The iPhone and Disruption: Five Years In

Monday, 2 July 2012

Clayton Christensen, author of the deservedly much-praised The Innovator’s Dilemma, was wrong about the iPhone five years ago:

So music on the mobile phone is going to disrupt the iPod? But Apple’s just about to launch the iPhone. The iPhone is a sustaining technology relative to Nokia. In other words, Apple is leaping ahead on the sustaining curve [by building a better phone]. But the prediction of the theory would be that Apple won’t succeed with the iPhone. They’ve launched an innovation that the existing players in the industry are heavily motivated to beat: It’s not [truly] disruptive. History speaks pretty loudly on that, that the probability of success is going to be limited.

Last month Larissa MacFarquhar profiled Christensen in The New Yorker (subscribers-only, alas), and in a parenthetical, succinctly explained why he got the iPhone wrong:

One CEO who never asked for his help, despite his admiration for The Innovator’s Dilemma, was Steve Jobs, which was fortunate, because Christiansen’s most embarrassing prediction was that the iPhone would not succeed. Being a low-end guy, Christiansen saw it as a fancy cell phone; it was only later that he realized that it was also disruptive to laptops.

This explains everything that has happened to both the computer and phone industries over the past five years. The iPhone is not and never was a phone.¹ It is a pocket-sized computer that obviates the phone. The iPhone is to cell phones what the Mac was to typewriters.

I wrote about this back in May 2008, positing that RIM was then already likely screwed because the future of the industry was about making computers, not phones or messaging devices, and RIM had no institutional experience as a computer maker, on either the hardware or software sides of the fence. With Apple, on the other hand, you can more or less look back at the decade preceding the original iPhone as a series of training exercises for what was to come: building portable computers (PowerBooks, iBooks, MacBooks) and pocketable devices (iPods).

The iPod’s success fooled almost everyone (including me) into thinking that Apple’s entry into the phone market would be similar. The iPod was the world’s best portable media player; the “iPhone”, thus, would likely be the world’s best cell phone.

But that’s not what it was. It was the world’s best portable computer. Best not in the sense of being the most powerful, or the fastest, or the most-efficient to use. The thing couldn’t even do copy-and-paste. It was the best because it was always there, always on, always just a button-push away. The disruption was not that we now finally had a nice phone; it was that, for better or for worse, we would now never again be without a computer or the Internet. It was the Mac side of Apple, not the iPod side, that set the engineering foundation for the iPhone.

What’s happened over the last five years shows not that Apple disrupted the phone handset industry, but rather that Apple destroyed the handset industry — by disrupting the computer industry. Today, cell phones are apps, not devices. The companies that were the most successful at selling cell phones pre-iPhone are now dead or dying. Amazon, Google, and now even Microsoft are designing and selling their own integrated touchscreen portable tablets. “App” is now a household word.

All of this, because of the iPhone.