UPDATE: There is now a full iPhone market projection with regional and quarterly breakdowns of the numbers, to show what Apple needs to sell to get to 10 M by end of 2008. It is entitled Crunching Numbers for iPhone
Ever since my January keynote on handset design at the big annual 3G event in Tokyo I've mentioned the iPhone in every public presentation. And almost every time I've made the point that June 2007 marks a watershed moment in time. Much like the Western calendar marks time from before and after Jesus Christ, and how the computer world changed totally by the Macintosh - remembering that Windows is Microsoft's copy of the Mac operating system - I am certain that the mobile telecoms world will count its time in two Eras. The Era BI: time Before the iPhone, and the ERA AI: time After the iPhone.
What will change? Pretty much everything. And funnily enough, most of it is not actually caused by the iPhone, they only happen to occur so closely to the iPhone, that the iPhone will be given much of the credit.
Handsets BI and AI
Lets start with the obvious. From June all handset makers will get their first tests of the iPhone. Then Nokia, Motorola, Samsung, SonyEricsson, LG, and the dozens of second and third tier manufacturers will all see what they are up against. Not the outwardly form factor - yes, the iPhone is cool and slick and sexy - but the more important internal software. How do they make it so user-friendly? This is Apple's strong suit. More so than even stunning outwardly design, is the internal software on user interface. The iPhone for most of its parts will definitely be the best phone out there. Yes, it probably will not be perfect at all, not the very first version (although it might be that too) but certainly in most major features, making calls, listening to voice mail, sending and receiving most messages, accessing the web, consuming music and videos - the iPhone will be supreme.
So from June all reviewers around the world will compare all new high-end phones with the iPhone. How near do they arrive in being "almost as good as the iPhone". This is the phrase we will see in most reviews of smartphones. And the yardstick in usability will from now on - and my prediction is that for the fore-seeable future of mobile phones - the latest iPhone. A clear watershed moment in the industry. For the first time a major handset device which was designed from the start to be both a multipurpose smartphone and yet easy to use.
Then the mobile internet, BI and AI
The second and much greater impact is the mobile internet, or the value-add services industry of mobile telecoms. Up to now within the technologists there has festered a dispute about which will rule and why, the fixed broadband internet, the wireless WiFi internet or the cellphone based mobile internet. To what degree they rival and threaten each other, and which might triumph in the end.
It has been a lopsided battle, when most early internet-capable phones were monochrome WAP phones or modest speed GPRS phones with still tiny colour screens. Now we get the glorious sharp 3.5" iPhone screen and its powerful web access software. It was easy to suggest a laptop with a WiFi or WiMax access card would "forever" trump a 2" tiny pocket screen of an early 2.5G or 3G phone. Now we get the big screen iPhone and suddenly the pocket internet seems very plausible. And even at 500 dollars (subsidised) the iPhone costs half that of a laptop. Do we really need a new computer. If all we need is e-mail and music and uploading some pictures to Flickr or Myspace, isn't an iPhone enough?
Watch how all kinds of pundits will suddenly turn their coats and start to sing from the "mobile internet" hymnbook. They will "discover" the internet and data services on cellphones. And then the amazing discoveries that although the wonderful Apple iPod pioneered digital MP3 song files on portable MP3 players, and built a billion dollar industry out of iTunes, actually music on mobile phones is already worth 8.8 B dollars last year, with ringing tones, ringback tones and MP3 files sold to musicphones EACH already larger than all of iTunes.
Similarly there will be all those looking at the various functions on the iPhone and marvel at the mobile internet it "enables" - not knowing there is an 8 year history of it already. Yes, you can play videogames online. But gaming on mobile already makes more money. Yes messaging is a multi-billion dollar business on the web. But messaging is an 80 billion dollar industry on mobile (mostly SMS text messaging). Social networking and digital communties? Yes big on the internet. But at 3.45 billion dollars it is already bigger on mobile. Oh that is why Google has recently been aiming for the next internet, on mobile, they will say in appreciating amazement.
