The Apple iPhone Is The Biggest Fish In The Biggest Tech Pond

on April 10, 2016
Reading Time: 22 minutes

There has been an awful lot of negative talk concerning Apple this past month. In response, Jan Dawson wrote an excellent article for Techpinions entitled, “Why 2016 isn’t 1997 for Apple”. I encourage you to give it a look if you haven’t done so already.

Apple is always subject to criticism, but this time the criticism feels a little out of place. After all, Apple’s quarterly numbers are good, their revenue per employee is outstanding ((Revenue per employee for 2015:
Yahoo: $419,830
Twitter: $462,009
MSFT: $789,145
Google: $1,160,648
Facebook: $1,412,655
Apple: $2,032,304)) and Apple has so much cash in hand that Horace Dediu humorously titled his graph on same “The Trauma Of Too Much Money”.

Part 1: Big Fish

The Smartphone Better Be Great

Still — despite Apple’s obvious successes — the criticism grows unabated. Even Walt Mossberg, one of the most respected journalists in tech, has added his voice to the ever swelling chorus of Apple naysayers.

Note: Bolded words within quotes are emphasis added by the author of this article.

One day this fall, if things occur as usual, Apple will stage a big event to introduce the next flagship iPhone. And, based on the events of this month, that smartphone better be great. ~ Walt Mossberg

Of course, Walt Mossberg is not the first to tell Apple what to do, and forewarn of dire consequences should they fail to do so. It has, in fact, become something of an annual ritual. Everyone, it seem, knows how to run Apple better than Apple does.

For Apple this is a critical year, can the next iPhone be a big hit again to protect the top end where Apple is no longer always the coolest most desirable device…. ~ Tomi T Ahonen, Former Nokia Executive, Inc

Written this year? Nope. Last year? Nope. The year before last? Nope. Written April 10, 2013, almost exactly three years — and about $300 billion in profits — ago.

The Hardware

Walt Mossberg continues:

I stand by my view that the premium iPhone 6S and 6S Plus are the best smartphones on the market. But the top-of-the-line iPhones were challenged impressively just two weeks ago by rival Samsung’s beautiful, carefully engineered new Galaxy S7 phones.

Competitor’s phones are better than Apple’s. Hmm. When have I heard that before? Oh yeah, every single year since the iPhone appeared on the market. ((“Read these hilariously negative reactions to the original iPhone announcement”, BGR ))

2013

Remember when the iPhone was truly innovative? Think hard, because you’d have to go back to 2007, and the release of the first iPhone. But since then, Apple has been tossing out retread after retread, and this year’s iPhone 5C and iPhone 5S represent a curious creative nadir for the firm. A new Windows Phone video shows how hard Apple must have worked to come up with these turds. Hint: Not that hard. ~ Paul Thurrott, Supersite for Windows, 13 September 2013

2010

Thanks to the open nature of the Android platform, vendors from HTC to Motorola to Samsung are building more powerful hardware than Apple…. ~ Avi Greengart, Research Director, Consumer Devices, Current Analysis, 17 November 2010

2007

Apparently none of you guys realize how bad of an idea a touch-screen is on a phone. I foresee some pretty obvious and pretty major problems here. I’ll be keeping my Samsung A707, thanks. It’s smaller, it’s got a protected screen, and it’s got proper buttons. And it’s got all the same features otherwise. (Oh, but it doesn’t run a bloatware OS that was never designed for a phone.). ~ Reviewer of the original iPhone ((“Read these hilariously negative reactions to the original iPhone announcement”, BGR ))

That’s just three examples among many. My personal “Claim Chowder” folder contains 12 examples of articles that contend the Android Operating system is better than Apple’s iOS and a whopping 67 examples of articles that claim one or another Android phone is, or was, supposed to be superior to the iPhone.

On the hardware side, there are some esoteric examples of smartphones that were supposed to be superior to the iPhone, such as the “Atria 2,” “ePhone,” “LePhone,” and the “Thunderbolt,” along with numerous examples from well known manufacturers such as Blackberry, Google Nexus, HTC, LG, Microsoft Windows Phone, Motorola, Nokia, Palm, and of course, Samsung.

