Apple's iPhone turns 5: A look back, and ahead

Phil Goldstein Apple (NASDAQ:AAPL) has sold more than 218 million iPhones since the device first went on sale in the United States five years ago this week, on June 29, 2007. Since then, the iPhone and its successors have at various times captivated, frustrated, motivated and astounded the wireless industry. FierceWireless is taking an in-depth look at how the industry has shifted in those five years. 

Click here for Apple's quarterly iPhone sales since 2007.

The iPhone revolutionized the wireless industry in many profound ways. That may sound like hyperbole, but I do not believe it is (and this comes from an admitted non-iPhone user). The iPhone was not the first smartphone or the first touchscreen device, but it made smartphones relevant to consumers and touchscreens commonplace. What made the iPhone an iconic device was the simplicity of the user interface, the intuitive nature of its design and the way in which it seamlessly married sophisticated industrial hardware design with software that--in the words of former Apple CEO Steve Jobs--just worked.

Since then, the iPhone has spawned an entire wave of competitors that have tried to one-up Apple in both software and hardware design (think HTC and Samsung) and other companies that have decided to back away from the paradigm the iPhone presented (Microsoft (NASDAQ:MSFT) bills its Windows Phone as the anti-iPhone in terms of user experience). Apple's success also caused the undoing of many former smartphone titans, some of whom are gone (Palm) and others that are trying to stage comebacks (notably Nokia (NYSE:NOK) and BlackBerry maker Research In Motion (NASDAQ:RIMM)).

The iPhone has also fundamentally shifted the way wireless carriers do business. Before the iPhone, carriers dictated terms to handset makers, which, with the exception of Motorola and its Razr, were not particularly known for wildly innovative or iconic handsets. Customers came to the carrier first, and then picked a phone. I think it's safe to say that in the early years of the iPhone's availability in the United States, many customers switched to AT&T Mobility (NYSE:T) because they wanted an iPhone, not because they wanted AT&T's service. Apple was the company that developed the tight relationship with the customers, and with the advent of the App Store, the relationship became even more seamless.

Which brings us to another area of wireless Apple helped ignite: third-party applications. The strength of smartphone ecosystems are in some ways measured by the number of apps they have. I personally think 100,000 apps is plenty, but Apple gave developers a reason to care about apps because, with the release of the iPhone 3G in 2008, they had a ready customer base. The carrier was no longer in control of content. It was the developer, Apple and the end user that mattered. And yet carriers have willingly forked over billions of dollars to Apple in device subsidies for the privilege of carrying the iPhone to attract customers, reduce churn and scoop up data revenue.

The iPhone and Apple's approach to the smartphone business is not without flaws. Apple can be opaque about its intentions (the company did not respond to requests for comment for this report), imperious in the way it deals with carriers, dismissive of the competition and sensitive to criticism. Apple adds features to its iOS operating system that others, including Google's (NASDAQ:GOOG) Android, have long had, but declares them novel and superior. Apple is earnest in its belief that it has the best products, and that no other devices should really matter to customers.

And yet, Apple has managed to convince hundreds of millions of people all over the world that this is, in fact, the case. The market does not lie, and Apple has built a multibillion-dollar smartphone business on the basis of essentially one new model every year. How did it accomplish this, and why does it matter? The answers should appeal to anyone interested in the past--and future--of wireless. --Phil   

For complete coverage of the five-year anniversary of the iPhone, please look at these different aspects of how Apple's iconic device changed wireless:

  • How the iPhone impacted the handset industry
  • How Apple changed the way carriers do business
  • What's next for the iPhone?
  • The biggest iPhone controversies
  • The evolution of Apple's iOS software
  • The iPhone and its inroads in the healthcare market
  • How the iPhone affected the enterprise mobility market
Apple's iPhone turns 5: A look back, and ahead