Ok. Now that we’ve finally seen phablet-sized screen iPhones and the migration of the flagship iPhone price up the price pyramid, its about time to do a bit of review of history. Has this blog given you value on the future of the mobile industry or perhaps steered you wrong. Lets examine the rise and fall of the iPhone and what I wrote before the events happened. Just like we saw with Nokia, with Apple’s iPhone, I have been by far the most accurate forecaster (again) in mobile. This is my backyard and I know my business. And I am fast to tell you either on Twitter or here on this blog exactly what I think (all of it free on this blog, no advertising, no registration).
Before this blog existed, in my 2002 book m-Profits I wrote for the first time that the stand-alone iPod musicplayers would lose the battle to the featurephone class we called ‘musicphones’. Then in my next book 3G Marketing in 2004 I expanded that to explain that all featurephones would eventually migrate to a superphone class called ‘smartphones’. In those books I did not explicitly argue that Apple would have to release a musicphone but I did say the iPod could not maintain its growth and would be superceded. I was right that musicphones would outsell iPods and I was correct that the musicphones themselves would then become superceded by smartphones. So from 2002 I've been quoted about the future of the iPod being on a collision course with mobile pohnes. Nobody else said at that time that the iPod was doomed. It was setting sales records globally.
In 2005 Apple’s iPod sales grew massively and powered Apple to record profits. Yet I was quoted in the Financial Times (and wrote the same point also on this blog on October 7, 2005) promising that next year, while I said iPod sales would continue to grow, Apple would lose the war to the ‘musicphones’. The actual market share of the iPod as portable musicplayers would diminish to the degree that the reign of the iPod as top dog portable musicplaye was to end. So understand, I knew iPod sales were in hypergrowth. I accepted heavy growth would continue, yet the iPod would lose the market share within the next year (2006) as it also did happen.
I was crucified on this blog. The Apple fanboys descended onto this blog and posted vile comments and hatered and said it would never happen, I didn’t understand Apple, I was no fan of music and no fan of Apple and I was a fool. And musicphones were not proper musicplayers etc. Nobody else predicted in October 2005 that the cross-over in total sales volume would happen that fast, that it was over by 2006. I did. I was correct. And we heard years later by Apple CFO Peter Oppenheimer that exactly at this time - Autumn of 2005 is when Apple came to that same view, that the iPod would lose to musicphones and Apple had to release its own musicphone (that would become the iPhone). Did I give you value on this blog if years before there was an iPhone I mapped out the market future for the iPod and what would come after it.
In that blog for the first time in public, on October 3 2006 (3 months before Steve Jobs was on stage first time showing the iPhone), I said I would welcome the iPhone, writing in the comments section this accurately: "I would very strongly welcome it. Apple makes excellent user interfaces, and any iPhone would no doubt shake the phone industry - some of whom are horrible at user interfaces. It would be most welcome."
I have been one of the people who saw the inevitability of musicplayers taking over for the iPod and have started to publish opinions of how the iPhone would shake this industry from literally 3 months before Steve Jobs ever strutted on stage with his iPhone, already warning the industry that our phones were hard to use, and Apple DNA was to make the iPhone the easiest-to-use phone that ever existed. Was I correct. Obviously. Who else was published with this view about the upcoming iPhone's strongest suit. Not that it would have a massive music library. I correctly forecasted in 2006 that when the iPhone would launch it would have the best user interface that would shake the industry. And I said this in 2006?
STEVE JOBS ON STAGE
Three days after the iPhone was unveiled by Steve Jobs and while many details were not final, I did my first market impact analysis of the iPhone. In that blog I explained that it was feasible for Apple to reach 10 million sales in its first year but not as a proper smartphone as many analysts were calling it (the original iPhone, later known as the iPhone 2G was only a featurephone) but rather as a featurephone/musicphone. I said I expected Apple to hit its sales targets but only after price cuts (as it happened by end of 2008, the old model price was slashed). I explained why the US market was a laggard so it didn't matter that the original iPhone didn't do 3G or have a modern camera but both would have to be upgraded before the iPhone could sell well in Europe or Asia (as it happened in 2008 with the iPhone 3G). This was not conventional wisdom. Many tech writers in January 2007 thought that 2 megapixels was good for a cameraphone at the time. Others thought 3G was not really needed, EDGE was enough (haha). I also explained in that blog already 3 days into the life of the iPhone, that its success was wholly dependant on achieving carrier deals, mentioing already in 2007 the relevance of China. I was right, right right right and nobody else wrote this in January 2007. Everybody else was doing the double-pinching of the touch-screen and thinking that this was so cool. In that blog i also pointed out that the iPhone, being so deficient as a featurephone would propel the sales success of a close rival, the LG Chocolate/LG Prada, haha (I totally forgot about that forecast). I was proven right. In the first year the Chocolate easily outsold the iPhone globally. Both were touch-screen featurephones (the Chocolate design was released before the iPhone so LG could have sued Apple for stealing their design but back in those calm years, nobody was suing everybody).
Note very importantly what I did NOT say. My blog was not a laundry list of what the top Nokia smartphones had at the time. I didn't say Apple would need to do optical zoom or GPS navigation or 5 megapixel camera or an app store - all that were already in top Nokia smartphones. I very clearly identified the single biggest key to iPhone market share growth - carrier support even mentioning how important Japan and China were at the time (Japan's NTT DoCoMo and Chinas' China Mobile were among the very last of the major carriers to sign up to the iPhone and were greatly celebrated by Apple now when they did). I accurately identified the most important development points what had to happen in the first year so that the iPhone could reach 10 million sales in its first full year (ie calendar year 2008) being 3G and an upgraded camera to 3mp. And while Americans were ignorant of advanced phones, they'd love the original iPhone, it would not sell well elsewhere, until these rudimentary upgrades were completed (I was correct). And that the iPhone 2G would have to see its price dropped seriously before that 10 million was reached (as it was in the Spring of 2008). I also wrote my open letter to Apple asking for a QWERTY variant but I also acknowledged back then that likely Steve Jobs would never authorize a QWERTY-slider variant to the iPhone no matter how much that might make economic sense. So I never forecasted it would come, only that if Apple gave us that version, it would be a global hit and boost Apple profits and loyalty.
Then my first presentation to include the iPhone! Only two weeks later I was speaking in Tokyo at Japan's largest mobile event, the 3G Forum. And would you know it, my topic assigned months earlier, was about handset user interfaces (total coincidence). The room was packed as everybody expected that Tomi must also give his thoughts about the brand-new iPhone. What would he say? The previous slides set up my conclusion, based on what I have now mentioned in the above, but this was my concluding slide about the iPhone on January 25, 2007, in Tokyo (and do remember, I was speaking to the Japanese 3G mobile expert audiience, the most sophisticated moblie audience in the world):
Yes I said the iPhone 2G would be a disappointment (only a 'success' in America) but the next edition - iPhone 3G would be good enough to revolutionize the world including Japan. And notice the last bullet point. It hit me already in January 2007 - six months before the first model went on sale - that far bigger impact than changing existing handset maker models like Nokia or Motorola or Samsung, the iPhone would wake up Silicon Valley to mobile: HP, Dell, Intel, Microsoft, Google, Yahoo, Amazon etc... Who else said that in January 2007? Who else noticed that wait, the iPhone will reach now beyond mobile? This before anyone had played even with a demo model?
Then I was thinking further and observed that the media industries with mostly USA based headquarters, would be radically energized by the iPhone and suddenly all would believe (as has happened). But again, notice the timing. I wrote this in February 28, 2007, months before the first iPhone was sold. I predicted that the traditional media industries which had ignored the mobile, would suddenly believe. And boy was I right about that. Who else wrote that in February 2007 or before that, that the iPhone would not just be a transformative gadget for phone-makers but it would revolutionize industries who up to that point did not believe in mobile?
Then in early May of 2007 I wrote about the 7 C's of cellphones (as the 'swiss army knife gained more abilities) I talked briefly of the iPhone at the end. "the iPhone comes at a critical time for our industry. We cannot keep on adding buttons to the tiny device, something HAS to be done, and much of that has to be in intelligent design. Now, personally, I don't think a "one button" solution by Apple is the perfect solution with all others on the multitouch screen, but we do need vital innovation in this space."
