Senior Vice President Philip Schiller at Apple spoke about pricing for the new 16GB iPhone 3GS at an Apple developers conference in San Francisco Monday.
(Jeff Chiu/AP)Photos (1 of 1)
With Apple’s new iPhone, is smartphone race down to two?
By Laurent Belsie | 06.08.09
Recessions don’t seem to slow innovation. Some surveys suggest they actually encourage it.
Which brings us to the growing battle for smartphone supremacy in an economy that hasn’t looked so bad since the 1981-82 recessions, when Apple and IBM began to duke it out for the top spot in personal computers.
Smartphone and PC technologies are so different it’s hard to draw comparisons. Even if they were similar, predicting winners is a fool’s errand. Hardly anyone in 1981 would have pronounced Microsoft the winner of the PC wars. Nor could they have possibly known in 1996 that mighty Microsoft would be eclipsed by just-started Google.
Lessons from the ’80s
But at least two lessons from the PC era do remain relevant for today’s smartphone wars: the importance of timing and the need for speed.
Timing is all about hitting the market with the right product at the right time. The Apple II was a hit in 1977 but it took 2-1/2 years to sell 50,000 units. The IBM PC, launched in 1981, reached that same number in 7-1/2 months and quickly established itself as the standard business computer.
By 1984, when the Monitor upgraded me to an IBM PC from a Teleram (don’t ask), the technology race was over, although we didn’t know it at the time. That’s the second point: In technology, the race really does go to the hare – and it can end in the blink of an eye.
In April 1984, Apple launched the Macintosh, a superior and far more elegant computer than the PC, and sold 50,000 units in a day. But it didn’t matter.
Other computermakers had already begun turning out PC-compatible machines and Apple never really regained its footing in the computer market. Steve Jobs was ousted for a time from the company he founded because he seemed out of touch with the new reality.
So Mr. Jobs created his own new reality, finding corporate redemption by returning to Apple and creating cool consumer products. Today his iPhone is creating the biggest buzz in smartphones. On Monday, Apple announced it would sell its current 3G model for $99 and begin offering its much anticipated, twice-as-speedy 3GS on June 19.
Other companies are trying to create similar buzz. Google has tried to elbow into the business with its Android operating system that will run on Verizon phones in coming months. Handheld pioneer Palm introduced the Palm Pre on Saturday and got quite positive reviews.
Can Palm top Apple?
By one estimate, the Pre sold 50,000 units this past weekend. But Apple sold 1 million iPhone3Gs in its opening weekend last year.
So the smartphone race may already be down to two competitors.
Apple owns the consumer market with 11 percent of the worldwide market in the first quarter of 2009, double its share from a year earlier, according to a Gartner report. Research in Motion, maker of the popular Blackberry, is the corporate favorite with 20 percent of the market as it gains share from faltering Nokia.
Perhaps the more intriguing question is who will emerge as the big winner of the smartphone revolution: a manufacturer, a telephone carrier, or a company that comes up with some revolutionary end-use for mobile Internet devices?
You can pick. This PC war veteran isn’t hazarding a guess.
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– Tip of the hat to Monitor researcher Adrian Mitescu for digging up the data for this blog. Don’t forget to catch us on Twitter.
Comments
2. nebben | 06.09.09
I don’t think the iPhone 3G S is the biggest news out of WWDC. Here’s why, http://bit.ly/dSlG2.
3. Harold | 06.09.09
The point you miss is that in the 1980’s Apple lost the personal computer wars to IBM/Microsoft largely because it elected to keep its operating system proprietary. This strategic blunder prevented the development of software that people actually needed and wanted to use. To paraphrase a famous politician, Apple did not realize or appreciate that “its the Apps, stupid.” Apple’s marketing of the I-Phone clearly refects that it learned from its past failure. (Gee, they might actually have a few grey beards around.) As long as there are “Apps for everything”, the I-Phone will be and remain the standard.