According to data from research firm BITG, checks at 150 Verizon Wireless stores indicate that in some cases the Thunderbolt is outselling the iPhone 4. According to the company’s data, 61 percent of the stores said they were selling equal numbers of both devices, and 11 percent more iPhones than Thunderbolts, apparently mainly in the southeastern US. But 28 percent were selling more Thunderbolts, seemingly indicating that at least on Verizon, the iPhone may have met its match. ~ Ed Oswald, technologizer.com, 1 April 2011

I cannot possibly link to all of the articles that claimed this phone or that was superior to the iPhone, so I will have to settle for merely quoting from those articles that identified rival products as “iPhone Killers”.

But when it comes right down to it, the BlackBerry Storm will be the superior mobile device and represents a true iPhone killer. ~ Andrew Hickey, ChannelWeb, 14 Nov 2008

The Palm Pre Will Be an iPhone Killer. ~ Ross Catanzariti, PC World, 2 Apr 2009

Top iPhone Killers
1. LG GD900
2. Samsung Pixon12
3. Samsung OMNIA HD
4. Sony Ericsson Satio
5. HTC Touch HD

iPhoneKiller.com, 1 June 2009

‘iPhone Killer’ BlackBerry 10 is here: iPhone is Dead! ~ Bob Brown, InfoWorld, 30 January 2013

When it comes to using the word “killer”, I think Harry McCracken has it about right:

New rule for tech journalists: Once in your career, you’re allowed to refer to something “killing” something else. Just once. Choose wisely! ~ Harry McCracken (@harrymccracken)

Only The Software

Let’s return to Walt Mossberg’s view of the iPhone’s competition:

(T)he top-of-the-line iPhones were challenged impressively just two weeks ago by rival Samsung’s beautiful, carefully engineered new Galaxy S7 phones. A Verge test showed the Samsung’s cameras are better. Only the sadly typical software mess on those phones makes them lag behind Apple’s long-superior iPhone.

“Only the software” differentiates the phones?

“Only”?

Isn’t that sort of like saying that the scarecrow in the Wizard of Oz would be smart if he “only” had a brain? Or that a singer could be an Opera star if he “only” had a better voice? Or that a model could be a superstar if she “only” had better looks?

The tech pundit fallacy: that software is easier to get right than is hardware. ~ Ben Thompson on Twitter

You know, the software is, well, it’s kinda important. It’s even kinda essential…or at least Apple thinks it is.

If the hardware is the brain and sinew of our products, the software in them is their soul. ~ Steve Jobs

Software is the user experience. ~ Steve Jobs

The Mac was just software in a cool box. We had to build the box because the software wouldn’t run on any other box, but nonetheless, it was mainly software. ~ Steve Jobs

Ever-Thinning Lead

Walt Mossberg isn’t done quite yet:

If the smartphone category is to take a leap forward, and the iPhone is to maintain its ever-thinning lead as the best smartphone you can buy, Apple needs to impress big time in the fall.

“Ever-thinning lead”? Say what now?

— You mean the iPhone, who’s average selling prices just went UP, while everyone else’s prices are being sucked into an ever downward death spiral?
— You mean the iPhone that people are switching TO far more than any other smartphone?
— You mean the iPhone whose approval ratings haven’t improved in years…because they’re always at or near 99%?

[pullquote] There isn’t a company in the world that doesn’t wish they had the “ever-thinning lead” that Apple has[/pullquote]

Walt, I love your stuff and all, but Dude — c’mon! “Ever-thinning lead”?

Let’s do the math here. The Apple iPhone has about 15% of the smartphone market share; holds a mortal lock on the top 10% of the buyers that constitute the premium sector; and consistently takes in 90% — and even as high as 95% — of all smartphone profits. That’s not an “ever-thinning lead.” That’s lapping your opponent five times over. There isn’t a company in the world that doesn’t wish they had the “ever-thinning lead” that Apple has.

Money is just a way of keeping score. ~ H. L. Hunt

The iPhone isn’t the “Mad Max” of phones, desperately trying to outrun a horde of more numerous and more aggressive competitors.

Cdrv1JkWoAAX40c

CAPTION: How Pundits Picture The Smartphone Market

Apple certainly doesn’t want to rest on its laurels, but the words “Apple had better…” really don’t belong in any serious conversation concerning the iPhone. (See also: ‘“Apple Must…”: A Brief History of People Giving Apple Advice’.)

huell money breaking bad
CAPTION: Apple Resting On Its Laurels

Measuring By Proxy

But maybe you don’t think money should be the measuring stick for success. Of course, 250 years of economics disagrees with you — but what the hey — let’s go with that.

