[bschmidt1]

> Apple was a completely new entrant into the space vs entrenched players that had already established sales channels

So? If anything it supports the point that iPhone wasn't an immediate success. It wasn't as successful as the Razr flip phone was before it, not for a while. The original point was just that it would have been difficult to predict the success of iPhone even after it released, because it didn't do that well at first.

[vlovich123]

https://en.m.wikipedia.org/wiki/IPhone_(1st_generation)

> In its first week, Apple had sold 270,000 iPhones domestically.[47] Apple sold the one millionth iPhone 74 days after the release.[48] Apple reported in January 2008 that four million were sold.[49] As of Q4 2007, strong iPhone sales put Apple no. 2 in U.S. smartphone vendors, behind Research In Motion and ahead of all Windows Mobile vendors.[50]

> As of October 2007, the iPhone was the fourth best-selling handset in the U.S., trailing the Motorola RAZR V3, the LG Chocolate, and the LG VX8300.[51]

I’d say being the #2 smartphone vendor on your first model and beating all Windows Mobile would be a fantastic first step and a clear indicator it would be extremely successful in addition to being #4 across all us handsets. 4M were sold in the first 6 months. You’re just simply misremembering how big it was and how well it sold.

The 3G version the next year sold 4x as many units (25M) . You could say it’s because 3G was such a huge upgrade our other software things like mms and App Store, but the first iPhone was in 6 countries while 3G was in 22 and got to 70. The 3GS did outdo the growth of that since it shipped 5M more units than would be explained just by being available in more countries (80 vs 70).

Could you predict it would end up dominating the smartphone market even as that market ate up more of the legacy feature phone market? Maybe that’s harder but the iPhone’s success wasn’t all that hard. The lack of any competition that could really keep up was another indicator. Android was a pretty big failure for a few years until enough of the feature set became parity and table stakes that people felt comfortable using it (or because Android was available in a lower price segment Apple wasn’t competing in).

[MBCook]

The 3G was also released with the App Store, which we all know quickly became a huge hit.

The iPhone 2G was an interesting phone. But there were no 3rd party apps until the software update that came out at the same time as the 3G.

The 3G had (insert app here). And boy did that drive sales.

[bschmidt1]

> entrenched > a fantastic first step

It's not like Apple was some scrappy startup going up against giants, when their profits had been in the billions for years prior to the iPhone, which by the way followed the MacBook launch in 2006.

> strong iPhone sales put Apple ... behind Research In Motion

Are you aware that RIM is Blackberry? This is what I've been saying, iPhone was behind the others like Blackberry, Razr, Nokia, etc.

> As of October 2007, the iPhone was the fourth best-selling handset in the U.S., trailing the Motorola RAZR V3, the LG Chocolate, and the LG VX8300.

Yep. 1 million is a lot, but Razr was selling 10s of millions, Blackberry and Nokia were selling more than that. But yeah I guess iPhone had the super cheap carrier phones beat, but they weren't meant to be high end products.

> The 3G version the next year sold 4x as many

Yeah that's when it started to take over. Especially when the 3GS / $99 AT&T plan came out, everyone got it by then.

Predicting hits: What about bluetooth headsets? They were forcing them on us around the same time period we're talking about now... but only a few geeky dads and cheesy business guys used them, eventually they weren't really sold anywhere, comedians had been referencing them at this point. Having lived through that era I would have never predicted the success of Airpods. As I said in my above post it wasn't like we didn't have touchscreen devices. I don't recall being as receptive to the touchscreen as you do, seemed like most people outside the Apple cult initially hated it.

[vlovich123]

> It's not like Apple was some scrappy startup going up against giants, when their profits had been in the billions for years prior to the iPhone, which by the way followed the MacBook launch in 2006.

First I think you may be misremembering your Apple history. The iPhone was very much Apple’s first product release post their iPod success which rescued their company. While they weren’t a failing company that they were in 2001 (like near banrukpt failing) they were not by any means a behemoth. In 2006 they made 2B in profit on 10B of revenue. By comparison Nokia made $7B in profit. Looking at MacBook belies that you seem to not realize how insignificant those sales were to Apple’s revenue (and how that’s even more true today even though they’ve actually grown their market share in that segment).