Then some clever analysts will have an "heureka" moment and exclaim that woa, the total content industry on mobile at 31 B dollars in 2006 is larger than on the fixed PC based internet (duh!) and some clever dicks will then observe that actually, since the majority of content revenues on the fixed side of the internet are pornography and gambling, but the biggest content revenues on the mobile internet are from music and social networking - yeah, they will tell you this in amazement, just watch them - some clever media pundits will conclude that while the mobile internet is younger, it is also more mature than the fixed landline internet on PCs. (and our blog readers will say, told you so, if you'd read the book Communities Dominate Brands, you'd have known all this already..)
Advertising BI and AI
And while on the subject of media, then advertising. An industry twice the size of the total internet industry and IT (computer) equipment industry combined - or in other words a little over half the size of the mobile telecoms industry - will also wake up and have their iPhone moment.
Look at this wonderful iPhone ! Look at that big screen. Look at all the internet content and music and gaming and web browsing and video clips. Wait. I'm in advertising. We need to be there. That iPhone is a magnificent advertising media channel. I better have a meeting with the boss...
Yes. Then they start looking for the case studies. Many will discover mobile advertising success stories from the 54% who consume ads on mobile phones in Japan already today, to the 2 billion ads served in just over one year by our friends over at Admob. But yes, then the advertising mind will suddenly "discover" the iPhone. And they start to talk about the mobile media no doubt (ha-ha, and some will even find themselves to our thinking about mobile as the 7th Mass Media channel, but it will take them longer to notice that yes, mobile as an Mass Media is as different from the internest as TV is from radio)
The Media Industry BI and AI
Similarly to the advertising industry, expect the major media moguls to "wake up" to mobile this June. Why? Not that the 50 or 60 year old board members at TimeWarner and Disney and Viacom etc will actually "use" an iPhone, but rather because the top strategist and CxO level execs at the media giants will be exposed to the Apple marketing blitz around the iPhone. Wait. Did they say TV? What was on that iPhone, was it CNN? and so forth. Soon Hollywood, HBO, Fox News, etc will feature iPhone stories and coverage. Conan O'Brian, David Letterman, Jay Leno, the Daily Show and SNL will all parody the iPhone marketing and it will simply be everywhere.
The music industry already has "gotten the message" and they are now trying to recover from the mistakes of ignoring ringing tones. Music is already onboard. Videogaming was the second to discover mobile already, so don't expect panic in the internal memos at EA etc.
But the rest of the media industries. TV? So in addition to satellite, cable, digital, HD and IPTV - there is STILL another new entrant into the game? But also, wait, this iPhone is very compelling. I could see myself having it at work next to the PC and tuned to CNN or CNBC. Actually I think I'll panic and write a memo.
Radio. Yes, the iPod and podcasting. Now this iPhone brings all the web broadcasts also onto the phone. Wake-up time. Expect panic memos in radio broadcasting.
Newspapers? Yes, the readers are either dying of old age or rejecting the paper formats altogether. But it was slow death on the internet and broadband. (didn't someone say TV Guide had lost 55% of its circulation in one year?) Now look at this iPhone. This will accelerate the death spiral. Time to panic. Let me write an internal memo.
Silicon valley BI and AI
The biggest single change I think will be a new gold rush, a klondyke, that grips the West Coast. The IT industry took it on the chin rather badly with the dot-com bubble bursting. They've been in damage control mode for a few years. The Web 2.0 buzz has some up and energized again, and the bravest investors are already returning to the tech space. But wait for the iPhone moment in IT. If Apple drops Computer from its corporate name. And says its future depends not on the Macintosh computers or the succesful iPods, but this latest gadget the iPhone? And suddenly it fulfills all the heartbreaking failed promises of PDAs and palmtop computers of the past. A new computer paradigm. And the ability to generate all new sales, new software, new interfaces.
New jobs. I need to update my CV. This is the new dawn of the computer age. The real revival after the dot-com bust. Suddenly everybody is rejecting job offers because even better ones are made simultaeously. Except that compared with last time, this time the fastest truly are the Blackberry and SMS generation who snatch the best deals at the last moments with the fastest communications.