So how else could we measure the success of the iPhone? Let me count the ways…

— Profits we’ve already covered. Check. ((The iPhone generates more revenue in 3 months than Android has in its entire existence.))
— Engagement? Check. ((Apple users use their devices more often with 63% of mobile traffic coming from Apple devices compared to 29% from Android. And remember, that’s from a much, much smaller base.))
— Customer Loyalty? Check. ((Apple enjoys a nearly 90% retention rate among its customers. iPhone loyalty rate is almost twice as strong as next brand.))
— User Satisfaction? Check. ((Recent surveys say customer satisfaction rate for 6s and 6s Plus is at 99%))
— Upgrade Cycle? Check. ((Apple users tend to replace their old devices regularly.))
— Most Affluent Customers? Check. ((Apple users in first world countries are significantly richer than non-Apple users and emerging market Apple users have 50% higher per-capita incomes, according to Credit Suisse.))

By any meaningful measure, the iPhone leads the pack.

Excellence is rarely found, more rarely valued. ~ Johann Wolfgang Von Goethe

Apple Can’t Match Up

Rafi Letzter, writing for Tech Insider, unintentionally sums up the the “thinking” that passes for intelligent criticism of the iPhone:

(C)ompanies like LG are working on some interesting, though so far unsuccessful, design innovations that Apple can’t match. ~ Rafi Letzter, Tech Insider

images-155

You have to ignore all of the ignorant people out there. ~ Steve Jobs

What’s sad is not that Rafi made such a perfectly nonsensical statement — but that he — and so many other Apple naysayers — believe it and think it makes perfect sense.

A great deal of intelligence can be invested in ignorance when the need for illusion is great. ~ Saul Bellow

Why People Buy Premium Products

Despite the critics’ insistence that Apple’s products never seem match up to those of the competition, Apple continues to make money hand over fist. How can this be?
Scrooge
CAPTION: Rare photo showing Tim Cook and Apple board members discussing how they can distance themselves from the fast-sinking iPhone.

As Ben Thompson says: “as long as there is a clear delineation between the top-of-the-line and everything else, some segment of the user base will pay a premium for the best.”

Customers pay a premium for product attributes that can’t be measured — intangibles like surprise and delight. All premium brands, not just Apple, need to elicit a strong positive emotional response from their customers.

(T)he real issue for me is, are they going to fall in love with Apple? Because if they fall in love with Apple, everything else will take care of itself. ~ Steve Jobs

Why People Criticize Premium Products

Apple’s critics perceive no intangibles that sufficiently delineate or distinguish the iPhone from competing offerings. And that is perfectly fine. We’re all different and we evaluate and value things differently.

Unfortunately, it’s human nature for us to then assume that if we cannot perceive it, it cannot be perceived; if it does not exist for us, it does exist at all; if the added value that a product offers does not appeal to us then, we reason, it should not appeal to anyone else either. In other words, if we’re not surprised or delighted by a product, we not only see no reason to buy it — we see no reason why anyone else should buy it either. And if there is no reason to buy it — yet others buy it anyway, and pay a premium to boot — then those others must be acting unreasonably.

And those who were seen dancing were thought to be insane by those who could not hear the music. ~ Nietzsche