And once again, yes obviously today the majority of all phones are descendants of the original iPhone in their touch-screen interfaces but that original one-button idea was too pure. Even Apple had to expand its button options a bit to allow music volume control etc...
So understand the nuance. Some like Nokia executives for example were dismising the original iPhone for its touch screen as not sustainable, claiming that consumers would tire of the touch screen. Ah, their view is 'go back to fill keyboards' in other words. Most felt that Steve Jobs was the genius and this one-button iPhone was the obvious future. But a Tomi Ahonen here on the blog said yeah, its almost ok, but a couple of more buttons would not be a bad idea. And what happened? Can you find any other pundit making this - very relevant - point about iPhone's user interface before the first iPhone was sold?
THE DEFINITIVE iPHONE FORECAST
Then the most relevant posting on this blog. The best single forecast posting I ever made anywhere. The definitive iPhone relevance forecast. The post about how we will mark time in handsets just like in calendar time (Before and after the birth of Christ) we will mark phone time before and after the iPhone. The blog which created the term 'Jesusphone' (something that was assigned to me, even though I never used that word on the blog). If you want to read one fun 'forecast' blog about the future, written in the recent past, that we can now evaluate go read this one. And remember, I wrote it before I had ever held an iPhone and before even one unit had shipped to any store.
I wrote first about the iPhone vs its rivals, that it would reign supreme as the best phone in side-by-side tests for usability or as I wrote then the 'yardstick of usability into the foreseeable future'. And boy did that come true. Its only now, in 2014 that we finally see many reviewers pick a rival smartphone just edging the latest iPhone. Giving the iPhone the best phone crown for 7 years in a row is getting that forecast right into the foreseeable future - and then some! Who sees 3 years into the future of this volatile industry far less 7 years. Pretty good call, eh?
Then the mobile internet? Wow did that forecast come out perfect. Yes from 2007 we did see all major internet players come to mobile. Note that Facebook was still so tiny, I used MySpace as the social media example haha.. but yeah. 'Do we need a new computer if an iPhone is enough." Yes today touch-screen smartphones, Androids and iPhones are growing strongly and PC sales are in decline, Various international surveys now say that consumers are switching from buyinig another PC to replace the old one, and happy to remain on their smartphones only (or tablets). Note how wild this is as a forecast in 2007 - PC sales were GROWING at the time yet I said the iPhone would bring in the era of their demise.
I forecasted back then, before the iPhone had sold one unit, that it would be seen as the start of the mobile internet, that gaming, downloadable music, social media etc would all count that as the starting point even though the internet had existed on mobile phones for 8 years at that time. Suddenly the past simply would not exist and it all seems to have started from zero in 2007. At the birth of the iPhone. As we so frequently see and read various analysts describe this industry. As if it started in 2007 with the iPhone haha. What a powerful forecast!
Then there was the advertising industry. I knew that the dudes and dudettes of Madison Avenue were already MacHeads. Now they would also become iSheep. Every CMO would want an iPhone and then put an ad campaign on the iPhone somehow. There had been mobile ads for seven years before this moment (I chaired the world's first conference for mobile advertising in 2001) but now, the iPhone woke up that sleeping giant. Since 2008 the global mobile advertising market has doubled to 2009, then doubled again to 2010, then doubled once again to 1011, nearly doubled to 2012 and nearly doubled again in sze to 2013. The magic started at the iPhone. Exactly as I predicted. Who else told you in May that the ad industry was about to awake to mobile?
I predicted the cultural impact, that comedy shows like The Daily Show would do parodies of the iPhone. They didn't do that of the Nokia N95 haha...
Then I said the single biggest change triggered by the iPhone was the new Klondyke for Silicon Valley to rush into smartphones. Boy was I correct on that haha. And who else said that? Before the iPhone was sold anywhere? And check out this sentence about computers: "The true coming of the first honest pocket computer will be attributed to the iPhone (while Nokia N-Series will dramatically outsell iPhones, still this is futile. iPhone will gain the Apple marketing magic)." Touché Tomi. Yes, most on the West Coast truly think the iPhone started this 'revolution'. And yes, Nokia's N-Series easily outsold the iPhone for several years (until an idiot Elop took over Nokia and wrecked the victorious and record-breaking profitable unit of Nokia).
Do I know my industry? Yes. Who else said in May of 2007 that while the iPhone would hit its sales target (ie I was not an 'Apple hater' claiming it would fizzle) Nokia's N-Series alone would still easily outsell the iPhone globally? Duh. I know my numbers! But did this blog give you value? Who else made that point? Can you find anyone other than Nokia staff (who themselves said the iPhone wouldn't come near the 10M mark) who promised in 2007 that the N95 would outsell the iPhone?
What about the new fools? I wrote "the massive West Coast blogging community will start to buzz around the iPhone and the "wirelesss" and "cellphone" space. They will think they're discovering it all for the first time. They will make the same mistakes we've made years ago in Japan, in Scandinavia, in South Korea, etc but it won't matter. To the Americans if it wasn't invented there, it isn't really important." Hahahahaha... Yes. Location-based madness! Banners and spam. App store nonsense. Yes. We learned these lessons years before but the West Coast insisted on tossing billions into the wells that we found were not filled with water. Well, who cares the richest man during this time became a mobilista, Carlos Slim, taking the title from the PC dude Bill Gates haha... Those who read the right books (haha and blogs, or follow the most accurate forecaster in mobile are doing just fine, millionaires and billionaires).
Yes, one of the most linked and most referenced articles at this blog. If you want to read about how I see my industry and can I foresee the future beyond just some hardware haha, read Entering the iPhone Era. And note, the reactions were not by any means all positive. Many wrote separate blogs commenting on my forecast with opinions like "bonkers" or "idiot" or "rude" or "disrespectful" or "blaspheming" or that I was an "iPhone pusher". Yeah it goes with the territory that when you write a controversial forecast, it will also receive a lot of hatered. I have grown quite a thick skin by now haha.
Then if you want the most amazing numbers-crunching 'rolling the sleeves' forecast for the iPhone before one unit was sold, only 3 days before sales start, I gave the definitive forecast of the international regional split of how the iPhone will sell around the world. This, at the time when the majoirty of forecasts still felt that Apple cannot even hit its 10 million market - I gave the regional split - that was essentailly perfect, You want to know which countries would buy the early iPhones, here was the best mobile industry forecaster, days before any iPhones shipped, already giving the first year split by geography, and so accurately, I was off by only points of percent per region. Essentially a perfect forecast. As far as I know, nobody else gave a regional split forecast at this time. And I did it for free, simply because I like to share.
So, while i make it very clear that I like the iPhone and based on all the above, obviously I am convinced it will be a transformational phone, i write days before its launch: "the iPhone as it ships now in June, is actually a seriously flawed device, for this time. Not fatally flawed, but seriously flawed." I explain that as Americans are not familiar with advanced phones, they will mostly be blissflly unaware of the missing parts but that Apple has to fix: the 2 mp camera. That there is no flash. That it did not record video. And that it wasn't 3G. I explained these were non-starters in the advanced markets where far more advanced 3G smartphones were sold but in the USA, these defects weren't deadly. The iPhone would have to, however rapidly correct those deficiencies. I also said there were plenty of other things that I didn't like about the original design, but those perhaps Apple could live with and just deal with the aggravation by customers like the battery haha.
I wrote that the competition was far ahead, with the example of the Nokia N95 which trumped the iPhone on all other features except screen size and touch-screen. 3G, GPS, 5 megapixel camera etc. And yes, obviously the N95 easily outsold the original iPhone globally. Easily.
I predicted that the US market will outperform the iPhone global sales to the Industrialized World and Asia will underperform. And that was true in 2007 and it is still true today in 2014. Apple's best market is the USA. Australia is good, Britain is good, several European markets are good but Advanced Asian markets (Singapore, South Korea, Japan, Hong Kong, Taiwan etc) far less so. Still true today! Only Japan does good sales for the iPhone in Asia while South Korea its near zero... Yes. Good call Mr Consultant.
