The iPhone at 5: From uncertainty to runaway hit

Apple's iPhone first went on sale five years ago tomorrow. CNET gazes back at some of its early flaws, and looks to what lies ahead.

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If Steve Jobs was spoiling for a chance to cross up his critics, the keynote at 2007's Macworld conference could not have been a better venue.

After months of speculation, Apple's chief executive used the annual confab to introduce the iPhone, a product that Apple's loyalists -- they called it "the Jesus phone" -- were sure to embrace.

It was sleek, it was simple. It had Apple written all over it. There was just one problem. It was expensive, and it wasn't launching for another six months. More importantly, for the iPhone to live up to Jobs' -- and investor -- expectations, Apple would have to attract a wide audience for this, its first entry into the phone business.

With the benefit of five years' worth of hindsight -- the iPhone hit the market running five years ago tomorrow -- those reservations now seem laughable. But it wasn't so clear at the time.

In fact, some believed that Apple had reached too far. At $599, they pointed out that the iPhone was a relative luxury good and far more expensive than most smartphones in the market. What's more, the device lacked a physical keyboard, required a computer with Apple's iTunes to even get it up and running, and had a special indented headphone jack that required many owners to purchase after-market adapters. There was also no speedy 3G wireless or a battery that could be removed -- both of which were considered crucial if Apple wanted to lure in corporate users.

Then there was the software, which was entirely new and unproven. Based on Apple's OS X software for desktops, what would later become the iOS was missing any way for users to install additional applications -- something rivals had offered for years. Critics also took aim at the iPhone's inability to handle some basic things, like send MMS, copy and paste text, or multitask.

It was also available only on certain carriers, though mainly just AT&T in the U.S. More than anything, there were simply concerns whether Apple could navigate successfully into new and potentially treacherous new territory without getting tossed onto the shoals.

The skepticism was, perhaps, best summed up by Microsoft CEO Steve Ballmer in an interview with USA Today just two months before the iPhone went on sale:

There's no chance that the iPhone is going to get any significant market share. No chance. It's a $500 subsidized item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I'd prefer to have our software in 60 percent or 70 percent or 80 percent of them, than I would to have 2 percent or 3 percent, which is what Apple might get.

For most other companies, you might have assumed this would have been the proverbial kiss of death. This wasn't most other companies. Apple has since gone on to sell more than 218 million iPhones, while raking in an estimated $150 billion in revenues.

Apple CEO Steve Jobs introducing the iPhone at 2007's Macworld.
Apple CEO Steve Jobs introducing the iPhone at 2007's Macworld. Declan McCullagh/CNET

Almost overnight, the iPhone transformed Apple's corporate image. It helped turn a company known primarily as computer maker with a popular portable music player and digital media service into a dominant player in the cellphone business. The arrival of the iPhone also turned out to be bad news in bells for rivals with years more experience, including the likes of Microsoft, Palm, Nokia, and Research In Motion, who appeared hopelessly out of touch and lead-footed as shoppers voted with their pocketbooks for Apple's iPhone.

Catching on
Doubts aside, it's now hard to say Apple missed the mark on the first version. The device was beautiful. Perceived flaws like no keyboard and just a single button on the front of the phone were later viewed as benefits.

The software also surprised naysayers, who found its details and flourishes impressive, not the least of which was its Safari Web browser, which in tandem with a hardware/software feature called multi-touch would let users pore over Web pages that rendered the same way they did on normal computers, just by making a pinching motion on the 3.5-inch glass screen.

Well ahead of a way to create and install apps for the phone, Apple attempted to get developers to build apps and games through Safari. This experience was hindered somewhat by the lack of Adobe's Flash, though Apple actually managed to convince site-owners to publish content with H.264, a video compression standard that could be played on the iPhone. Major sites also made special, touch-friendly mobile versions of their sites that felt "app-like."

All these things combined resulted in a million iPhones sold in 74 days, a number the company now surpasses every three days based on its past two quarters.

Apple's much-touted Multi-Touch technology picked up multiple finger taps, and used gestures to navigate around the phone.
Apple's much-touted Multi-Touch technology picked up multiple finger taps, and used gestures to navigate around the phone. Apple

Thinking different
Much of the iPhone's success can be attributed to two things: simplicity and consistency.

For all its features that put the iPhone into the "smartphone" category, it was easy to use. Things like text messages and voicemail were turned into simple, one-purpose apps that re-arranged how users typically accessed that information on phones. With only one button on the front of the phone that did just one thing, it was also less intimidating than devices from competitors that had a dazzling array of tiny keys underneath what very quickly began to look like miniature screens.

Being tied into iTunes also turned out to be a boon for keeping the device up to date. Instead of having to rely on a software update on a removable storage card, or through an over the air from a cell phone carrier as some phones did, Apple handled updates through its iTunes software -- something that had long been available on both Macs and PCs. The company was also relentless about pushing out updates that added new features and fixed bugs. Both of these things were carryovers from the iPod, a product Apple had spent six years honing and polishing before the iPhone came to be.