If we can’t hear the music that the iPhone is playing, then we, quite naturally, assume that those who dance to Apple’s tune are mad as hatters. ((Definition: completely insane. [popularized with reference to Lewis Carroll’s character the Hatter in Alice’s Adventures in Wonderland (1865), although the phrase was first recorded in the 1820s; the allusion is to the effects of mercury poisoning from the former use of mercurous nitrate in the manufacture of felt hats.])) We interpret our inability to hear what they hear, to see what they see, as their inability to think (because they don’t think what we think) and we label their irrational motivations accordingly. For example, over the years Apple’s critics have contended that Apple’s customers buy iPhones because they are part of a cult, ((To its many fans, Apple is more of a religious cult than a company. ~ Apple iPhone Will Fail in a Late, Defensive Move – Matthew Lynn, Jan 14, 2007)) or because they fall prey to marketing pitches, (((T)he iPad is not ‘amazing.’ It’s just marketed very well ~ Paul Thurrott (in response to comment by Mum), Paul Thurrott’s Super Site for Windows, 26 April 2010)) or because they are influenced by benefits that are only imaginary, ((“iHeads” who continually proclaimed the imagined superiority of Apple smartphones vs. those of Samsung now have grudging respect for the Korean giant, and will soon be awed by Sony and LG. ~ Henry Long, Seeking Alpha, 6 September 2013)) or because they are susceptible to fads ((That’s really all Apple’s iStuff is — an enormous and very profitable fad. It’s the Pet Rock of the new millennium. ~ Anders Bylund, Motley Fook, 6 Mar 2012)) and novelties, ((It just doesn’t matter anymore. There are now alternatives to the iPhone, which has been introduced everywhere else in the world. It’s no longer a novelty. ~ Eamon Hoey, Hoey and Associates, 30 April 2008)) and think the iPhone is cool ((Consumers are not used to paying another couple hundred bucks more just because Apple makes a cool product. Some fans will buy it, but for the rest of us it’s a hard pill to swallow just to have the coolest thing. ~ Neil Strother, NPD Group, 22 January 2007)) or trendy, ((Although Apple’s gadgets are trendy, their hardware will eventually become irrelevant. ~ Edward Zabitsky, ACI Research, 29 Dec 2009)) or simply because they are profligate (((A) device for people who have more money than brains. ~ Alex Valentine, /dev/null, 28 January 2010)) hipsters. ((The iPhone is nothing more than a luxury bauble that will appeal to a few gadget freaks. ~ Matthew Lynn, Bloomberg, 15 January 2007))

Of course, it is not Apple’s customers who are acting irrationally. It is we who have failed the test of rationality. Just because we don’t value a product, it does not necessarily follow that a product is valueless or that those who buy it are clueless.

Entia non sunt multiplicanda praeter necessitatem (Entities must not be multiplied beyond necessity.) ~ William of Occam

“Occam’s Razor” proposes that one should not increase, beyond what is necessary, the number of entities required to explain anything and, if employed in this instance, it cuts the critics’ argument to ribbons. There is no simply no need to explain the motivations of iPhone buyer’s by belittling their intelligence or disparaging their ability to reason properly. There is a perfectly simple, perfectly logical, explanation for why people pay a premium for the iPhone. Some people like Apple products more so they are willing to pay more to obtain them.

To see what is in front of one’s nose needs a constant struggle. ~ George Orwell

The hardest thing to see is what is in front of your eyes. ~ Johann Wolfgang von Goethe

The hardest thing to explain is the glaringly evident which everybody had decided not to see. ~ Ayn Rand

Part 2: Big Pond

One-Trick Pony

I don’t think people — even people who follow the industry and who should really know better — quite grasp what is going on here. People say that Apple is a one-trick pony. But that one trick is the smartphone. And the smartphone is one hell of a trick.

40-years-of-apple-in-pictures
CAPTION: Steve Jobs holding up Apple’s One-Trick Pony

— The UN reports there are now more people with mobile phones (6 billion for a population of 7 billion) on earth then there are with access to clean toilets (4.5 billion).

— By 2020, it’s been forecast that 2 billion smartphones will be sold EACH YEAR. ((Our new forecast predicts 1.96 billion smartphones sold in 2020))

— By 2020, 80% of people around the world (6 billion) will own a smartphone. ~ Roberto A. González

— The smartphone is being adopted faster than any other tech device ever.

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— The number of smartphones are going to dwarf the number of PCs.

mobile-is-eating-the-world-2016-4-1024

Take a moment to think back on how much the desktop, and then notebook, computer changed our lives from 1975 to 2005. Now try to picture the changes that are going to occur from 2007 to 2037 when 6 billion — not 1 billion — people have a supercomputer in their pocket.

Impact

How important has the smartphone become to our daily lives?

