Remember What the Experts Said about the Apple iPhone 10 Years Ago?

by on January 9, 2017 · 0 comments

Today marks the 10th anniversary of the launch of the Apple iPhone. With all the headlines being written today about how the device changed the world forever, it is easy to forget that before its launch, plenty of experts scoffed at the idea that Steve Jobs and Apple had any chance of successfully breaking into the seemingly mature mobile phone market.

After all, those were the days when BlackBerry, Palm, Motorola, and Microsoft were on everyone’s minds. Perhaps, then, it wasn’t so surprising to hear predictions like these leading up to and following the launch of the iPhone:

  • In December 2006, Palm CEO Ed Colligan summarily dismissed the idea that a traditional personal computing company could compete in the smartphone business. “We’ve learned and struggled for a few years here figuring out how to make a decent phone,” he said. “PC guys are not going to just figure this out. They’re not going to just walk in.”
  • In January 2007, Microsoft CEO Steve Ballmer laughed off the prospect of an expensive smartphone without a keyboard having a chance in the marketplace as follows: “Five hundred dollars? Fully subsidized? With a plan? I said that’s the most expensive phone in the world and it doesn’t appeal to business customers because it doesn’t have a keyboard, which makes it not a very good e-mail machine.”
  • In March 2007, computing industry pundit John C. Dvorak argued that “Apple should pull the plug on the iPhone” since “There is no likelihood that Apple can be successful in a business this competitive.” Dvorak believed the mobile handset business was already locked up by the era’s major players. “This is not an emerging business. In fact it’s gone so far that it’s in the process of consolidation with probably two players dominating everything, Nokia Corp. and Motorola Inc.”

A decade after these predictions were made, Motorola, Nokia, Palm, and Blackberry have been decimated by the rise of Apple as well as Google (which actually purchased Motorola in the midst of it all). And Microsoft still struggles with mobile even though they are still a player in the field. Rarely have Joseph Schumpeter’s “perennial gales of creative destruction” blown harder than they have in the mobile sector over this 10 year period.

The lesson here is pretty clear. As Yogi Berra once quipped: “It’s tough to make predictions, especially about the future.” But there’s more to it than just that. These mistaken predictions serve as a classic example of those with a static snapshot mentality disregarding the potential for new entry and technological disruption to shake things up. “In dealing with disruptive technologies leading to new markets,” says Clayton M. Christensen, author of The Innovator’s Dilemma, “researchers and business planners have consistently dismal records.”

This has implications not only for business forecasting but also for public policy, which is notoriously shortsighted when it comes to the potential for new technological innovations to shake up existing markets. Just because you think a particular firm or sector it the proverbial “King of the Hill” one day, it doesn’t mean they will be able to sit on that lofty perch forever. Likewise, policymakers cannot neatly “plan progress” by incessantly intervening in the hope of directing markets and technologies toward some supposedly better end. Picking winners and losers–or even just trying to stimulate more “winners”–will likely end very badly.

In his book, The Year 2000: A Framework for Speculation on the Next Thirty-three Years, the futurist Herman Kahn wisely noted that:

History is likely to write scenarios that most observers would find implausible not only prospectively but sometimes, even in retrospect. Many sequences of events seem plausible now only because they have actually occurred; a man who knew no history might not believe any. Future events may not be drawn from the restricted list of those we have learned are possible; we should expect to go on being surprised.

But we can only “expect to go on being surprised” by leaving plenty of breathing room for the evolution of markets and technology. While all social and economic experiments are accompanied by a great deal of unpredictability and disruption, history indicates that most of those experiments will result in greater progress and prosperity–just as the iPhone did. But developments such as these are almost impossible to predict or plan beforehand. We have to get the environment for innovation right and then let creative minds work their magic.

 

 

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