Then I modelled the options and possibilities and noted that because Apple had to rush its next-gen iPhone for 2008, it could not now bother with a lower-cost iPhone (as it finally gave us with the colorful plastic iPhone 5C vs the flagship 5S). There were many who were already callling for cheaper iPhones at this time. Then there is this gem: "Many analysts have suggested the iPhone will hit Blackberry. It won't. Blackberry is the most insulated of all smartphone makers against the iPhone, simply because the Blackberry is part of a corporate wireless email system. The iPhone won't have a direct rival for that, and corporate buyers will happily approve more Blackberry devices, but will shy away from buying iPhones to employees. No, the Blackberry is not hit by the iPhone." American pundits were for years pushing that bullshit that the iPhone was/is stealing customers from the Blackberry.
Here are the facts. In 2006 before the iPhone launched, Blackberry had 6% market share. While the iPhone gobbled up market share the next four years reaching 16% market share in 2010, what happened to the Blackberry? It also grew!!! to 16% market share! There was no cannibalization of the Blackberry by the iPhone! Now that Blackberry has collapsed from 16% to under 2% where is Apple? Did it grow? Now, since 2010, Apple has also lost a point of market share! It is utter bullshit to suggest that the Blackberry suffered because of the iPhone or the iPhone killed the Blackberry. The facts are clear. The iPhone devastated Palm !! and Windows Mobile! The Blackberry grew with the iPhone and only died to Android. But who told you in 2007 that Blackberry was immune to the threat of the iPhone? Did anyone else tell you this? How many times were you still reading in 2011 that the Blackberry is dying because of the iPhone haha.. (the Blackberry died to Android smartphones at near perfect symmetry when one grows the other declines). I told you before the first unit was sold, and I explained why the Blackberry and iPhone were not rivals, of essentially zero overlap. Like a jet airliner vs a helicopter. Yes they are both aircraft and have jet engines but if your jet is grounded, you can't replace it with the helicopter to fly over the ocean to carry your passengers. Duh. Did I give value on this blog?
Then of the phone maker brands, I said clearly that the biggest casualty to the iPhone would be Motorola (which was the world's second bestselling phone at the time and went bankrupt in only a few years later). I felt SonyEricsson would not lose badly and might recover (good call). And I said very clearly that the biggest gainers from the luanch of the iPhone were to LG Chocolate and Nokia N-Series. Totally spot-on what happened in the next 12 months. Who else said this in 2007? Anyone? I do know my industry!
Then that selfie camera. I pointed out why, back in June 2007 that Apple has to include an inward-facing second camera. Its not that we use or don't use the second camera. Its because the carriers insist. And there were howls of laughter on the blog about how silly and old-fashioned Tomi was and didn't understand Apple because (nonsense follows) and Apple would never do this etc. And Apple of course gave us that eventually. Right again Tomi. Good call.
I also predicted the Asian Clone Wars. That various Asian makers would introduce iPhone-spec touch screen smartphones of similar appearance but far lower cost (the typical Android offering today, Huawei, Xiaomi, ZTE etc).
And of that future, seen in 2007, while I've said already that all phones will be measured in two eras, before and after the iPhone, I ended my long blog with this opinion: "The phone to fear, the ultimate superphone of its age, the one striking fear into the HQ's of Nokia, Motorola, Samsung, SonyEricsson and LG, is the first re-designed iPhone, after feedback from users in Europe and Asia. That truly re-designed "iPhone II", that may be released in the summer or autumn of 2008 at the earliest, that is the must-have smartphone. I can't wait to use that iPhone. This first iPhone is more like the Lisa for Apple PCs, an important step along the way, but the next iPhone is like the Macitosh, a true masterpiece." (emphasis in the original). As we saw, that was the iPhone 3G and the first proper smartphone from Apple with the obvious birth defects mostly cured and the first 3G iPhone and the first with the app store etc. That iPhone 3G became the first global hit phone where the original iPhone 2G was a sales success only in America, the laggard mobile marker where consumers had not seen modern flagship phones, exactly as I predicted.
In November of 2007 we got the official launch price of the original iPhone in unsubsidised form in Europe. T-Mobile started to sell the iPhone base model for 999 Euros (1,450 USD at the then-current exchange rate). So from that lofty level by the time the iPhone model line settled to a 600 dollar unsubsidised price by late 2008, clearly I was correct that the original iPhone price was too high and Apple had to cut costs dramatically to hit its 10 million sales target. But also in that blog, I told my readers that the 10 million target was well on track. (before you bitch about 'Apple made record profits in 2008 - yeah imagine if the price for the SAME device sold for about 600 dollars - what AT&T pays Apple after the 2 year contract - instead Apple had managed to get 1,450 dollers per iPhone? That is pure profit there as the device components, manufacturing, shipping and marketng is all included in the 600 dollar price. But 850 dollars - per iPhone sold - of pure profit had to be sacrificed from 2007 to 2008 when Apple had to reduce the price to make the promised 10 million target.)
January 2008 I looked at some big trends for the mobile industry. I touched for the first time on an iPhone effect, the screen size, and predicted we would now want larger screens in our pockets just like how laptop screens were constantly growing. (Nokia's new E90 Communicator had already a larger screen back then than the iPhone's 3.5 inch. Nokia went to what was the industry's largest, at 4 inches alreedy then in 2008. Apple followed four years later when the iPhone 5 finally gave us a 4 inch screen for the iPhone). But yeah, somewhere around 2011 it was no surprise that larger-screen phablets were going to be popular. But who told you all the way back in early 2008 that we had entered a screen size race and Apple's massive 3.5 inches would soon be seen as too small?
In January 2008 I did an update of the iPhone and 10 million target. I concluded that blog with this: "I am pretty confident, that as long as there is a 3G iPhone this Spring or Summer, then Apple will rather easily hit its 10 million mark this year. Very impressive for a high end expensive smartphone by a company that had never made a phone before. Remember it took RIM six years of sales to reach 8 million users for its Blackberry worldwide, and the Blackberry is less expensive than the iPhone."
In Q1 of 2008 I took a look at the global handset market based on Gartner's numbers. I noted that Apple had cracked into the Top 10 largest handset makers (while having 0.7% market share, remember this is all phones not just smartphones). And the big gainers were Nokia, Samsung and SonyEricsson, with Motorola the big loser (in line with my pre-iPhone launch forecast) and now I for the first time noted the 'stampede' of West Coast tech giants into mobile with Google and Dell joining Apple and Microsoft. Again as I predicted would happen only eight months before.
Then days before the first total updated iPhone would be announced, the iPhone 3G, I wrote my speculative blog about what I expected it to have in terms of 'must have' and other nice-to-have and not-needed features. I said the new iPhone would have to have 3G (it did), MMS messaging (it added a year later). Video calling ie second inward-facing camera (it didn't have, Apple added that only 2 years later in 2010).
I said that HSDPA (3.5G) was not yet necessary and GPS only a nice-to-have feature but both of those did appear already in 2008. And I said I didn't expect many of the miscellaneous features that other phones had, like digital TV tuner, microSD slot, removable battery etc to arrive to the iPhone (as they didn't). So it was not one of those blogs that just predicfed a massive laundry list of everything. I had all the must-have items - every one of which arrived (but a few with delay of a year or two). Of the other things, some that I didnt' find that important did also arrive but those I said were not coming also didn't come. Not a perfect forecast but darn close. At that time, no doubt, there will be others who also guessed pretty closely most of those features. I dont' know if many got the MMS at the time haha.. I know my customers and what they say. Most on this blog were launghing at me that Apple would never bother with MMS because of (nonsense follows).
SECOND GEN iPHONE
Then we got the first new revised iPhone model, the 3G, and with it came GPS. I was here on this blog one week after the new iPhone 3G specs were relased, to explain why 'location-based services' were not the pot of gold that so many had suddenly started to believe in. Now, in 2014, we can see I was correct and those 'pundits' were fools. LBS has been the worst-performing part of hte mobile ecosystem. Not that there isn't any growth there, but yes, the only sector in mobile that has managed worse performacne than smartphone apps. And the apps business is a lottery. Location-based services are worse than a lottery. Who told you the truth on this blog when the 'tech analysts' all were ooh-ing and ahh-ing about Apple's GPS on the iPhone 3G? Did I bring you value here or what?
