How The iPhone Disrupted Everything

We're in November 2017 and it's difficult to imagine life without a supercomputer - aka smartphone - in the palm of your hand, right? About 58% of you reading this post will be doing so on your mobile device. For the average Millennial, life without a smartphone essentially didn't exist. But for the rest of us, it did. Without being too biblical, for many people the year 2017 could be considered 10 CE noting the 10th year of the smartphone in our lives. Consider the cover of the famed Forbes magazine exactly 10 years ago in November 2007 (see below). Nokia was King and the cover asked "Can anyone catch the cell phone king?"

"Nokia: One billion customers - can anyone catch the cell phone king?"

#LOL

In retrospect, seeing is believing. Reading that headline at that point in history is quite remarkable. This week we marked the launch and release of the latest iPhone X, and this marked the 10 Year Anniversary of the iPhone. Let’s recap how profoundly significant the smartphone has been and the massive impact this handheld supercomputer has had on the world, including every industry from retail to media to communications to politics to travel to hospitality to music to love to banking, in just a decade.

One wonders if Steve Jobs could’ve dreamed that he would ultimately change the way the Internet is used by packing a computer into a pocket-size device? Either way, the Internet became ubiquitous because of the iPhone and has changed the way we live. It also started a smartphone revolution that changed the way we determine what a phone should do, should look like and how it should operate. The iPhone has altered consumer behavior and preferences: consumers expect information and goods to be available in the palm of their hands. Apple-like convenience has become the new standard for customer expectation. Think of it another way: in financial services for instance, banks are no longer competing against other banks or even disruptive FinTech players for the customer experience. Rather, the new competition is your customer’s “last best customer experience.” If their last interaction was with Uber or Amazon or Seamless or Facebook or eBay or PayPal to interact and consume, then you're customers have the same expectation of your customer experience regardless of the industry you operate in.

Democratizing the customer experience 

The creation of Apps has revolutionized the way businesses interact with customers, allowing for a democratized and instantaneous interaction be they B2B, B2B2C, B2C and/or C2B. The global App Economy is forecast to be worth $6.3 trillion by 2021, up from $1.3 trillion last year, according to a new report from app analytics firm App Annie. During that same time frame, the user base will almost double from 3.4 billion people using apps to 6.3 billion, while the time spent in apps will grow to 3.5 trillion hours in 2021, up from 1.6 trillion in 2016. These figures represent more than just the revenue generated through app stores, but also other forms of monetization including in-app ads and mobile commerce.

Today, the 3.4 billion app users, on average, spend $379 in apps across all three forms of monetization last year, or $0.80 per hour, per person. This will grow to $1,008 per user by 2021.

Indeed the iPhone has also made social media networks indispensable to daily life and 44% of Americans now get their news everyday on Facebook. Amazing when you consider the term “social media” basically didn’t exist 10 years ago, let alone the impact it’s had and new businesses that have been created as a result. Apple launched its App Store in 2008 and created its own platform ecosystem for developers and fans alike. Note that it did so a year after the iPhone’s launch, with 500 apps. Now there are 2 million+ and according to the Facebook Money report 49% of US Millennials now prefer to bank via mobile device. For the record, Millennials represent approximately 92m Americans (~1/3 population), 16m in UK (~1/4 population), 10m Canadians (1/3), 6m Aussies (~1/4) and 400m in China and 700m in India. Their sheer weight in numbers means they have outsized influence today, on the cusp of the next decade as they enter peak economic, social and cultural influence. That’s why the race to be mobile-first and mobile-optimized and mobile-friendly is on for every company and every industry to be relevant with this important demographic.

