPhone 3G cost only $199 for the entry-level model, partially subsidized by a two-year AT&T contract. Apple’s Pro iPhones now start at $999, and the wireless contract is sold separately.
Apple’s ability to deliver a new model every year with significantly improved capabilities was underpinned by a vast and sophisticated supply chain that culminated in massive assembly facilities in China run by Apple’s primary manufacturing partner, Foxconn. In 2017, Apple said it created and supported 4.8 million jobs in China.
The parts that went into the iPhone and other smartphones — tiny cameras, dense batteries, high-quality touch screens — were cloned and eventually became common, enabling a generation of entrepreneurs to make new kinds of hardware products, such as drones, scooters and smart home products.
Tim Cook’s era
When the decade started, Apple was led by founder Steve Jobs. On Aug. 24, 2011, two months before Jobs’ death, Tim Cook took over as CEO, and he’s been in charge ever since.
Under Cook, Apple has sold sold billions of iPhones and raked in hundreds of billions of profit. At one point, it registered what was at the time the most profitable quarter for a publicly traded company ever .
For much of the decade, Apple was the most valuable publicly traded company, only recently losing that crown briefly to longtime tech rival Microsoft and more recently, Saudi Aramco.
For years, Apple grew a giant stash of cash and marketable securities on the back of its iPhone sales, but in 2018, after tax reform, it indicated it planned to distribute the majority of that wealth to its shareholders in the form of buybacks and dividends.
Those buybacks helped the stock price grow over 900% on a split-adjusted basis. A million dollars invested in Apple on Jan 1, 2010, would be worth over $9.13 million last Friday, after a 7-1 stock split in 2014.
Along the way, Apple has crossed a few big landmarks. It joined the Dow Jones Industrial Average in 2015 , a symbol that Apple is a blue-chip stock and an industry standard-bearer. It got an endorsement from famously tech-shy investor Warren Buffett, whose Berkshire Hathaway now owns over 5% of Apple .
In 2018, Apple became the first publicly traded company to cross a $1 trillion market capitalization. “Financial returns are simply the result of Apple’s innovation, putting our products and customers first, and always staying true to our values,” Cook told Apple employees in a memo marking the occasion.
It also opened a literal landmark in 2017: Apple Park, a giant corporate campus in its hometown of Cupertino, California, that cost an estimated $5 billion to build and now serves as the company’s headquarters.
Apple also launched three major new product lines: the iPad, Apple Watch and AirPods. All have sold well. None has changed the world like the iPhone.
A victim of its own success
Apple enters the next decade as a juggernaut with several massively profitable products. But it increasingly faces challenges related to its size and success.
Recently, the House Judiciary Committee requested documents from Apple , along with Amazon, Facebook and Google, as part of an antitrust probe as the mood in Washington turns more skeptical of Big Tech. In recent months, Cook has had to answer questions from international press whether Apple is a monopoly, mainly based around its control of its App Store platform.
“No reasonable person would ever call Apple a monopolist,” Cook said in October.
There are also increasing concerns from activists and consumer advocates about the environmental cost of selling new hardware devices to hundreds of millions of people, who upgrade every few years. In recent years, Apple has introduced new recycling programs and initiatives to reduce the waste going to landfills.
Others, including former head Apple designer Jony Ive , have expressed fears that iPhones may be too good — and people can’t put them down. In response, Apple introduced a Screen Time feature to help people wean their addiction to the little glowing screen.
“One turning point is when Apple introduced the Screen Time feature, and CEO Tim Cook said he was using his phone too much,” said Kaiwei Tang, co-founder of Light , a company that makes an iPhone alternative focused on limiting over-usage.
“People are starting to see some of those metrics. It’s basic math, spending five hours a day on your phone, what else you might be able to do with that time?” he continued.
But the biggest challenge might simply be that the iPhone was a once-in-a-generation product that cannot grow as briskly as it did over the last 10 years, when hundreds of millions of people got an iPhone for the first time.
Unit sales for iPhones peaked in 2015 at 231 million. Since then, they have been largely flat. In 2019, Apple said it no longer planned to report unit sales, suggesting that total revenue and other metrics were sufficient information for investors.
Instead, Apple has focused investor attention on the hardware unit it calls “wearables,” which includes the Apple Watch and AirPods, and its services division, which sells content subscriptions such as Apple TV+ and Apple Arcade. But the iPhone still accounted for 54% of Apple’s 2019 sales.
Whether the 2020s will be as kind to Apple as the last 10 years were will depend on if online services and computers people wear can change our lives as much as the iPhone did.