So then just on the eve of the 10 million level being passed, I gave my view of where Apple needs to go next. I said the next edition in 2009 would now need video recording, a better camera and flash and MMS. Those all came either in 2009 or 2010. And I said Apple's smartphone market share would roughly double in the next year (it grew from 7% to 15% - spooky accurate!)
Then in June 2009 we saw the new iPhone 3GS when almost all of the birth defects were now all cured. It upped the camera to 3 megapixels, added video recording and MMS support. And in June of that year when the App Store was one years old. I gave my first analysis of the futility of the smartphone apps as a business, pointing out that for gaming yes, it was an ok market but that wasn't invented by the iPhone (Nokia's N-Gage was the world's first gaming smartphone with its own app store years before the iPhone). And I said in 2009 that the rest of the consumer apps were pure futility in terms of economic opportunity. Yes today most app experts say the same that apart from games its pretty hopeless, but who said this in 2009?
In January 2010 as the apps store hysteria was just growing, I wrote a long blog explaining why it was an illusion of an opportunity, there was no money to be made. I called it a freak show. And gave all the numbers to explain why there was no opportunity there (today this is very broadly accepted, in 2010 almost nobody dared say this). But then to truly illustrate that I know how this industry works and the benefits to the ecosystem owner, I wrote another blog the next day, explaining why inspite all that hopelessness for developers, the iPhone App Store was a brilliant move by Apple (and a vastly profitale one to Apple). And of course as I always do, I also showed where the real money opportunities were (SMS, MMS, WAP etc). It is nwo accepted very widely as the truth that yes, if app developers struggle with making direct money with apps, they can get some income from premium SMS payments or operator-billing (aka 'WAP billing') etc. MMS alone is far bigger globally than all app store revenues for all stores and more than half of MMS revenues are content/media. Duh. Do I know my shit? Yeah.
BLOODBATH STARTS 2010
In 2007 when the iPhone launched, this Communities Dominate blog was not really much of a 'mobile phone' blog or smartphone blog. By the heat of 2010 and 2011 this blog was often posting almost exclusively smartphone-related postings, about Nokia and Blackberry and Android and Windows and of course the iPhone. This shift was quite by design. In 2006 the smartphone market was a serene ultra-nerdy geekosphere. There were brands like Kyocera and HTC and Fujitsu and Palm and Blackberry plus of course the inventor of the smartphone: Nokia. The operating systems were utterly dominated by Symbian (about 80%) but you know who was the second bestselling smartphone OS? Windows Mobile. Yes. At one point Microsoft had the 'second ecosystem' which they then of course proceeded to destroy. But that was the calm and mostly invisible techie space called the 'smartphone'. Nokia and some techie dwarfs.
There were only 7 Fortune International 500 sized companies (for US readers, this is equivalent to about Fortune 200 sized companies on the more traditional listing in terms of their size, the Fortune Internaitonal 500 is the far more prestigious and exclusive list than the 'Fortune 500' of only USA-based companies). So seven global giant corporations were in the handsets business in 2006. Then came the iMagic and by 2010 that number had grown to a peak of 23 Fortune International 500 sized companies (very briefly 24) all peddling handsets to global audiences. The sleepy handset market had become almost overnight the most competitive industry in human history. Never before had that many giant corporations been competing in the same global industry. This is not true of cars. There have never been 24 car manufacturers in the Fortune International 500. Neither have there been oil companies, or banks etc. Banks for example yes, there are more banks in the Fortune International 500 but they don't compete against each other, internationally. Most banks only operate nationally. But in handsets an American Motorola competed with Finnish Nokia and South Korean Samsung and Japanese Sharp and Chinese Huawei and Canadian RIM (Blackberry). Newcomers were rushing in such as UK based Vodafone, US based Microsoft (before the Nokia acqusition it tried to sell Kin phones), China based Lenovo who had bought the IBM PC business, etc etc etc.
So to be clear, there has never been any globally contested industry that had as many as 23 Fortune International 500 (or Fortune 200) sized corporate giants competing in the same market. Until 2010 with mobile phones. As I saw that rush to mobile in 2009, I christened the year 2010 to be 'the Bloodbath' as the MBA training in me suggested that this kind of competition could not be sustainable and there would be casualties. Some very major ones perhaps. Little could I guess that we'd see casualties almost immediately from Palm and Motorola to now the biggest of the big, the giant Nokia fall last year. Bloodbath was a most apt name. And yes, the Bloodbath series had a ton of analysis and forecasts and projections. I am not going to go through all of those. But I want to revisit a few of the most relevant iPhone-related matters.
So in February 2010 I did one of my many smartphone war dispatches and in it I upped my prediction about Apple from it has to split its product line (more than one new model per year) to "That will happen soon, its inevitable.." At that time and through 2011 many came here to this blog or commented about my Twitter feed that it was a silly thing to suggest, Apple would never split its product line. It sold older models at a lower price. Well, who was right? We got that split in 2013 when the iPhone 5C and iPhone 5S were released. Very many analysts in 2013 said that split was 'too late' and clearly Apple should have done that sooner. But when I say something is inevitable, i do mean it is unstoppable and it will happen. I was not wrong.
Then came the iPad. I am not a PC industry expert (anymore) and said so on the blog but did my best to analyze the opportunities of the iPad. I got most of the parts right in that blog. The iPad was going to revolutionize tablets and get clones. It was not going to challenge smartphones and not desktop PCs. It would be a rival to portable computers like notebooks and the kindle. A new market space would appear for users who didn't use PCs before in particular when watching TV. But I did get the numbers wrong and the iPad far exceeded my expectations in the first year sales. You can't get every forecast right and it doesn't surprise me that the further we move away from mobile industry, the more there is error in my forecasts. Even so, that blog established right from the start the clear view that a tablet had to be considered a separate device from a smartphone, not as if it were a large-screen smartphone. Today most tech analysts have joined in that view but in 2010 that was a minority view.
MYTHBUSTERS AND APPLE 'LEADERSHIP'
So then yes, the American legend that somehow Apple leads anything other than usability. Apple did not invent the mouse for the Mac, Steve Jobs stole that from Xerox labs. And so it goes. The iPhone? Its looks were not invented by Apple they were - ahem - 'copied' from the award-winning LG design from 2006 which was launched as the LG Chocolate and LG Prada before the iPhone was sold, in 2007. But winning international design awards in 2006. So much for 'Apple' iconic design. Thank LG for the one-button touch-screen slab phones with large touch-screen that we have today from Androids to Lumias.
So what about the upgrades. I said the original iPhone in 2007 was both revolutionary, indeed transformational phone yet it was only a featurephone and fatally flawed. It was so lacking in its specs that some markets flatly rejected the original iPhone such as Japan which had shut down its old 2G network that year haha... Yes. the 'awesome' original iPhone to American eyes was literally obsolete for Japan. All of Japan was 3G or faster by end of 2007. (And still today you have plenty of 2G basic phones selling in the USA... talk about lagging markets haha. Japan launches 5G at its Olympics). But all those American pundits who were so mesmerized by the original iPhone who thought it would revolutionize the world? Did they tell you this that the original was unsuited for Japan. Did I give value to you on this blog?
So I have mentioned a few of the upgrades that Apple brought to the iPhone 3G in 2008 and iPhone 3GS in 2009. Then in February 2010 I catalogued all iPhone upgrades/changes that Apple found so important, it listed them in their press release about what are the highlights of whats new. Including the operating system upgrades, there were 12 total 'important' upgrades from the original iPhone from 2007. They are: 3G, MMS, GPS, better camera (3 megapixels), stereo bluetooth, cut-and-paste, voice dial, video record, autofocus for the camera, MS office apps support, user-installed apps (ie the App Store) and multitasking.
