3.4.2 Elements of the iPhone Strategy

In January 2007, Steve Jobs announced the long-awaited iPhone. In June, Apple sold 270,000 iPhones on the first weekend it was available⁴¹.

3.4.2.1. Technology: Better operating system than Symbian, Palm, Microsoft, Nokia, LG. In 2005, Apple announced a surprise: Mac OS X had retained the support for multiple hardware architectures that had been used by NeXT to rapidly target new business (because of its origins, NeXTSTEP was built as a highly portable system)¹³. Within six months, Apple began shipping Intel based Macs, and within a year was able to transition to its entire product line. Thus, Apple also announced that its new iPhone would also run a version of the operating system which Apple referred to as simply OS X. In contrast to Microsoft's NT and WinCE, the version of OS X used on the iPhone--and apparently also the new Apple TV--shared far more in common with the desktop Mac version, from its Mach/BSD kernel to its Cocoa development frameworks.

3.4.2.2 Technology: More memory than Palm, Microsoft phones. How can Apple squeeze Mac OS X into the iPhone? On a Mac, a minimal installation of OS X takes up at least 10 GB of disk space, and happily consumes all the RAM it can find. The iPhone doesn't have a hard drive at all⁴².

The latest smartphones typically have 128 MB of Flash RAM and 64 MB of RAM. It is likely that the iPhone has at least 256 MB RAM in addition to its 4 or 8 GB of Flash. It appears that its copy of OS X and installed apps are stored in Flash RAM and consume about 500 MB. That would leave around 3.5 GB for music, email, and other storage on the base model. That's 28 times the Flash RAM capacity that any common Pocket PC or Treo has. Clearly, Apple expects users to actually use the iPhone, not just carry it around as a status symbol or to keep IT staff busy.

Palm devices were originally designed to run using a very minimal amount of RAM. The original Newton-era Palm Pilots from a decade ago had .5 or 1 MB of RAM. By 2003, the Palm Treo 600 had grown to use 32 MB of RAM. Only 24 MB of that was actually available to the user; however, the rest is eaten up by the Palm OS itself. Installing an application such as the Documents to Go Office file reader ate up another 5 MB, leaving only 19 MB available. This relatively tiny bit of RAM isn't a huge problem for the Palm OS, because it can only run one application at a time anyway. In the Treo 650, Palm changed how RAM worked. It uses 32 MB of Flash RAM, and 32 MB of system RAM. The Flash RAM storage is analogous to a hard drive; it contains a 9 MB ROM image of the Palm OS, leaving around 23 MB for user storage. That was actually less available storage compared to the previous Treo 600 model it replaced. Other differences resulted in the same files taking up more space than they did before. The 32 MB of system RAM actually runs the OS and apps, like RAM in a PC. When starting up, the Palm OS uncompressed from an image in Flash RAM to consume around 15 MB of the system RAM, leaving a paltry 18 MB for all running applications, caches, and peripheral use including camera photos as they are captured.

The latest Palm 700p has 128 MB of Flash RAM storage built in, 60 MB of which is available to the user, and 64 MB of system RAM. No amount of SD cards could make the Palm Treo a fast, multitasking machine, however, its memory capacity and potential is artificially stuck in legacy. That helps to explain why Palm sold out to Windows Mobile.

WM/WinCE similarly used to store everything in system memory, like a big RAM disk. Powering off the unit off would destroy anything in memory, just as it would on a PC. In Windows Mobile 5, Microsoft introduced the Palm-like convention of persistent storage. Files are all stored in Flash RAM, and only copied into system RAM while running. When the device runs out of power, everything copied to Flash RAM is retained. Existing devices designed to run the previous Windows Mobile 2003 typically had no or very little Flash RAM. This prevents them from upgrading to Windows Mobile 5, which requires a certain amount of Flash RAM to run. Palm's Windows Mobile version of the Treo 700 has the same 128 MB of Flash RAM for storage, and 64 MB of RAM as the Palm OS version. Windows Mobile 5 similarly leaves about 60 MB of the Flash RAM disk-type storage available to the user. The HTC TyTN, Motorola Q, Samsung Blackjack, and other common Windows Mobile 5 Smartphone and Pocket PC devices all have around 64 MB of RAM, and 128 MB or more Flash RAM, a paltry amount compared to the iPhone's 4096 MB or 8192 MB of Flash RAM. Again, the iPhone is equipped to be useful.

3.4.2.3 Market segmentation. Prior to Apple's iPhone, the industry had been dominated by a "staid, corporate-led smartphone paradigm" focused on enterprise needs. Industry leaders Nokia and Motorola had been enjoying record sales based on fashion and brand name, not technological innovation⁴³. In his 2007 Macworld Expo keynote presentation, Steve Jobs announced that Apple planned to take just 1% of the billion-unit mobile phone market. Apple may have been shooting for 1% of the "mobile market," but it really intended to capture closer to 15% of the smartphone market--more than Palm, RIM, and Windows Mobile combined--in its first year⁴⁴.

Smartphones of the day were designed around carrier and business limits, resulting in low bandwidth and short battery lives. These phones were not designed to handle additional tasks beyond communication and basic functions. Indeed, smartphones marketed for business were often deliberately stripped of cameras or the ability to play music and games. And when then-CEO of Research in Motion Mike Lazaridis pried open an iPhone, his impression was of a Mac stuffed into a cellphone, as it used much more memory and processing power than the smartphones on the market at the time. Apple's iPhone design also contained one of the first multitouch capacitive touchscreens, along with a consumer-friendly design. Steve Jobs proclaimed in 2007 that the smartphone was not just a communication tool but a way of life.