Before the latest iPhone launch, there have been 15 iPhones released since inception and about 1.3 billion sold, generating more than $800 billion in revenue making Apple essentially the world's most valuable publicly traded company. Fun fact: 77% of people have their smartphone with them 24/7... all the time. Happy to say I’m one of the 23%! Average iPhone usage rose from 68.2 hours a month a year ago to 73.8 hours a month now. Think of it another way, that’s roughly 3 full days of iPhone use every month. Extraordinary! In case you’d forgotten, Apple has many other products as well. But the iPhone boom has overshadowed the others with the iPhone representing approximately 2/3 of sales. That's nothing to be sneezed at. The iPhone’s success is probably best reflected in China, where the mobile proficiency and customer behavior is way out front than most advance economies are. Consider that last year, Greater China alone made up 23% of all Apple revenue ($48.49 billion) that was greater than Coca Cola’s total worldwide revenue.

What about people? 

The debate around automation of machines replacing people is important, but perhaps misunderstood. Consider that Apple hired about 100,000 people in the 10-year span, bringing its global workforce to 116,000 (from 18,000 in 2006). But what about other industries like rideshare (Uber, Lyft, Via etc) that have been spurned by the mobile and smartphone devices? Consider than 2.2m people around the world now get a pay check every month from Uber, the 3rd largest private sector “employer” (albeit Uber drivers aren’t technically employed) behind only McDonalds and Walmart. There are some 160,000 Uber drivers in the US alone. In fact, overall US workforce participations rates have increased substantially over the past 127 years (1890 – 2017) in spite of numerous transformative waves of technology and innovation, and the important inclusion of women in the workforce raising participation rates, these factors alone don’t correlate with “machines” replacing people. That’s because the technology – if designed and implemented right – is there to help people and free up their time spurring on entirely news industries and innovation creating economic opportunity and chances to extract new economic value previously unimaginable. Think about Airbnb and what that mobile-powered technology platform has done real estate and hospitality in just 7 years. 

Impact on banking 

The iPhone has created the need for mobile banking, seamless banking Apps and a whole host of mobile advancements that 10 years ago who could’ve predicted the impact on banking would’ve been so great? Imagine full service banking from the palm of your hand, anywhere and anytime. The iPhone has stressed the importance for banks to have a mobile presence because that is what consumers now expect. Indeed don’t our customers just love mobile check deposit, mobile balance inquiry, mobile transfers, mobile payments and convenience to bank at any time of day, from anywhere while doing anything. Data and personalization via BYO device is the new norm, and functionality like Touch ID has enhanced security and seamless log on without having to use annoying tokens and multiple forgettable passwords. In fact, the iPhone's prevalence is driving even further development of biometric technology across our industry, including voice, finger vein, facial recognition and hand writing recognition. I won’t rehash the impact of ApplePay and P2P payments like Venmo (~200m users now) but you all get the point. However, I will point to the fantastic HSBC Trust and Technology study that forecasts the number of mobile banking users to double between 2015 and 2019 to 1.8 billion, representing more than one quarter of the world’s population. Remember, the term "mobile banking" a decade ago effectively meant a banker or relationship manager in a car driving around to meet small business customers. Now it means full service personal banking in the palm of your hand, when, where and how you want to bank. Thanks in no small part to the iPhone and smartphone revolution as well as the secondary and tertiary developments that were born as result.

Continuous innovation

Just when we thought the smartphone was entering market maturity, this week saw the launch of the iPhone X complete with facial recognition and the heralding of a new era of enhanced digital security. Of course, Samsung recently integrated facial recognition with their launch of the Galaxy S8 and Note8, the smartphone has once again pushed the innovation curve further afield disrupting the competition and enhancing the customer experience at the same time. What will it mean when facial recognition becomes ubiquitous and the new normal? Imagine a day when you'll walk into a store and be automatically recognized with a personalized greeting with products and services tailored to your needs because facial recognition can identify as you walk in. And then imagine having your emotions recognized with a tailored message. And then imagine paying for something with the mere blink of your eyes. Now we're talking.

Stay hungry. Stay foolish.

P.S. thanks for everything, iPhone!

Jeremy K. Balkin is the award-winning author of Millennialization of Everything: How to Win When Millennials Rule the World (RMB 2017)

Disclaimer: views my own.