I then showed, meticulously documenting by model number and launch year, how every 'improvement' from the original 2007 iPhone were actually only doing 'me-too' catch-up to what Nokia flagships had had years before. All of these 12 items were commercially sold on Nokia's flagship before the original iPhone sold in June 2007. And some of these were so 'old hat' tech that Nokia had sold them for more than 5 years. You cannot say these are trivial tech specs that only Tomi would care about, if Apple official launch press release sings songs about them. These were the 12 biggest changes/improvements to the iPhone and all of them were only copies from what Nokia (and others) had offered before. The truth is that Apple does not invent. It makes things better. And its products are often technologically behind others. This is particularly true of the iPhone models. Like today, the iPhone 6 models have new features that are 'me-too' catch-up that rivals have offered for years. Some of them worse than the rivals for example if its true that Apple's NFC is crippled to only do Apple Money and no other standard NFC functions (similar to how Apple's original Bluetooth was implemented also as crippled).
Here is where we got the joke 'if you want to see what will be in next year's iPhone, look at last year's Nokia flagship'. That was literally true of the iPhone 3G and 3GS. It also was true literally of all subsequent iPhones 4, 4S, 5C and 5S, and now 6 and 6 Plus. Did I give you value in 2010?
WHO SAW SAMSUNG?
So Sammy Sammy Sammy. Who ate the iCake? It was Samsung. Now we know that Samsung is such a smartphone juggernaut in all price points, it is unassailable by Apple. But in April 2010 when we had end-of-year 2009 numbers to consider, Samsung was only the 5th largest smartphone maker in the world (behind Nokia, Blackberry, Apple and HTC). Apple outsold Samsung in smartphones by 4 to 1. Did you see what I forecasted? From that hopeless position for Samsung, I made this forecast: "by early 2011, Samsung will pass Apple in smartphone sales." Yes. I wrote that. And it happened exactly as I said, in 2011. It was not Blackberry or HTC who were far bigger than Samsung at the time. And note - while Samsung had lingered in roughly 5th position in smartphones for years before that, I had never suggested that Samsung would have a sudden surge to become a Top 3/Top 2 smartphone maker before.
Samsung was about to explode in market share. That was a BOLD brave forecast, for the brand stuck at number 5. And I told you why. "Why? Because they already outsell Apple in touch screen phones." Samsung had become the world's largest touch-screen maker (second largest phone maker behind Nokia) at the time. It was now inevitable that Samsung would shift that touch-screen customer base to smartphones (ie Android) and by 2011 would pass Apple. WHO ELSE SAID IN 2010 THAT SAMSUNG WOULD PASS APPLE BY 2011? Nobody thats who. Absolutely nobody. Even Samsung execs didn't dare to make that prediction (in public). And no, I had not thrown this line at every brand out there some given week. I never said Blackberry or HTC or SonyEricsson or Motorola or Palm or LG would pass Apple's iPhone. But I said that Samsung would - and that it would happen in 2011. Wow thats an uncanny forecast!
So my most courageous forecast. It does not take guts or skill to look at a strong growth curve and project another period of growth. That is the easiest forecast to make. The most difficult forecast is to take a growth (or decline) curve and forecast accurately the inflection point, when growth turns into decline (or vice versa). Apple had shown consistent and indeed world-record pace growth in market share in smartphones from launch in 2007 until the end of 2009. Then in April of 2010 before the First Quarter (january-March calendar quarter) sales of the iPhone were even released, I made that famous forecast: We had hit 'peak iPhone' and either year 2009 or 2010 would be the year when iPhone market share growth would have stopped and turned 'into gradual decline'.
Ask any professional forecaster, that is literally the most difficult forecasting mission. To pinpoint an inflecioin point. And I announced in April 2010 that we were at peak iPhone (in terms of smartphone market share on an annual basis). Nobody else had dared suggest anything nearly this dramatic. Apple had just grown from 7% to 15% the year before! Almost any 'sane' forecaster would pick the safe bet and say the iPhone would continue to grow somewhere into the 20+ percent range. But Tomi Tomi Tomi... what did you say? Yes. I said in April 2010 that the growth had ended and while unit sales would continue to grow for the iPhone the market share growth period was past and now Apple would see 'gradual decline' in market share.
Now I did not nail that forecast but I was off only by one percentage point. That courageous and outlier forecast ended up being off by one percentage point. Apple did not stop growing but the record-setting growth rate almost stalled to snail-pace and the iPhone managed to grow only one point to 16% in 2010. Today the iPhone market share is in decline and was 15.5% last year and will be around 14% this year. I almost nailed it. I did correctly predict the end of the strong growth but there was still slight growth.
Some like to ridicule me for that 'mistake'. Yet they cannot show anyone else who said before me that Apple's world-record market share growth was going to end in 2010. As this type of forecast is the most difficult to do, I am proud of how close I came and that nobody else was even in the same ballpark. Nobody else said in the Spring of 2010 that Apple's market share would be falling anytime soon. Most promised uber-rosy futures for Apple into 20+ and even 30% market share ranges. Even when I am wrong, I am the one who is least wrong. That is what being'most accurate forecaster' means literally. You take a series of forecasts over a period of time by the forecasters you want to compare - all forecasters including me make mistakes - you then find who was least wrong. That is the msot accurate forecaster. I was by far the most accurate forecaster of mobile industry stats. I was by far the most accurate forecaster of mobile handset stats. I was by far the most accurate forecaster of smartphones stats. I was by far the most accurate forecaster of Nokia and Windows Phone stats. And now, we see from the iPhone, I have been by A MASSIVE LEAD the most accurate forecaster of iPhoen stats. No contest.
If you deride me for that forecast, you must hate all the other 'analysts' who thought iPhone would continue dramatic growth in 2010 and beyond. I was not perfect, but even here, I was least wrong. By more than one order of magnitude. BY FAR the most accurate forecaster about the iPhone peak. And to be fair, immediately when the facts came in, and this forecast was thrown into doubt, I was on the blog telling you so. Who else does that? Who else is that professional that they warn you, my current forecast is not consistent with these fresh numbers, so beware. I am.
Today nobody doubts it that the iPhone has indeed peaked and as the market is in low-cost smartphones, Apple cannot gain market share. Today its an easy forecast. But who told you first? in 2010 as it was happening! Did I provide value to you my readers?
In June 2010 we saw the new iPhone 4. It added now the forward-facing second (selfie) camera, upgraded the main camera to 5mp and finally introduced an LED flash. The screen added higher resolution (which Apple calls 'retina display') and the OS finally added multitasking. You cannot accuse me of nitpicking features that are not relevant, those were the 5 highlights from Apple's own press release. Yes its not that Tomi thinks these were the big news, Apple itself (still run by Steve Jobs) felt that these 5 were the highlights of the new iPhone 4 compared to the predecessors. And once again, all those upgrades were mimicking years-old tech that Nokia had already had. Granted, while the E90 Communicator had up to that time held the pixel resolution world record, the iPhone 4 went even more sharp, but yeah, the E90 had far sharper resolution than the previous iPhones. But it was not quite 'retina display' level haha... so Apple went a bit further than where Nokia had been. Remember, this was still with a 3.5 inch screen size when Nokia's Communicator had gone to 4 inches already.
And the iPhone 4 finally abandoned the futile attempt to limit the phone to only 1 button (as I predicted) adding new buttons like volume controls. Then as numbers came in, on June 25 of 2010 I for the first time forecasted that Android would become the world's largest smartphone OS during 2011. Note that Andorid was in 4th place by latest quarterly market share data at the time (behind Symbian, Blackberry and iOS). I don't think anyone made that call that early (and many thought it would be either iPhone or Blackberry who might dethrone global smartphone OS king, Symbian, at some point, not Android which had only launched 2 years prior). Note that in a matter of only a few months I had been the world's first analyst to call it that Apple would lose out to Samsung in the smartphone handset brand race and also for iOS to lose to Android in the OS wars. Value yet?