— We now spend ~$1,000 bucks on cell phones annually. ~ Matt Phillips on Twitter

— Mobile ecosystems are now enabling at least $225 billion a year in economic value. Likely to double in a few years. ~ Horace Dediu on Twitter

— In some nations, smartphones are already bigger than television. ((Mobile usage about to overtake TV and PC usage for catchup TV in France according to @LeCNC ~ Jérôme Derozard on Twitter))

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— 75% of millennials grab their phone first thing in the morning. The percentage among non-millennials is smaller, but still significant for every age bracket. ~ John Starkweather on Twitter

— Smartphones are checked 8 billion times a day in the US alone. ~ Kazuo Hirai, Sony CEO at Mobile Congress 2016

— The importance and the impact of smartphones simply cannot be overestimated. People today spend a lot of time on their phones. They check them constantly throughout the day and keep them close to their bodies. They sleep next to them, bring them to the bathroom and stare at them while they walk, eat, study, work, and wait.

— Smartphones are this generation’s automobile — the most transformational tech of its time. ((The automobile was, in many respects, the defining commodity of the twentieth century. The ways in which we produced consumed, used and regulated automobiles defined the post-World War II generations. Now that mantle has been passed on to the smartphone. Understanding the automobile was fundamental to grasping the last century. Understanding the smartphone and our transformation to a global economy where information is king, is fundamental to understanding what’s happening, and what’s going to happen, in this century.))

— Generation Y has already indicated that they would rather have a smartphone than an automobile.

— Smartphones are the Swiss army knives of computing. Like the Swiss army knife, they fit in our pocket and go with us most anywhere, but unlike the Swiss army knife, smartphones have a virtually infinite number of “blades” that can be applied to a dizzying variety of tasks, in an innumerable number of situations. On the hardware side, the smartphone is our camera, our guide (GPS), our personal communicator and a location monitor. On the software side, we have access millions of apps that cost only pennies to own.

— And the above is only the tip of the smartphone iceberg. The smartphone is becoming a true universal remote control that manages everything from drones to thermostats, from cars to monitoring our health.

Please take 7 seconds to watch the video: “20 years of apps eating the work desk“.

The video is a great synopsis of how more and more of our daily tasks are being absorbed by our computers. The only thing wrong with the video is that it should end by showing the notebook computer morphing into a smartphone.

Decentralizing and Democratizing Economies

 

Author’s Note: Much of the information in this section is paraphrased from: “The Smartphone Society” ~ by Nicole M. Aschoff

MALLEABLE
The smartphone reduces the rigidity inherent in formal work relationships and replaces it with malleable human labor. It facilitates contingent employment models and self-interest by linking workers to capitalists without the fixed costs and emotional investment of more traditional employment relationships. Combine malleable labor with inventive capitalists and the market for goods and services expands exponentially. The smartphone is becoming the primary mechanism for activating, accessing and channeling unused assets and unengaged labor.

And the way that labor is being employed is changing too. Smartphones have facilitated the creation of new types of work and new ways of accessing labor markets. Temporary, project-oriented employment models are proliferating, creating a “distributed workforce.” Some examples:

TASK RABBIT
TaskRabbit connects people who would prefer to avoid the drudgery of doing their own chores with people who are willing to do piecework odd jobs for pay. Those who want chores done, like the laundry or cleanup after their kid’s birthday party, link up with “taskers” using TaskRabbit’s mobile app. Once the chore is successfully completed, the “tasker” can be paid directly through the phone.

POSTMATES
Postmates tracks its “couriers” in cities like Boston, San Francisco, and New York using a mobile app on their iPhones as they hustle to deliver artisanal tacos and sugar-free vanilla lattes to homes and offices. When a new job comes in, the app routes it to the closest available courier, who then responds and gets paid upon the successful completion of the task.

AirBNB
AirBNB taps into unused capacity, i.e. empty rooms and houses, matches owners with potential renters, then coordinates and facilitates rental agreements.

UBER
Uber, like AirBNB, takes advantage of unused capacity, but this time it is the form of inactive motor vehicles and unengaged vehicle owners, rather than unused rooms. Uber matches those occasionally in need of the service of a vehicle with those who occasionally wish to provide those services.

WORK ANYWHERE, ANYTIME
Smartphones extend the workplace in space and time. Emails can be answered at breakfast, specs reviewed on the train home, and the next day’s meetings verified before lights out. The Internet becomes the place of work, with the office just a dot on the vast map of possible workspaces.

As Bennedict Evans says “Every new sensor creates new businesses.”

mobile-is-eating-the-world-2016-24-638

Today, sensors give us directions, help us to measure our fitness, assist us with shopping and making payments. Location sensors make entirely new industries, like Uber, possible.