3.4.2.4 Product line. Incumbents had catered to segments of the market by offering a large number of smartphone models (Nokia had 57 different models). However, this approach could be confusing to customers and could sap engineering resources. Thus, Apple deliberately simplified its product line, offering only one model per year, minimizing the decision-making process for the consumer by making things simple. The standardization allowed for ease of design, but it also enabled mass production, consistent with the mass market it had targeted. Finally, a carrier in France said that in their stores, the feature phone makers have as many as 25 different models of phones available. That makes it hard for staff to be really knowledgeable about all of them all of the time⁴⁵.

One year after the Apple iPhone was introduced, Google began offering its Android OS to chip makers, handset manufacturers, and developers through the Open Handset Alliance⁴⁶. In effect, the various feature phone ecosystem members that had had problems with the transition to smart phones were united in a strategic alliance (like the Symbian alliance?). Therefore, the competition between the different product line philosophies - one brand, several models (Apple) versus several brands, several models (Android) - continues to exist. The following recent research provides a more detailed comparison of the strengths and weaknesses of each approach.

Table 4: Comparison of Apple vs. Android smart phones APPLE ANDROID Product Line Narrow: One brand, several models Broad: Multiple brands, several models -Development is cheaper: Most apps debut on iOS -Development is more expensive; Some apps may not appear at all -Integration with tablet, PC, watch -Not possible unless manufacturer produces all devices (Samsung does) Fewer apps but more control over apps (better -Better selection (more apps) but less secure security) -Retail store well-trained -Service from manufacturer or retail store; multiple brands mean less well-trained sales & service personnel -Known, pre-installed apps -Apps installed by manufacturer or retailer; may be less popular, of lower quality -Less variation in size, weight, features, quality -Better selection of size, weight, features, and price; less confusing price. But low price can mean low quality too. -Lightning ports, compatible with other Apple -USB ports, compatible with all other products products Other -Fast at updating OS -Some models slow or not update at all -More backward compatibility; 66% of iOS1 1 run -Less backward compatibility; 0.2% of Android iOS5 in six weeks carry Oreo in 8 weeks -Excels in games; predicted to overtake Nintendo -Many games but not as popular and Sony on mobile devices -Resale value (for trade-in) higher -Resale value (for trade-in) lower -Siri Assistant limited to simple tasks -Google Assistant superior, can call upon everything Google knows about you -Can't upgrade storage -Can upgrade storageTable 5: Product generations of Apple iPhone Date Version Innovative features Microprocessor Storage memory 2007 iPhone -Touchscreen 32 bit 412 MHz 4-8GB -Mobile browser & email client Samsung, 128 GB -Size (fits in pocket) RAM 2008 iPhone 3G -3G enabled, can browse web faster 8-16GB App Store -Polycarbonate backing (black or white) 2009 iPhone 3GS 600MHz processor, 256GB RAM 2010 iPhone 4 Front-facing camera, FaceTime 1GHz, 512MB -Stainless steel RAM -Thinner by 25% Screen resolution improved (960x640) 2011 iPhone 4S -Siri 16, 32, or 64GB -iCloud 2012 iPhone 5 -LTE 4G enabled, Facebook integration 1.3 GHz, 1GB -Bigger, 4" screens RAM -Aluminum (lightest in history) -Touch sensors embedded on screen (thinner) 2013 iPhone 5S, -5 color options 5C -Biometrics (fingerprint to unlock) -Slow motion video -Touch3D (two-handed navigation) 2014 iPhone 6 -Larger screen (4.7-5.5"), resolution 1334x750 -Near Filed Communication (payment device) 2015 iPhone 6S -Larger screen 64-bit 2GHz processor, 2GB RAM2016 iPhone 7 -Got rid of headphone jack (Bluetooth 2.3GHz processor, wireless), thinner phone 2GB RAM -Water & Dust resistant -apps run more smoothly 2017 iPhone 8, X -Wireless charger 2.4GHz processor, 64GB, 256GB -All screen, OLED display (resolution 3GB RAM 2436x1125) -Facial recognition -Largest screen (5.6") 2018 iPhone XS -6.5" screen 2.5GHz processor, 64, 256, and Max 4GB RAM 512BG 2019 iPhone 11 -telephoto, wide angle camera lenses; nine photos processed to best oneTable 6: Growth of Apple's App Store, 2008-2017 Date Apps available Downloads to date Download growth rate (annual %) 7/11/2008 500 0 7/14/2008 800 10,000,000 1/16/2009 1500 500,000,000 4/24/2009 3500 1,000,000,000 7/14/2009 50,000 1,500,000,000 15,000 6/7/2010 225,000 5,000,000,000 233 1/22/2011 350,000 10,000,000,000 7/7/2011 425,000 15,000,000,000 200 3/2/2012 500,000 25,000,000,000 6/11/2012 650,000 30,000,000,000 100 6/10/2013 900,000 50,000,000,000 67 6/2/2014 1,200,000 75,000,000,000 50 6/8/2015 1,500,000 100,000,000,000 33 1/5/2017 2,200,000 130,000,000,000 20