As for the consistency, Apple has kept a relentless pace, pushing out an iPhone each and every year since its introduction. Even today, with five generations worth of iPhones, there have been just three distinct designs, with no more than two models available for sale at any given time -- and the same plugs and buttons in all the same places. On the surface this might not seem like a big deal, however it has led to a burgeoning ecosystem of third-party accessories, and an immediate familiarity with each new model.


Maintaining a qualitative edge
Over the years, Apple has maintained a steady drumbeat of updates that build on top of the original iPhone. That includes making the phone physically slimmer, as well as improving the various hardware components. Here are some of the big features Apple added along the way:

• 3G. One of the big things the first iPhone was missing was third-generation wireless networking. Jobs argued that Wi-Fi was pretty much all over the place, and considerably faster than 3G was, so it really wouldn't be a problem. With that said, the second-generation model's crowning feature was its speedier 3G connection. Apple still only sells models with 3G, while many competitors have moved to the faster 4G LTE spec. Apple is expected to do the same in its next iPhone.

Apple

• The App Store. Software stores on phones and PDAs weren't a new thing. What made Apple's a standout is that it used its existing Apple ID payment system, making iTunes Store buyers feel like they were just buying songs. It also extended the usefulness of the device after someone bought it, which was pretty important when people were locked into multi-year carrier contracts.

• Cameras. The iPhone has always had a camera, and it has bumped up in quality with each generation since the iPhone 3G. Since the iPhone 4, Apple has doubled up on the number of cameras, adding a front-facing camera it uses for its FaceTime video chat. In a recent build of iOS, Apple even built in a shortcut to the camera from its lockscreen -- a part of the phone that had gone relatively untouched since the iPhone's beginnings.

• Retina Display. With the iPhone 4, Apple doubled the resolution of its 3.5-inch screen, with the promise of packing the pixels so close together that humans could not tell them apart at arm's length. The feature was well ahead of competitors, and has since trickled over to Apple's other products this year, including the third-generation iPad and the top of the line MacBook Pro.

Apple

• Siri. The latest among the iPhone's headlining features, Siri was introduced alongside the iPhone 4S last year. The voice assistant technology was not the first such tool to turn voice commands into phone actions, but Apple offered it out of the box with its phone and with a sassy female personality that set it apart. The feature is now headed to iPads as part of iOS 6 this fall.

• iCloud. A feature that's largely still being developed, but notable for helping Apple cut the iPhone's cord to iTunes. For the first time users could keep backups of their device in the cloud, as well as ferry over things like photos and settings from one device to another. It's also disolved the need for as much built-in storage, since users can re-download whatever content they've bought, and at any time.

What lies ahead
When introducing the iPhone, Jobs said that the software on the iPhone was "five years ahead of any other phone," a prophecy that remains controversial, and challenged by competitors.

Many would argue that rivals caught up sooner, primarily Google with its Android platform. What Jobs considered a " stolen " product, Android leads at 59 percent of the smartphone market, according to a study of global smartphone marketshare released by IDC last month. On the same study, Apple's iOS came in at second place, at just over 35 percent of handsets.

Apple iPhone goes on sale, June 2007
It's a frenzy as the doors to San Francisco's downtown Apple store open on the evening of Friday, June 29, 2007, to let eager iPhone shoppers in. James Martin/CNET

It hasn't been peachy for all competitors though. Palm, once the darling and preeminent ruler of smartphones, was bought up by Hewlett-Packard, then fumbled a recovery with a series of missteps. Its crown jewel, dubbed WebOS was the answer to Apple's iOS and Google's Android, but its future is uncertain.

There's also RIM, a company in the midst of a drastic restructuring plan that includes layoffs and rumored possibilities of a split of its handset business from its messaging network. In the meantime, the company is pinning its hopes to the next version of its BlackBerry software , a serious re-think of the platform due out later this year.

Not to be left out is Microsoft, which fell well behind the curve with Windows Mobile before getting its Windows Phone platform out the door at the tail end of 2010. The latest version of that software , due out later this year, makes it even more competitive, and puts Microsoft on a course to converge its phones, tablets and computers into using one OS. Part of that plan involves a deep, multi-year partnership with Nokia to produce phones.

For Apple, the next five years are quite different than they were when the company set out to make a smartphone. That very product is no longer a niche, and instead has become mainstream. Apple faces much fiercer competition that shows no sign of abating. It's become a battle for pockets and pocket books, and one to get users into an ecosystem that becomes ever more intertwined.

In other words, unlike when it ran away with the MP3 player market with the iPod, Apple has a real fight on its hands. Better grab a seat, we're only a few rounds in.

 

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