With new and better sensors being attached to phones with every iteration, we simply have no idea what new businesses, and what new business opportunities, will spring up tomorrow.

It used to be that there were large gaps in our lives where we were unable to do anything other than wait. The smartphone fills those gaps with writing, communicating, viewing, picture and video taking, working, playing and more. As individuals, we are able to achieve more, produce more, do more. Collectively, we are able to communicate more, collaborate more, create more.

If you look at things I’ve done in my life, they have an element of democratizing. The Web is an incredible democratizer. A small company can look as large as a big company and be as accessible as a big company on the Web. ~ Steve Jobs

I love things that level hierarchy, that bring the individual up to the same level as an organization, or a small group up to the same level as a large group with much greater resources. And the Web and the Internet do that. It’s a very profound thing, and a very good thing. ~ Steve Jobs

I don’t think even Steve Jobs could have foreseen how revolutionary, how world changing, the iPhone and the smartphones patterned on it, would be. He, and Apple, certainly did put a “dent in the universe.”

Imagine A World…

In the century after the Civil War, an economic revolution improved the American standard of living in ways previously unimaginable. Electric lighting, indoor plumbing, home appliances, motor vehicles, air travel, air conditioning, and television transformed households and workplaces. With medical advances, life expectancy between 1870 and 1970 grew from forty-five to seventy-two years.

Some see this as a reason for pessimism. “How,” they say “can we possibly repeat such a rapid technological advance? The era of unprecedented growth has come to an end.” (Pessimism sounds smart when we look forward to an unknown and unknowable future, but it looks mighty dumb when we compare the predictions of pessimists with the actual outcomes that occurred. See: Why Does Pessimism Sound So Smart?)

What the pessimists conveniently ignore or overlook are the twin truths that the progress of the twentieth century was mostly confined to the first world and that the technology of today is going to help push the benefits of the technology of yesterday farther and faster than ever before and, in some instances, help to leapfrog that technology entirely.

What the railway was to Victorian England, the mobile networks are to Africa. ~ Smart Africa: Smartphones pave way for huge opportunities

I don’t think that analogy is nearly powerful enough. The smartphone is to the third world what the industrial revolution was to Europe and the Americas.

mobile-is-eating-the-world-2016-10-638

Let’s look at that list of twentieth century technological advancements again.

Electric lighting, indoor plumbing, home appliances, motor vehicles, air travel, air conditioning, television, medical advances.

There are third world populations that still don’t have access to many, or any, of those technological advances. But that’s not going to happen with the smartphone.

— The smartphone is going to get to billions of people before many of the other great technological achievements do.

— Smartphones will bring more people online in the next five years than the PC did in the previous 30 years.

— Smartphones are going to be the vehicles — the digital car, if you will — for transporting the technology of today to every corner of the globe.

— Smartphones are going to spread the wealth in ways that are unimaginable.

— From Congolese coltan miners to tweens in Tijuana, anyone can communicate with everyone, anywhere, anytime.

If you look at the personal computer, it’s going from being a tool of computation to a tool of communication. ~ Steve Jobs

b6088232-c38c-11e5-808f-8231cd71622e.img
CAPTION: A group of men take a picture of themselves in the River Nile outside Khartoum, Sudan

— The smartphone is going to link together six billion minds. Six billion minds with access to the sum of human knowledge. The possibilities for the trade of goods and services, for collaboration, for the creation of knowledge, for the transfer of knowledge, are virtually endless

Steve Jobs foresaw this. Sorta.

Let’s say that, for the same amount of money it takes to build the most powerful computer in the world, you could make 1,000 computers with one-thousandth the power and put them in the hands of 1,000 creative people. You’ll get more out of doing that than out of having one person use the most powerful computer in the world. Because people are inherently creative. They will use tools in ways the toolmakers never thought possible. And once a person figures out how to do something with that tool, he or she can share it with the other 999. ~ Steve Jobs

The only thing wrong with the above is that smartphones aren’t one-thousandth the power of PCs. They’re powerful computers in their own right.

[pullquote]The smartphone’s most disruptive days are still ahead[/pullquote]

I’ve said this before and I’ll say it again.. The smartphone’s most disruptive days are still ahead. ~ Ben Bajarin on Twitter

You’re No iPhone

One of the barbs most frequently hurled at Apple by its critics is that no new Apple product — whether it be Apple Music or Apple Watch or the iPad Pro, etc. — is, or has any chance of being, as big as the iPhone.

