Friday marks five years since the world first got its hands on a smartphone that would turn the industry on its head. In five short years, Apple went from the ground floor to being the most profitable company in the smartphone business by a staggering margin. Apple and Samsung — two companies that weren’t even on the smartphone industry’s map a few years ago — are now the only two major global vendors making money, and the split was estimated at 80/20 in Apple’s favor last quarter. That’s 80% of smartphone industry profits in less than five years with just five different smartphone models under its belt during that span.
But this isn’t just about Apple. The advent of the iPhone era has forced changes in a stagnant smartphone industry that would never have gotten to this point without a serious push. Smartphones are now slim and sleek instead of huge and bulky. Touchscreens are now commonplace, drastically improving the overall user experience across all mobile platforms. Apps are now a booming economy, and are neatly organized in on-device portals instead of being available mainly through poorly-managed websites that made finding the software one needs a daunting task.
Apple’s rise to the top has not been without its drawbacks, of course. Apple’s inexperience in an industry where companies often looked the other way, and co-founder Steve Jobs’s short temper, have resulted in a worldwide patent war with no end in sight. Every major player in the industry is now fighting multiple patent battles, and innovation often must play second fiddle as smartphone makers tiptoe around patents.
The bottom line, however, is that one thing is clear: this is Apple’s game right now, and companies can either play or get out of the way.
Shortly after the iPhone launched, I asked a Nokia executive during a private meeting what he thought about Apple entering the cell phone market. He told me Nokia was a fisherman and Apple was just a tiny fly buzzing around its ear. Nokia lost $1.2 billion in the fourth quarter last year and another $1.7 billion in the first quarter this year.
RIM’s co-CEOs scoffed at the notions of a camera, an MP3 player or a full touchscreen on a smartphone. Now thousands upon thousands of smart, hard-working people will find themselves out of work as RIM is potentially broken apart and sold for scrap.
It’s not all bad news, though. Samsung has become one of the biggest consumer electronics companies in the world thanks to its wide range of Android smartphones. Whether or not Samsung’s phones are truly iPhone copycats is open to debate, but there’s no question that Samsung’s wares were at least inspired in part by the iPhone. After all, other designs are possible.
And then there’s HTC. The company has fallen on hard times but it had a monster results through most of 2011 and the door is open for HTC to make a serious comeback. Early efforts this year like the One S and One X are remarkable offerings, and HTC has big things planned for the remainder of 2012.
But it all started exactly five years ago with one phone. One phone that launched on one carrier and started at $500. One phone that numerous analysts and industry watchers said was doomed to fail.