The 5 Industries Most Impacted by Apple's iPhone

A CBS reporter recently reminded me of a quote I gave in 2007 ahead of the iPhone launch.

"Apple would not just release a phone. It would be a new platform that will include hardware, software and services. Over time it will become Apple's biggest product," I said at the time.

As the 10th anniversary of the iPhone approached, that reporter got in touch and asked me why I was so certain the iPhone would be a big hit. I told him that in 2007, I had been following Apple for 25 years already and understood that it did not just deliver a product. It attacked the market from a hardware, software, and services approach and was convinced it could do the same with phones.

I was lucky enough to get a preview of the iPhone the day before it was introduced at MacWorld. Apple exec Phil Schiller put the iPhone on a coffee table and asked me what I saw.

I told him I saw a piece of glass in a metal case. That is what Apple's wants you to see, Schiller responded. After all, when it's off, that is exactly what it is. When it's on, though, Apple's software and services shine. Apple sees itself as a software company first and creates devices to run innovative software.

Before the iPhone was released, there was a lot of hype; I'm sure you all recall the "Jesus phone" moniker. At the time, no one really believed it could live up to the hype, but the iPhone turned out to be a powerful technology that impacted the lives of hundreds of millions of people around the world. It has changed the way they communicate, work, learn and play.

Specifically, it had an impact on five major industries.

The PC Market

Until the iPhone arrived, PC shipments were around 400 million a year. They were crucial work tools, and the only way people could get on the internet.

Now, however, you don't need a PC to check your email, watch videos, or even dial in to that conference call. With the iPhone, Apple put a PC in your pocket. PC shipments are now down to 275-290 million PCs a year, prompting industry consolidation that is concentrated around Lenovo, HP, Dell, Acer, and Apple.

Telecom

Before the iPhone, AT&T, Verizon, and most of the original telcos' business models were around voice. Yes, VoIP became popular by 2000 and had already started pushing them to move to digital voice instead of traditional landline voice delivery methods. But in 2017, voice is no longer a priority. Just try to find a pay phone that hasn't been turned into a Wi-Fi hotspot these days.

Telcos are now data communications companies with totally different business models. And all of them have added to their businesses with things like information and entertainment services.

Movies and TV

For most of my life, I had to go to a movie theater to watch a movie or sit in front of a TV set to watch a TV show. But the iPhone created a mobile platform for video delivery and every major movie and TV studio has been forced to provide streaming services to fixed devices like TVs and mobile devices like smartphones.

Video-capable iPhones forced these studios to move in this direction. Quality TV is no longer relegated to broadcast channels or even HBO; Netflix, Amazon, and Hulu are sitting alongside traditional networks at the Emmys (and picking up awards). Who ever thought Jeff Bezos would be mentioned at the Oscars?

Gaming

Before 2007, most games were either delivered on a game console, a PC, or a dedicated handheld device. But the iPhone helped jumpstart the casual gaming market with hits like Angry Birds and Candy Crush, while also allowing for more graphics-intensive titles as Apple's technology improved. Even Super Mario is on iOS now. As a result, millions play games on their iPhone, something that was not possible in 2007.

Healthcare

Today, iPhones can monitor various health issues and give people ways to get access health information, make a connection with their health professionals, and even get health advice on the go. Only recently have we started to see how a smartphone impacts the health industry and we will see its role expand as this industry embraces the smartphone for outpatient care.

Apple Computer to Apple, Inc.

But perhaps the biggest impact the iPhone has had is on Apple itself. It has evolved from Apple Computer to Apple Inc, a company that makes much more than computers; iPhone accounts for just over 60 percent of Apple's total revenue

The iPhone also transformed (and killed) specific products. As the chart below shows, the digital camera market has shifted from $6.5 billion in 2007 to $2 billion in 2014; MP3 players dropped from $6 billion in 2007 to $800 million today. Portable navigation systems were a $2 billion market 10 years ago; today they hover around $600 million. And camcorders are all but gone these days; about $80 million compared to $2 billion in 2007.

Looking back, the iPhone hype underestimated what Apple's smartphone could do. Now, with Apple eyeing AR on mobile, can it have a similarly transformative effect on the next decade?