No shooting Sherlock.

Of COURSE no new product is going to be as big as the iPhone — because there is NOTHING BIGGER THAN THE IPHONE. And that’s the point.

[pullquote] The iPhone dominates the most dominant tech sector of our time[/pullquote]

The iPhone dominates the most dominant tech sector of our time.

You can’t have it both ways. You can’t criticize Apple for not surpassing the profits of the iPhone without acknowledging the profits of the iPhone or the fact that no one has been able to surpass the success of the iPhone.

Saying that Apple’s success is “limited” to the iPhone is like saying:

— Henry Ford’s success was “limited” to cars
— John D. Rockefeller ‘s success was “limited” to oil
— Andrew Carnegie’s success was “limited” to steel
— Cornelius Vanderbilt’s success was “limited” to railroads

Being limited to a product with limitless potential, ain’t such a bad thing and if you have to be dependent upon something, it’s best to be dependent upon the most dependably profitable product of your time.

Apple kickstarted the smartphone revolution just eight short years ago. Microsoft Windows had a thirty year run (and will continue on for many years hence). Google search is decades old. Are the critics seriously suggesting that the smartphone revolution has run its course?

Of course they’re not. What they’re actually suggesting is that the smartphone revolution will go on — but it will go on without the iPhone. Why? Because the iPhone is a premium product and that’s, uh, a bad thing, umm, because, ah….

…oh what’s the point in trying to fathom the unfathomable? There is simply no support for the proposition that smartphones will be fine but the iPhone will not. It makes zero sense.

His argument is as thin as the . . . soup that was made by boiling the shadow of a pigeon that had been starved to death. ~ Abraham Lincoln

And frankly, if the pundits are worried about Apple, then their blood must run cold when they think about the prospects of the oh-so-very-many other tech companies who are not nearly as well positioned to take advantage of the smartphone revolution as Apple is.

Biggest Fish In The Biggest Pond

So, is Apple’s future assured?

No.

There are two kinds of forecasters: those who don’t know, and those who don’t know they don’t know. ~ John Kenneth Galbraith

Apple’s future isn’t assured…but their present is.

Apple is not a big fish in a small pond. They’re the most bad ass fish in the biggest dang pond the world has ever seen. They absolutely dominate the premium sector of the premium tech product of our time.

images-157

Or, mixing my metaphors yet again, if Apple is a one-trick pony, that’s the biggest, fastest, strongest and most valuable pony in the world.

“But wait,” you say, “Android owns most of that smartphone Pony.” True enough. But Apple, all importantly, holds the reins while Android controls only the rearmost 85%. One ((Not me mind you, but one.)) might even be tempted to say that makes Android — metaphorically speaking — a horse’s ass. ((The fact that the iPhone generates more revenue in 3 months than Android has in its entire existence, seems to support that characterization.))

Here’s the thing. Calling Apple a one-trick pony is no insult because Apple, throughout its existence, has always been a one-trick pony. First the Apple I and ][, then the Mac, the iPod and now the iPhone. Apple has always relied upon one product to bring in the majority of its profits. But — as Horace Dediu recently pointed out on his Asymco podcast — Apple has been very adept at changing ponies in the middle of the technology stream.

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Patience, Padawan

Yoda-The-Empire-Strikes-Back

So Apple is here for the foreseeable future. But what about the unforeseeable future? What then?

Being the biggest player in the biggest market does not guarantee Apple a future, but it does guarantee them the resources necessary to make that future.

The best way to predict the future is to invent it. ~ Alan Kay

Apple’s future lies in their own hands. They will invent it, or they will fade away like so many others before them. But that is not unique to Apple. To say Apple might fail soon or Apple will fail eventually is true but trite because it’s equally true for every other company as well. Predicting Apple’s eventual end is not insightful nor helpful. It is not if, but when, that matters.

Timing has a lot to do with the outcome of a rain dance. ~ Cowboy wisdom

Those who predict the future we call futurists. Those who know when the future will happen we call billionaires. ~ Horace Dediu (@asymco)

Some say we don’t have to divine an uncertain future to be certain about Apple’s fate. Apple’s inability to create a breakthrough product, following Steve Jobs’ death, is proof positive that Apple is destined for mediocrity, followed by failure.