SPLIT PRODUCT LINE
Do you remember the Death Grip? I said it wouldn't damage iPhone 4 sales to returning loyal customers but would damage new customer sales. Then in July 2010 I articulated the product line split strategy which I called the iPhone Nano lower-cost model like the iPod musicplayers had split into various lower-priced (and lesser capacity) MP3 players. I explained the iPhone Nano (ie the cheaper of the two new models that year) should not have all the new features of the new flagship, partly be consistent with the previous model but include some new features also on the flagship. That is exactly what Apple did with the split when they introduced the iPhone 5C and 5S, and it is exactly the strategy they still use now how the iPhoen 6 and iPhoen 6 Plus are designed. Exactly. I explained this strategy as something Apple had to do, in July 2010. But I also said in 2010 (and have said it repeatedly since) that the lower-price iPhone has to be significantly cheaper than the flagship, as the 'entry level' model similar to how BMW 3 Series is vs the 7 Series. It can't be almost the same price. That is where Apple made the mistake with the 5C and 5S, and now repeated that mistake with the 6 and the 6 Plus. The price difference is not wide enough to give this strategy its full effect. Many analysts have joined me in arguing this point, that the low-end iPhone model is still too expensive. (And please don't write about last-year's model. Thats not the same thing). I also explained the profitability issues and customer acquisition matters in that posting. Who else said this in 2010?
THE 10 DOLLAR iPHONE 4 (without handset subsidy or contract)
So then in July 2010 I made one of my epic long-term forecasts. I applied Moore's Law to the technical specs of the top smartphones of that moment and argued that by 2019 the cost of providing the exact same specs as the 'best smartphone in the world' of 2010 - the iPhone 4 - would cost only 10 US dollars to sell including profit margin. So I didn't mean that the iPhone 9 or whatever it would be called would be sold at that price in 2019. Rather, that some handset maker from China could sell the exact specs (3.5 inch touch screen, 3G, WiFi, GPS, 5mp camera etc) and sell that for yes ten US dollars without contract, profitably, year 2019. Wow. A true top-end superphone of 2010 by year 2019 would be so cheap it would make Nicholas Negroponte's 100 dollar laptop for every child a joke. This forecast has been quite widely quoted since (and I've shown it often in my presentations on all six inhabited continents). The more relevant part about that forecast is that I do a regular update to it. The very latest numbers I did two weeks ago verify that we are totally on schedule to get there. Those specs should cost 75 Dollars this December 2014. They are had today in China for 82 dollars this August so we are totally on track for 75 dollars by year-end. For the first four years at least, that forecast has held like clockwork. Is that valuable info to know that the iPhone 4 level performance will be the minimum tech spec of cheapest phones sold globally before this decade is done (running Android obviously not iOS). And that every new phone sold will be a smartphone before this decade s done.
That same blog also made this clear prediction about Apple's early lead in app store races: "In a few years all app stores will be cookie-cutter copies of each other with 90% overlap of content and apps. Just like almost any supermarket today will sell you both Pepsi and Coca Cola." We are almost at that point now (for those app stores that are still viable, so obviously excluding say Windows Phone that is dead). And that blog also explained that for winning the handset wars having the best phone was not the key, neither was the best app store or best loyalty. The global handset winner was going to be, as it always had been (and is today) the handset maker with the best carrier relations. That was Nokia in 2010 and is Samsung today. Best carrier relations does not guarantee you the best profits. But it guarantees you biggest market share. And in that blog I explained the inverse relation between profits and market share (if you grow market share, profit usually goes down, if you increase proffits you usually lose market share). I explained that it was impossible for Apple to win the market share wars but that the niche Apple was serving was one that allowed the biggest profits, not unlike BMW in cars. A profitable luxury niche.
I explained how profits were about today but platform OS market share was about the next decade. And that in 2010 when there were 10 different smartphone OS platforms, that was way too many to be sustainable, some would have to die (as they did).
BIGGEST COMPUTER MAKER AGAIN AFTER 30 YEARS
When Apple made the Apple 2, it was once the world's largest computer manufacturer by volume of units of computers sold (ie before the Macintosh). Then it never reached that level again and almost went bankrupt in the 1990s. But I was the first analyst to call the second coming of Apple as computer-maker to the top of the hill. I called it on October 26, 2010 that for year 2010 Apple had passed HP and Nokia, so when smartphones and tablets were included in computer sales numbers (as most tech analysts now define a modern computer) yes Apple in 2010 became once again the world's largest computer manufacturer (by unit volume). You heard it first here on this blog.
Then we get to 2011 and the collapse of Nokia. Nokia's new CEO Stephen Elop who came from Microsoft suddenly took the world's bestselling smartphone platform (and second bestselling app store) and announced he is terminating it while switching to not the strongest of the contenders but the 7th largest OS platform that itself was already deeply struggling, Windows Phone. That bombshell announcement came on February 11, 2011 and I was the most accurate forecaster also about all the carnage that Elop then caused to Nokia. Up to that point Nokia was by far the planet's largest handset maker, by an even wider margin the world's largest smartphone maker, and generating the industry's second best profits behind only Apple while selling to every price point in dumbphones and smartphones in every country. From 2009 to 2010 Nokia grew more than Apple so the gap between Apple and Nokia was increasing - Apple was not catching up to Nokia in smartphones, Nokia was pulling away from the iPhone. Nokia so utterly dominated smartphones it was bigger than its two closest rivals combined (Apple and Blackberry). This is such a rare leadership position that no PC maker has ever enjoyed such a dominant lead. Yes, never has IBM or HP or Apple or Compaq or Toshiba or Lenovo etc been as big as the next 2 largest PC makers combined. Nokia towered over other smartphone makers in 2010. And while Nokia corporation reported a rare loss-making quarter in 2009 (and had its previous CEO fired), by the time Elop came to run Nokia, the smartphone unit was generating Nokia-record profits. Only a total idiot would destroy that.
Well, on February 11, 2011 Stephen Elop started the systematic destruction of Nokia. What we found out only after the Microsoft sale had been concluded in 2013, was that Elop had a secret clause in ihs CEO contract that incentivized him to destroy the handset division and then to sell it as scrap to Microsoft. Elop was paid a bounty of 31 million US dollars for that heist. However, in 2011, what Elop annnounced was just sheer madness and Nokia's share price started on its death-spiral from a sterling AA+ raring to junk status. Now yes, I predicted perfectly the horrors that were to come to Nokia from that day and the other damage inflicted by Elop, as it happened. This blog is not about how accurate I was about Nokia. This is about the iPhone. On the day when Elop announced his Windows strategy, many pundits rushed to give their views of was this good or bad for Nokia or Microsoft (about 3 out of every 4 said it was very bad, and one out of four thought very good). I wrote mere hours after that announcement on this blog not just how horrible it was for Nokia, but what was the impact to the rivals in the industry!!!
So the moment the Nokia collapse started, only hours from the announcement, I was on the blog telling what was the impact to Nokia's competitors. This is what I wrote of the impact to Apple iPhone: "Last year it was pretty hopeless to suggest super-high-cost Apple iPhone could pass Nokia which sells 100 million smartphones per year. Now, if Nokia is crippled and vulnerable on all fronts in smartphones - suddenly Apple can plausibly catch and pass Nokia. Wow. This changes the whole picture."
Did anyone else say that while Nokia sold literally more than twice the number of smartphones per year than Apple, and in 2010 Nokia had grown MORE than Apple (and Apple's own smartphone market share growth period had ended) - suddenly this one announcement by the new Nokia CEO meant that Apple would suddenly leapfrog that rival - the one twice as big as itself? That is an awesome forecast and a daring one! What happened? I wrote that on 11 February 2011. Apple passed Nokia smartphones in unit sales in Q2 o 2011 only five months later! Nobody else predicted this on that day! And I wasn't making some blanket forecast for all brands. I didn't say Blackberry or Motorola or LG or SonyEricsson or HTC could achieve this. But I said Apple would. And I was spot-on (again).
Incidentially on that day I also said that Samsung was now destined to overtake Nokia as world's biggest handset maker (as they did shortly). Remember already before I had predicted that Samsung would pass Apple in smartphones (as they did also in 2011). But try to find anyone else who analyzed the Nokia-MIcrosoft deal who said Apple would pass Nokia in smartphones and Samsung would pass Nokia in all handsets because of that stupid move by Elop.