> Are you aware that RIM is Blackberry? This is what I've been saying, iPhone was behind the others like Blackberry, Razr, Nokia, etc.

Except not. Razr isn’t a smartphone and iPhone outsold any smartphones that Nokia made. By 2007 when Apple shipped the iPhone RIM had been shipping the blackberry for about 8 years and had completely taken over the enterprise segment which until Apple cracked it was considered to be the only place that smartphones would be successful and that it would perennially remain Blackberrie’s to lose. To have a competitor who’s never done cellular or smartphones before take #2 from the get go is huge considering how unlike traditional consumer electronics that Apple had engaged in until then, the sales channel and regulatory environment looked completely different. Think about it - one huge innovation they did was that you could buy the cell phone directly from them and through the Apple Store and they took care of the carrier onboarding experience. No one else attempted (or even could attempt) to do that.

You’re simply misremembering or trying to paint a weird picture that the first iPhone was this niche device no one wanted. That’s literally not true. It’s inherently impossible to enter a mature market and become #1 overnight. That Apple came in at #2 is really astounding and everyone was paying attention to it and Google literally hit pause on their launch by a year to completely redesign their OS because they saw it as the future.

> Having lived through that era I would have never predicted the success of Airpods.

Well I worked at Apple before they launched AirPods and got to see an exec demo of them. From the first instant I knew they were going to be a hit. Did I know it was going to be a multi billion dollar business by itself? If I’d done the math on it I probably could have worked it out just from estimating an attach rate. I think you shouldn’t extrapolate your inability to predict hits to others and say no one saw things coming.

As for touch screens, we actually didn’t have capacitive touch screens. All the smartphones to date had been resistive and the introduction of multitouch that capacitive enabled as well as better scan rates made a huge difference. I think you’re outing your viewpoint when you’re discounting people who were enthusiastic about the iPhone as members of a cult even now without allowing for the possibility that maybe they see something you don’t. Same kind of reasoning happened with the iPod too and I made the same mistake thinking they wouldn’t be big and it was this weird Apple thing and the UX seemed weird until they fixed their strategy to open it up to Windows users. My excuse was that I was still a teenager so I didn’t have sufficient perspective. Btw not everything Apple touches is gold immediately. I think they’re going to struggle with Vision Pro. I think they did a bunch of novel interesting UX innovations but the “killer product” hasn’t been built in that space yet and Meta is a much savvier opponent than they have ever had to face to date in a new product line.

[qwytw]

> MacBook belies that you seem to not realize how insignificant those sales were to Apple’s revenue

Unless we look at the actual data (i.e. Mac revenue was always bigger and was a actually growing at very fast pace unlike iPod by the time the iPhone came out)

Revenue from Q4, 2005:

Mac: $1,611, iPod: $1,212

Q4, 2006:

Mac: $2,213, iPod: $1,559

Q4, 2007:

Mac: $3,103, iPod: $1,619, iPhone: $118

Q4, 2008:

Mac: $3,620, iPod: $1,660, iPhone: $806

Q4, 2009:

Mac: $3,952, (only MacBooks: $2,866) iPod: $1,563, iPhone: $2,297

Revenue from iPhone sales didn't surpass MacBook sales (so desktops excluded) until 2010.

(iTunes revenue was lower than Peripherals, Other Hardware, Software and Service in all of those years)

[vlovich123]

I think you're making some key important reasoning mistakes. First, look at it as a percentage of annual revenue (numbers from ChatGPT so may be off somewhere):

2001 (ipod initial launch at end of year): 4.1B/5.36B, 76% Mac, <1% iPod

2002: 4.3B/5.74B 74% Mac, 2.5% iPod

2003: 4.9B/6.21B 79% Mac, 20% iPod

2004 (Windows support added late 2003): 5.3B/8.28B 64% Mac, 21.7% iPod

2005: 6.2B/13.93B 38% Mac, 44.5% iPod

2006: 7.4B 38% Mac, 40% iPod

2007 (iPhone launch - should cannibalize ipod): 10.3B/24.6B 42% Mac, 33% iPod

2008: 14.2B/37.49B 38% Mac, 24% iPod

2009: 16.4B/42.91B 38% Mac, 18% iPod

2010: 17.2B/65.2B 26% Mac, 12.7% iPod

When I say it's "insignificant" I don't mean to say that Apple could have cancelled it and it wouldn't have mattered. Mac still remains a meaningful pillar of their product lineup even though it only contributes ~10% of revenues.