But this is nothing new. Apple’s critics have always insisted that Apple’s most innovative days were behind it.

Apple is a company that has to come up with hit after hit after hit, every 12 to 18 months, but once you do the iPhone on Verizon, what’s the next thing past this? ~ Patrick Becker Jr, Becker Capital Management, 7 March 2011

Further, it is a mistake to assume that the products produced by Apple in the past several years are predictive.

— Did the iMac foreshadow the iPod? No.
— Did the iPod lead us to believe that Apple would create the modern smartphone? No.

We do not say anything about future products. We work on them in secret, and then we announce them. ~ Steve Jobs

[pullquote]Like a bikini, what they reveal is suggestive, but what they conceal is vital[/pullquote]

Apple’s product offerings have always been like a bikini — what they reveal is suggestive, but what they conceal is vital.

Those impatient for Apple to reinvent the world on an annual basis simply ignore the reality that iteration on existing tech products is the norm and significant change is the rare exception.

It seems to take a very unique combination of technology, talent, business and marketing and luck to make significant change in our industry. It hasn’t happened that often. ~ Steve Jobs

Further, those who claim to know the most about Apple’s future, are the very same ones who seem to know the least about Apple’s past. Has Apple ever been first to market with a wholly new, wildly innovative device?

You don’t want to be first, right? You want to be second or third. You don’t want to be…Facebook is not the first in social media. They’re the third, right? Similarly, you know, if you look at Steve Jobs’ history, he’s never been first. ~ Malcolm Gladwell

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CAPTION: Apple is always behind their competitors

Steve Jobs, who was famously lacking in patience in his personal life, always showed a surprising degree of patience when it came to introducing new products.

These waves of technology, you can see them way before they happen, and you just have to choose wisely which ones you’re going to surf. If you choose unwisely, then you can waste a lot of energy, but if you choose wisely it actually unfolds fairly slowly. It takes years. ~ Steve Jobs

You just make the best product you can, and you don’t put it out until you feel it’s right. ~ Steve Jobs

Patience is a necessary ingredient of genius. ~ Benjamin Disraeli

We have to wait to see whether Apple will, in the future, reinvent themselves as they have so many times in the past.

Go as far as you can see; when you get there you’ll be able to see farther. ~ Thomas Carlyle

Don’t pretend that you know Apple’s future. You don’t.

— Did we expect the Apple ][ to be a success? No.
— Did we expect Steve Jobs to get fired from Apple? No.
— Did we expect Steve Jobs to return to Apple? No.
— Did we expect Steve Jobs to turn Apple around and save it? Probably not.
— Did we anticipate the iMac, the MacBook, the iPod, iTunes or the iPhone? No, no, no, no and no.
— Did we expect Apple to surpass Microsoft and become one of the biggest, most profitable, most powerful companies in the world? Hell no.

Why are you so very certain that you know what is going to happen to Apple when you’ve never, ever, not even once, known before?

You’re suffering from the ‘End of History’ Illusion: we expect things to change little in the future despite knowing that things have changed a lot in the past.

It seems to me that beliefs about the future are so rarely correct that they usually aren’t worth the extra rigidity they impose, and that the best strategy is simply to be aggressively open-minded. Instead of trying to point yourself in the right direction, admit you have no idea what the right direction is, and try instead to be super sensitive to the winds of change. ~ Paul Graham

The Best Innovation Is The Company

I discovered that the best innovation is sometimes the company, the way you organize a company. The whole notion of how you build a company is fascinating. ~ Steve Jobs

Toward the end of his life, Steve Jobs turned his attention from creating the next big thing to inventing a company that could continually create the next big thing.

My passion has been to build an enduring company where people were motivated to make great products. Everything else was secondary. ~ Steve Jobs

The real question here is whether Steve Jobs was successful in that attempt. Did he build a company that could repeatedly innovate at the highest level? Unsurprisingly, Steve Jobs thought that he had.

I believe Apple’s brightest and most innovative days are ahead of it. ~ Steve Jobs, August 24, 2011

Also unsurprisingly, your opinion may differ.

Where there is much desire to learn, there of necessity will be much arguing, much writing, many opinions; for opinion in good men is but knowledge in the making. ~ John Milton, Areopagitica

I look forward to “making some knowledge” with you in the comments, below.