Then in my preview to the 2011 year bloodbath I for the first time argued that when Apple splits its product line (which would be inevitable), this was the opportunity for Apple to move its flagship base price upscale form the 600 dollar level (unsubsidised price) to something like 700 dollars. Now we see the iPhone 6 Plus has its base price at 750 dollars. Exactly that strategy and even more aggressive in the pricing. Many argued that there was no room on the top of the price pyramid for Apple to do this kind of pricing move (and still at the time the vast majority of arguments were that Apple would never split the product line haha).
I then called it first that the iPhone had passed Nokia to become the world's largest smartphone maker (in the quarter) of Q2 of 2011 ( as it also was). Then on June 13, 2011, in my regular feature of the bloodbath updates, I discussed Apple's iPhone new model delay from June to September. Nothing amazing in that. Except that I was the only one at that time to correctly give the reason why there was that delay. It was because Apple had tried to launch the new iPhone model designed without a physical SIM card (using a 'virtual SIM') and the carriers had utterly rejected that idea. Apple had to rush back to the drawing board to redesign the model and include the physical slot for the (nano) SIM card slot. That redesign and subsequent testing etc meant a sudden urgent 3 month delay.
Then in 2011 as the industry started to have rumors that Apple might split the iPhone product range, I wrote a long blog explaining the details of the 'iPhone Nano' strategy. Expanding on my previous postings, I now explained why it was necessary to have a different physical size (the more expensive model being physically larger). This was not done with the iPhone 5S and 5C but it is what Apple now did with the iPhone 6 and 6 Plus. The 6 Plus is larger and more expsensive. In the blog I showed how the new cheaper model could have some aspects form the previous year's model (to save costs and ensure profitability) but had to include some new dimension only on the new models. The example I used was NFC. That is exactly what iPhone 6 did now.
The quarterly leadership position in smartphones fluctuated between Samsung and Apple in 2011 but when I wrote my Bloodbath 2012 preview in March of 2012, I said clearly that Samsung would win this battle decisively during 2012 (as it did).
Microsoft Lies. Then there is the perennial Microsoft propaganda and lies machine. On May 23, 2011, the Microsoft mafia decided to spin a story about Nokia Lumia Windows success in China. They picked the wrong target when they compared the supposed success to the iPhone in China. Microsoft mouthpiece Michel van der Bel (Microsoft COO of China) got himself quoted in the press claiming that Windows Phone smartphones like Lumia 800c were outselling the iPhone in China. You don't spread lies like that on my watch! So I debunked that sillyness with 18 separate items of proof. When the numbers came out two months later, I was of course correct and Mr van der Bel has not been seen in the press about this ever again. But for a brief moment there as this alternate reality created by the Microsoft Imaginarium. Who debunked them comprehensively and immediately for you to keep your Apple facts straight? Yeah.
Then as obviously nobody in their right minds could have thought that Europe's largest tech giant would decide to destroy its most profitable division, there was of course windfall market share gains that nobody could have anticipated before the year but I did correctly anticipate that Apple was one fo the beneficiaries of that in 2011. That meant that there was the sudden jump in market share for Apple from 2010 to 2011 that I call the Nokia customer give-away (also benefiting Samsung). But after that was over, we were back to the normal for 2012 and now there was of course the newest iPhone 5 with the first larger screen at 4 inches of size. As Apple did not split its product range yet, I said that Apple would end up with between 20% and 21% market share for the full year. Apple ended at 19.5%. If you round that off, its 20% and I was spot-on. If you want to quarrel, I was off by half a point.
Again for year 2013 I gave my Bloodbath preview and there I again speculated on the split in the product line. I said that the annual sales for the iPhone would be down from 2012 to a range of 15% to 20% but if a lower-cost iPhone model was released, then there was growth potential into the fourth quarter. Note that the moment we saw the product split later that year, and the prices, I said no, the price is not low enough and Apple's market share was not going to grow. Where did it end? 16%. Whose your daddy, eh?
Then the moment we had enough numbers, I was also again first to show that 'post-Nokia-collapse' the new iPhone peak had also come and gone. By July I could see that iPhone market share was again/still in decline and would not reverse to the end of the year and told you so.
In September we saw the split of the iPhone model line to the iPhone 5C and 5S. I liked the split but explained that the price differential was not wide enough (and the cheaper model not cheap enough) to boost iPhone market share in any significant way. But we saw yet another Nokia innovation being copied by Apple (the cheesy colors in cheap plastic for the 5C model) and the gold color variant (also Nokia copy) for the new flagship 5S. There were again many on this blog who said Apple would never do colors haha while I said that this is basic marketing that even Henry Ford learned 100 years before with his Model T automobile...
I gave my target market share for full year 2014 iPhone at 14% in July after we had seen 2 quarters of sales. There I pointed out that a large screen iPhone costing as much or more as past iPhones was no answer, Apple needed lower-cost iPhones in the mix now, if it intended to return to some market share growth or even stability.
CONSIDER THE TRACK RECORD
So lets start with the simplest and easiest iPhone forecasts. What is coming. You could take a laundry-list of all features that rivals have, and say the next iPhone models will get those, and then be able to point back that look, this thing came now. Obviously the original iPhone (known now as iPhone 2G) was not a technology showcase and thus its easy to say it will evolve by a, b and c by just looking at the competition. But go back and look at my articles about the various iPhone models and what I expected was coming. I had many things I hoped for or wished for or said was possible but only a few things at any time that I said were inevitable. That Apple had to do. I said Apple had to do 3G, had to upgrade the camera, had to include MMS and a second inward-facing camera. Some of those were also echoed by ohters (3G, better camera) but others were very strongly argued that Apple would not need to do as being silly (second, inward-facing camera) or Apple would never do 'because its against Apple's philosophy (MMS). These were not all easy-to-make 'me too' predictions. If you look at what I said Apple HAS to do, it has literally done every single one of those items excepting for one (which it will do). The one it hasn't yet done, which I said was inevitable, Apple had to do, was to lower the price of the entry-level iPhone model after the model-line was split.
There are plenty of forecasts of sillyness suggesting Apple would have flexible screens or pico projectors or 3D displays etc. I have said those were possible but unlikely. Some things I wished for like physical QWERTY keyboard variants but I said even then that I felt it was unlikely Apple would do that. But out of everything I said Apple had to do - Apple has done that. And those have been - every one of them - an item so important to Apple, it has listed the change as one of their highlights in the new iPhone model press release. Note, I have not always been able to predict the correct timing - Apple has often left that item out for a couple of years before doing it. But I have been that correct, that even 2 or 3 years early, I have told you, this feature is a must-have and Apple will do this. Not that its a nice-to-have feature. It is a must-have and Apple will do it. Whether larger screens or splitting the model line or not being able to release an iPhone with a virtual SIM card, when I said 'this Apple has to do' I have been perfect (with one last prediction waiiting to be fulfilled - the price drop at the entry-level model). So many items that when I said it will be done, I was massacred on this blog, that Apple would never stoop to something that silly - like the colors. Or yes, inward-facing cameras or MMS support or splitting the product range or copying Samsung's Note into very-large-screen sizes (now known as phablet size).
You go read through all those blogs and anything else in the millions of words on this blog. I never once said that a flexible screen was inevitable or a 3D display or optical zoom (all aspects that other pundits have been predicting to be on an iPhone). Every single thing I said 'Apple has to do this' has indeed happened in the next iPhone or a later model a year or two after it. Note, as Apple has hugely celebrated each of those changes, it means Apple management agrees 100% with what I wrote on this blog, it is a major improvement, worthy of being included in the highlights of the press release. These have not been trivial issues nor obivous issues nor issues of natural progression that Apple might ignore. No, major changes.
