Ten Years On, iOS Leads The Agenda

Ten years ago, nobody really wanted an MP3 player that could take a phone call. Steve Ballmer famously declared that there was “no way” that Apple’s new iPhone would gain market share. The CEO of Research In Motion, manufacturer of the Blackberry, said that describing the iPhone as a sea change was a stretch. Verizon was happy that the iPhone was not on it’s network. A friend bought me an iPod touch because it seemed that I already had a fully functional phone.

And yet, ten years on, the iPhone defines the market.

Apple is the most profitable company on the planet, on the back of the success of the iPhone — together with iTunes and the iOS ecosystem. 

It’s that ecosystem, and the plethora of applications and utilities that actually defines Apple’s products. For the first year of it’s life the only really useful application available for the iPhone was the Safari browser. When Apple launched new television commercials in February 2008, they featured Facebook as something you might want to use the Internet for.

Ironically the same hacker community that had once spawned Apple itself 'broke' the iPhone and started developing applications for it. By July 2008 however, Apple had launched it’s app store, allowing third parties like Facebook to introduce their own apps and user experience to the iPhone platform.

That changed everything.

Facebook, which had grown organically to about 100 million users, exploded onto iPhones everywhere. One of the first apps in the store, it is also one of the most widely-distributed applications. Almost 1 billion people use a version of the Facebook mobile app, about 47% of those on Apple devices. 

It’s the seamless ecosystem behind iOS that contributes so much to the user experience. If iTunes was launched with heavily discounted music, at $0.99￠ per track, downloading an album on iTunes is often now typically significantly more expensive than the traditional physical media product. We’re buying convenience. The digital product is much easier to use, to the point where I have downloaded albums I already own for the sake of sheer convenience. (Partly that’s because there’s no CDROM drive in my new MacPro). 

In the same way, applications are just as easy to download and install — although the frequency of updates has become somewhat irritating, particularly if you’re using mobile data. The average iPhone user maintains about 26 applications, and spends about $40/pa on applications. In spite of the fact that 90% of iOS apps are free, the average price paid for an App is only $0.19￠, and micro-site or mobile-optimised web sites are becoming more common, the iOS ecosystem had still returned more than US$70 billion to developers by June this year.

No surprise then that Apple is now the third-largest player, in terms of revenue, in the mobile gaming market — without producing any games.

And that’s all before you consider the economics of the iOS user base. While Android devices overwhelm the market for devices, in every other respect it’s the Apple ecosystem that rules. Apple’s app store earns 400% more revenue per user than the equivalent Google Play store. 

Apple users don’t just spend more on apps, they spend more everywhere. In one day —America’s notorious Black Friday — Apple devices accounted for 40% of ALL retail internet traffic. More than 27% of on-line sales were made from iOS devices, compared to just 8.3% from Android-powered devices.

Proof of the value of the iOS experience, are iPhone sales. People don’t just buy an iPhone, they keep on doing it. The vast majority — maybe 90% — of iPhone users upgrading to another iPhone. The average age of an active iPhone is less than 3 years, meaning that many users will have already owned three generations of iPhone. 

For a device that nobody wanted, the iPhone has proven to be transformative, and not just for Apple.

It’s hard now to remember a time when people went to a computer too access the internet, or send mail, or do pretty much anything. In the same way, I wandered into a mall last weekend and reflected on the last time I physically went shopping. My last few meaningful purchases were made on my iPad and delivered to the back door.

More important that the iPhone, or the advent of smart mobile devices generally, is what they imply for business.

Consumers have spent billions on smart devices in New Zealand in the last ten years. There are more than 4 million smart devices connected in this country, accounting for about 75% of all cellular connections, and growing, as smart technology led by Android devices joins the race to zero value. A browser-capable phone is just about the default now.

Consumers are equipped to interact in text, voice and video modes, and in fact we are probably 15-20 times more likely to interact in text mode than in voice or video, simply because text mode interactions are asynchronous and we are typically able to use text in parallel with whatever else we might be doing. 

Consumers own the media agenda.

The challenge today is to enable business to appear as accessible, as convenient and as relevant as an iPhone. If businesses are going to meet the expectations of today’s consumer, then they first need to respect the consumer’s media choice. The fact is that a customer electing to use a mobile browser is a click away from your competition. Not being present in these channels is a lost opportunity.

The drive to turn ‘contact’ with consumers into engagements has taken a sharp turn. Mobility has changed everything. All time is real-time now. If your business strategy is predicated on the consumer responding to your advertising and media strategy, and calling you on the phone, then you’re likely to find that’s become a barrier too high for the digital native to cross. Today’s consumers, overwhelmed with choices and information, are likely to take initiative on the channel that serves them the best — and that’s probably not the telephone. 

Not for nothing was the iPhone named Time Magazine’s most influential gadget of all time. While the iPhone itself was innovative, its impact can be seen virtually everywhere today. It has changed forever the way we interact with each other, and with business. Ten years after it’s introduction, the iPhone still represents the technological agenda for interaction.