4. Marcos El Malo | 06.09.09
No mention at all of Android?
It’s very early days yet. While growing rapidly, the smart phone market is only a small part of the greater cell phone market. Another big difference is that smart phones are network devices, and the network owners will have an effect, either to hinder or help, the adoption of hardware. ATT being a case in point: Tethering and MMS are not currently available, even though the iPhone software and hardware support it. They are also forcing current iPhone users to pay full price (~$699) to upgrade to the new iPhone.
Laurent is smart not to prematurely pick a winner.
5. shelley | 06.09.09
I would say the applications win that are being made for android market, for example for my G-1 I now have a shopping scanner app which scans bar codes and tells me where an item is to be found as well as price (cheapest) a metal detector app to find my ring in the sand if lost, and last and most interesting to me a visa card scanner for my business which will double my sales ie: merchant swipe or merchant lite!!
who knows what i will see and like or hear about in the android market next. hundreds of things to choose from and new ones being added daily!!
shelley
6. disposableidentity | 06.09.09
@Harold, I think the point was that the race was already over by 1984 when Apple’s Mac hit the market. Open or closed, IBM’s (and Microsoft’s) platform was dominant and could not be overtaken.
I think the open vs. closed debate is overblown actually. The open platform does not always win (se the iPod for proof). The Beta/VHS, and the Mac/PC examples have trained us to believe that the open platform will win, but it’s not always the case — Gillette has dominated shaving for 100 years.
7. Ray Salemi | 06.09.09
From one 1980’s vet to another, wise call on the prediction.
It will all seem so obvious once the smoke has cleared.
8. Ron Skates | 06.12.09
In 1980 Apple and Tandy were the players. IBM was a non player in the PC market. The Apple II was user expandable. When the IBM PC came on the market IBM tried to make it proprietary. However the did lend credence to the PC which up to that point was not taken a serious business contender. Then came the Apple III a poorly built system, yet innovative in it’s own right, the PC JR, even more proprietary and Tandy’s CP/M computers. Then came a big reversal over the following years. Apple with it’s Lisa and McIntosh became very proprietary under Job’s direction, Woseniak (SPL?) left, and IBM started to realize that this was not the mainframe crowd and opened up the AT and further computers. Eventually they actually got out of the hardware market and it took a life of it’s own. Then what was called the IBM PC became the “PC” and the operating system was the driving force, meaning Microsoft. However by having the opennes of Windows and allowing anyone to write programs for it, it caused a tidal wave of usage. Where Apple held everything with a tight fist. It used to be where anything Graphics was Apple and other stuff on the MAC. That is no so now. What has made the “PC” so dominate in the market is the apps and allowing anyone to write them. So the users has many choices.
When I talk to a person and they bring up the Apple Vs PC card, I tell them do they like Chevy or Ford. Both do the same thing just a little differently. The only main difference is there an application out there that does what they need? Apple is sorely lacking there.
However in the Iphone, they have the Apps. The main concern I have is are they fun apps or apps for a purpose to fill a need I have. I have two friends who have Iphones, and they spend the bette part of any evening conversation showing everyone all the fun apps. However from a business standpoint in the information business, do those apps have purpose. And if I was a company having to support Iphones, I would be hesitant, because I would not want someone loading all kinds of apps on a business phone I have to support.
Lastly, in my humble opinion, the reason Microsoft Windows has so many virus’s is because it is such a big target. Just wait they will come on the Iphone and probably others. Oh and by the way the first PC virus was on an Apple.
So bottom line, do not buy because it is the latest and greatest. You will be playing the old game of keeping up with the Joneses for the rest of your life. Get one that will meet your needs and if you need all the other stuff buy an Ipod touch, Zune touch or a DS.
And yes I am tired of having a drink with people and all they can talk about is the new toy on their Iphone. I could care less.
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1. Dan P. | 06.09.09
Aw c’mon Laurent at least offer us a guess? Nice article but you have to have an opinion who it will be?