Oh, and ironically lost in the shuffle is the fact that Nokia has stopped calling its top-end smartphones, the N-Series as mobile pohnes. The N-Series - the phone series most competitive with the iPhone at launch - has been called Multimedia Computers by Nokia for over two years. But this is something that happened in the dark ages, BI. The true coming of the first honest pocket computer will be attributed to the iPhone (while Nokia N-Series will dramatically outsell iPhones, still this is futile. iPhone will gain the Apple marketing magic)
Microsoft, Dell, HP, Intel, IBM, any IT company will suddenly want a cellphone strategy. Mobile experts will suddenly be in short supply. Crazy job offers will be everywhere. Oh, and if you want a quick boost to your mobile credentials, Oxford runs its short courses on 3G mobile technology in the first weeks of July - featuring also your fave author-blogger-podcasters Alan and Tomi - come there to pick up a certificate in the topmost training in mobile, and be in hot demand in the AI age)
The Family of the Mobilists? BI and AI
There are 80 million bloggers. There are massively more English speaking bloggers in America, in particular the West Coast, than in Europe and Asia and the rest of the world. We've had our expert circles with the Carnival of the Mobilists, the Wireless Watch, our Forum Oxford and so forth. We trust the opinions of the Ajit Jaokars and Russell Buckleys and Walter Adamsons and Chetan Sharmas and Carlo Longinos and Tony Fishes and Paul Goldings and here at Communities Dominate Alan Moore and Tomi Ahonen. But suddenly AI, the massive West Coast blogging community will start to buzz around the iPhone and the "wirelesss" and "cellphone" space. They will think they're discovering it all for the first time. They will make the same mistakes we've made years ago in Japan, in Scandinavia, in South Korea, etc but it won't matter. To the Americans if it wasn't invented there, it isn't really important.
So we will hear all the old stories we've gone through in the past. Should young teenagers get cellphones. Should schools allow cellphones or not. How about restaurants. Is it ok to speak on a phone while in the company of another. How about sending and receiving SMS text messages when speaking to another. Etc. Yes, we all know. But Americans have to go through those lessons as well. Watch the American wireless and cellphone bloggers discover these truths.
SMS texting BI and AI
And finally texting. Again. This is something totally unrelated to the iPhone. But the iPhone will feature SMS texting. Last year 42% of American cellphone owners (ie 30% of the total population) used SMS. This year it will grow, and next year, 2008, it will be about 60% of the total population who use SMS text messaging. It is inevitable. SMS texting is addictive. There is no going back. And soon SMS texting will break through the 100 billion dollar global revenue barrier so everybody will pay attention.
But again the credit will be given to the revolutionary iPhone. No matter that iPhones will form a tiny minority of American cellphones by end of next year. Still, it will be seen as a major contributor to Americans discovering the power of SMS. And then technology historians will write books in the next decade where suddenly all mobile service innovation will be attributed to this device and this moment in time.
Yes the iPhone is a radical device and yes, we need the American IT and media and adveritsing industries to wake up to mobile phones. And yes, the iPhone will bring valuable goals for all user interface design in mobile telecoms, both for handset makers and mobile operators. But all invention didn't happen at Apple or be caused by the iPhone.
But the level of the noise around mobile will double in June. Very many big guns will join the game. That is good. And it will be a change from an old Era, where handset makers like Nokia and Motorola ran the show with the major mobile operators (carriers). Now media giants will join in, as will major IT players and internet companies.
It will be an exciting time, AI.UPDATE 23 September 2015 (8 years after this blog story was written) - yes now 'in the future' Digg has done a retrospective of what experts wrote about the iPhone at launch, 8 years ago. They included this blog (thank you!). I have done a small reflection myself, about this blog article, and why it turned out so incredibly accurate (I had had LOTS of preparation before writing this blog in 2007). Read all about how this blog article become to be, in this look back from 2015.
FREE INFORMATION - for those who would like to understand the basics of the mobile telecoms industry, its current size, replacement cycles, second subscriptions, mobile content revenues, SMS texting usage etc, I have written a concise 2 page Thought Piece on Size of Mobile Industry. Send me an e-mail to tomi at tomiahonen dot com and I'll send it to you for free.
UPDATE - We've had a lot of discussion here in our comments (over 20 comments so far) but this story resonated very widely in the blogosphere and beyond. See Electronic Echoes Part 2 for who all said what. We've been called anything from idiots to best posting of the week
And finally to understand how different the modern mobile phone is from the handset of only 9 years ago, check out this charting how far the pocket device has evolved: