The future of the iPhone
by johnThe iPhone has defied the common power structure that puts carriers on top, brought in $2 billion in extra cash for ATT, offered the first real web experience on a phone, and finally showed us all what a phone can do. Despite all this, it is not at the top of the list for smartphone sales, and there are signs that it has had little success outside of traditional early adopters and mac fans (more about this in an upcoming post).
We recently spoke with Chi-Hua Chien, a partner at KPCB (Kleiner Perkins Caufield and Byers), managing the iFund (a $100 million venture fund for businesses making iPhone apps) and we would like to share his thoughts, and ours, about the future of the iPhone.
First, some numbers. In 2007, Apple sold 4 million iPhones and aims to sell 10 million in 2008. Apple is projecting it will sell 45 million iPhones in 2009. I’ll repeat that for impact: Apple plans to have about 60 million iPhones out in less than two years. KPCB said at an iPhone Developers meetup that by adding the iPod touch to those numbers, they expect 100 million devices by the end of 2009. This sounds ambitious, but KPCB is confident.
We agree that the iPhone has sold well (zintin will be out on the iPhone this summer and it will be a couple of months at least before we appear on other phones). But we think that what is really unique right now is the set of market conditions that created the iPhone. Technology has been advancing at a steady pace, but in the US, most major wireless carriers have stifled innovation through closed business practices. After so many years, we have reached a tipping point; users want cool and useful phones like the iPhone so badly that the carriers stand to make more money by finally giving users what they want than by keeping users locked in to contracts with cheap phones. These market conditions don’t only affect Apple products of course; they have inspired Google to work on an open source mobile OS (Android), and inspired Microsoft and RIM to produce real web browsers for their phones. Many other companies are or will be following suit.
So while the iPhone is certainly the start of an avalanche, its not clear yet that the competition will let it run away with the market. Apple may sell 100 million units (if you include the iPod Touch), but what will be more interesting is how much they sell compared to everyone else (Android phones, Windows mobile phones, Blackberry, etc.)
June 5th, 2008 at 9:09 pm
And what are the thoughts of Mr Chien? I didn’t quite get that…
And aren’t those 45 million iPhones in 2009 a prediction of an analyst and not of Mr. Jobs?
Not that I disagree, I have posted several times that Jobs is eyeing some 60~70 million iPhones (not iPod Touch and not iPhone v1) sold in a year’s time. I find that quite achievable for a number of reasons.
The iPhone/Touch line of handhelds are computers and in some developing countries they may be the best choice for entry level computer that anybody can have. It’s a EeePC killer;
In developing countries – and I really mean China and India – phones are really important and the iPhone will stand to be as important as cars are for Americans. I have read India natives statements that people will easily spend half a year’s salary on an iPhone, I guess the same way many Americans buy cars they can’t afford (with credit). So IMHO, the biggest iPhone sales will come from those two countries not just out of being the most populated but because of that ulterior interest. And the fact they are status symbols and get them chicks (another native India fellow remark);
There will be people jumping to the network that “has them” plus there will be a lot of smartphone new adopters because of the hoopla that is being created;
If we’d say the potential subscriber market for the iPhone is 1.1 billion (with China in) and smartphones stand for 20% of the market, I’d say Steve Jobs will want to get 50% of that piece in one year’s time (’til July 2009). That’s 10% of 1.1 billion or 110 million. I think it’s not that difficult should he be willing to let go of some of the 19 billion cash for a high visibility ad campaign. Or if he put as contractual condition for network carriers to get the iPhone “highly subsidized, heavily promoted” instead of that silly shared revenue scheme.
But my question stands: what’s Mr Chien’s view that you wanted to share with us readers? That they’re confident there’ll be 100 million Touch devices by the end of 2009?
June 6th, 2008 at 11:05 am
I’ve been a Nokia user for years, never had anything different until the iPhone. It may not be everything to everyone but it is just so….good looking…cool…..
I just love using my phone again.
One criticism, the touch camera is hard to use, keep taking pictures of the floor or ceiling!
So, I personally hope the iPhone future is bright.
June 6th, 2008 at 2:07 pm
In response to XamaX:
Thanks for the additional analysis.
The point we were trying to share from Mr Chien is that the iPhone is a unique device, and that is going to power it on to swamp the market (all my interpretation of what he said). The counterpoint we were trying to make is that the iPhone is not going to be unique forever. A lot of companies are going to give them a run for their money.
June 12th, 2008 at 1:01 pm
I searched for \’Apple Iphone Top Competitors\’ at google and found this your post (\’The future of the iPhone\’) in search results. Not very relevant result, but still interesting to read.