And about half of them were so controversial, we had die-hard Apple loyalists on this blog arguing vehemently it will never happen. Apple will never do a larger screen than 3.5 inches because of (nonsense follows). Apple will not ever need a second inward-facing camera because (nonsense follows). There will never be MMS support or never be a split in the product line or colored iPhone models or larger screens than the 4 inch which was obviously the screen-to-end-all screens (retina display etc nonsense follows). Whenever I say this is inevitable, Apple has to do this, EVERY one of those things came to be. The only thing Apple fans should worry about is, if Tomi saw this as inevitable, and Apple did do it and celebrate that in a press release, why on earth weren't all those things done the immediate next release? Why some of those changes were delayed by a year or two? How much more competitive had the iPhone model line been, if Apple had bothered to do these things when they were technically capable and Tomi said these will come. How much money (profits) and customer loyalty did Apple 'leave on the table' because they didn't do these things right away? That is my love of Apple here. I have never wished for Apple to stumble or fail. I have celebrated and loved Apple, even as I see their latest model didn't fully take advantage of everything Apple could have done.
The technical part is the easiest. And no, I have not, by any means, guessed correctly all features of the next model and I missed several starting right in 2008 with GPS. But there is nobody else who has the record of saying 'these features Apple has to do' and have essentially a perfect record on those (with one item still pending). The far more difficult part to forecast is the impact to the market share out of the iPhone evolution. Can this help Apple grow market share or not. And here again, I have been by far the most accurate forecaster. Its not just that most years I have nailed Apple's annual market share, I was literally the world's first to call the moment when the market share growth stalled and its now in decline.
And again, if you are interested in more than just Apple, I have correctly predicted which brands will suffer from the iPhone (like Palm, Motorola) and which were immune and actually gained growth in sales (Nokia) and even growth in market share (Blackberry) in the early years when the iPhone market share grew from 0% to 16%. Then when Apple market shate growth had stalled, I correctly predicted Samsung's sudden rise when nobody else said that and I pinpointed the time when Samsung would pass Apple in both quarterly sales and annual sales of smartphones. I was first to predict the moment when Apple would pass Nokia to become (momentarily) the world's largest smartphone maker - and yet, that Samsng was going to pass Apple to become world's largest smartphone maker.
While this is not a financial analysis blog about share prices and Wall Street, I also have repeatedly reminded readers that any market share losses by Apple were not going to damage its enormously profitable iPhone business, and that Apple would continue to reap the world's largest profits out of its iPhone. While this blog focuses on 'mobile' and for smartphone platform wars, the performance of iPods and iTunes and Mac sales are irrelevant, I have also noted that those are also profitable - and benefiting - from iPhone sales (ie upsale/cross-sale to existng iPhone owners). So I have not been blind to Apple the corporation while that is not the focus of this blog.
Then the far more difficult parts. The iOS market share and the App Store effect. So many many writers have come here - and blogged on their own blogs - that the one part Tomi doesn't understand about Apple is the ecosystem and (nonsense follows). I have followed the MONEY. I have reported here from the beginning that the iOS App Store is the same story we saw on counting eyeballs on websites a decade before, an economic illusion. Most who make apps will not make money on it (and now most apps experts agree). Because of that most who were drawn to this mythological mirage of magical money have since gone and left their apps as Zombies. I told you the app stores ecosystems were a diversion from where the real money was in mobile services (90% of the mobile data business revenues are still made outside of the apps today, 6 years after the App Store. And those mobile services have literally a 10x better chance of becoming profitable than anyone developing an app). My view has not changed one iota from the first app store posting (games is the only thing worth doing here) to now. But the silly iDreamers and iWishers who iHoped for a new iEconomy have now mostly woken up to the truth. I told you first, literally, the first, on this blog. Today most apps experts agree. And incidentially if you read what they now write like Peggy Anne Salz in her latest book about how app developers can make money - what does she teach? One of the keys is SMS of course, something I wrote in 2008 when the original App Store launched. Who told you so?
It very easy to be mesmerized by billions of downloads of free content. Its far more challenging to see the real impact to an industry and what it means to revenues, loyalty, consumers, developers, and what kind of economy will emerge from all that. I did that for you on this blog, in a series of articles explaining where the economic opportunity was, and where it was not, and those positions have not changed and today my old view is increasingly accepted as the truth.
What of an industry-wide catastrophic accident. An event that nobody could foresee, but one that shatters the status quo. Like when Nokia CEO had a secret clause in his contract that paid him 31 million dollars to destroy the Nokia handset business so badly, it would then be sold to Microsoft. Nobody could imagine that Nokia the world's largest handset maker (and very profitable at the time) would include this secret clause in the CEO contract. So we saw the systematic destruction of Nokia over 3 years, that the Financial Times calculated, paid Elop another million dollars for every half Billion dollars of shareholder value he managed to destroy. Elop was removed from CEO job in shortest time of Nokia history and yes he was shipped back to Microsoft after the damage was done .But this is an event nobody could foresee (and I still wonder why aren''t there investigtions about stock market rules infringements relating to this). I don't mean nobody could foresee Nokia falling. I mean nobody could foresee that a Fortune Internatonal 200 sized company would give its CEO a license to destroy its cash-cow and most profitable unit. So in February 2011 we saw the beginning of Nokia's sudden comprehensive collapse and a fall of literally world-record speed. Not world record for handset makers, the collapse was fastest of any market leader of ANY industry ever, of cars, food, airlines, hotels, you name it. Never has a global market leader collapsed as fast as Nokia did from February 2011 to 2013 when Nokia sold its remaining handset business to Microsoft.
So if there is a catastrophic incident in the industry, is there guidance by your analyst. I predicted accurately not only what was the damage to Nokia and Microsoft, but what was the benefit to Apple, how much the iPhone would gain and how long - and as Apple was not the primary benefactor of the Nokia collapse who was: Samsung. Again, even at such an event that nobody could 'prepare for' and the analysis is literally reacting to sudden bizarre news, even then this blog told you BY FAR most accurately what was the effect of Nokia's pending collapse to Apple and as the iPhone wasn't the main benefactor, then who was (Samsung). Nobody else gave these facts only days after the Nokia Microsoft partnership was announced.
So if all that is difficult, the single most difficult thing to forecast of a given technological change is how it impacts OTHER industries. When the telephone came, there were fears that it would kill live audiences as theaters and that people would stop going to chuch. Marconi invented the radio and when he was asked could it provide 'broadcast' type of media, he said flatly no, there was no chance of that business. When the internet came, few saw it would destroy the encyclopedia business or utterly change government procurement. Now go back and re-read that seminal blog about what is the global impact of the iPhone - written before the iPhone had sold one unit and accurately forecasting what sudden change would happen at the media, advertising, tech worlds; how they would suddenly discover 'mobile' even though smartphones had existed for ten years by then. Jesusphone was a most appropriate term (even thought I never used that term myself in that blog).
There are Apple fan-boys who think everything Apple does is golden and will always win the world. There are others who seem to be Apple haters who said the iPhone would never succeed. I have loved the iPhoen, celebrated its steps and milestones. I correctly forecasted its first year sales and its second year market share gains - not over forecasted, nor underforecasted. You cannot accuse me of being an Apple fan-boy nor of being an Apple hater. Then I have since accurately forecasted the end of market share gains while still projecting every year unit sales growth and profit growth. Again, not a hater, not a fan-boy. A realist. And on all biggest issues, whether its features, whether its prices, whether its the prodcut line spit, whether its regional success/failure, whether its carriers, whether its loyalty, whether its rivals and market sahre - I have been right. Not always perfect but by far the most accurate forecaster. And I have been able to see the truth of the mythological apps as well as the impact of the iPhoen beyond 'my' industry of mobile into tech, media, advertising, money etc.
So yeah. Try to find any analyst who released even half this number of iPhone-related forecasts and had 75% of them hitting the target. Nobody else has been anywhere as accurate as me on the iPhone. I have not been perfect, no forecaster can be. But I have been least wrong and have been most right for the full duration of the existence of the iPhone. So with that, if you wanted, this blog is my 'end of Decade forecast' for smartphones including iPhone and OS platforms including iOS yes up to year 2020. Consider this against all those silly numbers you can read that suddenly Windows Phone will jump from 2% to 15% haha... The most accurate forecaster and his decade-forecast. Maybe worth bookmarking :-)
If you were interested in my Nokia collapse predictions, I did a similar survey of those at this blog a while ago. And if you want to see a comparison of all forecasts about Windows Phone market shares published after the Nokia partnership (and see mine compared) its here.