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The word "revolutionary" is thrown around a lot in the world of high technology. Once in a while, something comes along that actually deserves the label. In 1984, the Macintosh revolutionized personal computing and set the pattern for every computer user interface since then. Twenty three years later, Apple has started another revolution with the iPhone.
Despite the widespread adoption of mobile phones, owners don't love their handsets. Some, such as the Motorola RAZR and Q and the Blackberry Curve, offer striking hardware design but a software personality that is complex, hard to use and confusing. And some cellular phone carriers, such as Verizon, inflict painfully slow, custom-branded interfaces on their subscribers. Most people simply accept the pain as part of the experience.
Apple decided that it doesn't have to be that way and set out to design a better mousetrap. In doing so, the company is turning the cell phone industry on its head — and aiming to get a slice of that $115 billion pie.
Apple CEO Steve Jobs's greatest successes have come from the consumer market. The original Apple computer, created by Steve Wozniak and marketed by Steve Jobs, sold to hobbyists. The Apple II was marketed to families. The Macintosh was the computer "for the rest of us." Pixar exists solely for consumer entertainment. The iMac? Consumer. iPod? Consumer. iTunes? Consumer. All huge successes for Apple.
With iPhone, Apple is taking its consumer market focus, sense of design and user interface expertise into a huge existing market. And that is the risk. With the Apple II, the Macintosh, the iPod and iTunes. Apple entered a small market and grew it into a huge market. But there are dozens of major companies already in the mobile phone handset and carrier space, and competition is cut-throat. (The same week that Apple introduced iPhone, LG and Prada introduced the equally stunning KE850 touchscreen smartphone, with similar design, screen and specifications - and a $700 price tag.)
Handset makers try to one-up each other in features to garner orders from carriers (who subsidize the handsets to win subscribers), while carriers ruthlessly play handset makers against each other to get the best price and control what features are available to their subscribers, and at what price.
Apple enters a market in a position traditionally considered one of weakness — carriers have all the power, says convention wisdom. Yet Apple has crafted a deal with AT&T to sell iPhones and service, without the traditional handset subsidy, and is even rumored to get a cut of iPhone subscription revenue. And AT&T gets new customers, with a lower acquisition cost, and the opportunity to sell service upgrades (see Pricing, below). And did we mention that iPhone customers are locked into AT&T for two years?
Apple and AT&T are breaking all the rules. How well will it work? It all depends on how well iPhone delivers on its promises.
iPhone tackles the truly hard part of the puzzle — the user experience. Companies such as Palm, Nokia and Motorola have attempted this before, but the results have never been particularly satisfying. Where existing handset makers have replaced menus with full-color animated icons and warning messages with Windows-style dialog boxes, Apple has reinvented the user interface from the ground up. And instead of the limited WAP mobile "web" and unreadably small email interfaces, Apple has fully integrated core Internet web and email functionality into the device.
Apple has turned using a mobile phone from a chore into a pleasure, and has beautifully and seamlessly integrated Internet tools into the package. Like the Apple II, the Macintosh and the iPod, iPhone is posed to win hearts and minds and leave competitors scrambling to catch up for years.