What you have to do is consider that Apple leadership views it as an ecosystem. Mac by itself isn't a lucrative or really important business. However, it's importance is that it makes sure that a customer in their ecosystem always has an Apple product they can buy when they need something. Importantly, if they have an iPhone they're more likely to buy a Mac and if they have a Mac they're more likely to buy an iPhone (& now Watch, AirPods etc). The refresh rates for these are also different enough that you're likely to remain stuck there by default once you get into the ecosystem because it's just an easier experience.

What I'm saying is that the strategic focus and resources was not really on Mac because Apple leadership did not see growth there by itself unless it was as an attachment to the iPod. You can see in the % numbers where iPod took over Mac as contributing a huge portion of % to their bottom line as soon as they made it generally available and that Mac sales themselves only started going up like crazy once iPod became generally available to everyone. Similarly, once the iPhone comes out we see it crazily cannibalizing iPod sales. At that point strategically the iPod barely got any attention. They didn't cancel it until 2022 because it was still bringing in significant revenue streams (+ a form factor Apple didn't have a replacement for until they got the Watch). Additionally, the overall laptop market has been shrinking even as Apple has been growing which is why their marketshare in laptops is so large even though it's comparatively such a small product for them.

So while the revenue from Mac was important from a "keep working on this" perspective & "ecosystem play", the vast majority of resources, focus, and energy were definitely thrown at iPod & then iPhone because of how much bigger the opportunity was and that even for Mac iPod and iPhone were the flywheel engines driving growth in those spaces.

If you're taking "insignificant" as the cancellation point for Mac, I think it would be that they succeed in their pitch that the Vision lineup is a Mac replacement. If they manage to succeed in that product line, Mac won't be much longer for this world.

[bschmidt1]

He shows real data, you use ChatGPT, modify the timeline plus admit the numbers are off - yet you say he's making the mistakes?

High level: You're trying to make the case that iPhones were immediately more successful than the conventional market leaders like Razr and Blackberry when that's not the case by far - it wasn't true for several years.

When someone shows that's wrong with numbers (e.g. 130 million Razrs sold in 2 years vs iPhone's 6 million in 2 years) you say something like "yeah but they were new to the space!" But that's totally peripheral, and counter to your original claim.

You'll never convince those of us who were 18-24 years old when iPhone released what happened. You obviously don't have a clue, probably were a child or out of the country at the time because you're using ChatGPT to pull up (false) info we all know intuitively.

Other awful takes:

> Macbook sales were insignificant

False.

> Mac by itself isn't a lucrative or really important business.

Lol. Saying $10 billion a year is not lucrative is crazy. Saying that 30%+ market share on the laptop market is not important is crazy.

> Once the iPhone comes out we see it crazily cannibalizing iPod sales. At that point strategically the iPod barely got any attention.

Nobody ever compared iPhone to iPod - we were talking about feature phones of the day like Razr, Blackberry, Nokia, etc.

Most of your paragraphs are pure conjecture.

[qwytw]

Yeah picking Q4 in my previous comment wasn't fair (Apple didn't seem to release FY revenue by segment which is a bit annoying and iPod sales were generally much higher in Q1

No argument about what happened after the iPhone (specifically 3G + App Store) came out, but I'm not sure I fully agree with:

> What I'm saying is that the strategic focus and resources was not really on Mac because Apple leadership did not see growth there by itself unless it was as an attachment to the iPod.

By 2007 iPod's market share was ~72% in the US. The MP3 player market was pretty saturated and there was very little growth left (especially with increasing competition from (feature)phones). On the other hand Apple only had < 5% of the PC market (in the US) by 2006 so there was a lot of space to grow especially in the laptop market if if they started released more competitive products (by ditching PowerPC).

If we look at iPod + iPhone revenue around those years

2007 :

Mac: $10,314 (42.94%)

iPod+iPhone : $8,428 (35.09%)

2008 :

Mac: $14,276 (43.92%)

iPod+iPhone: $10,997 (33.82%)

Mac sales were actually growing faster even if we combine iPhone and iPod sales (which probably meant that a lot of people switched to other phones/mp3 players instead of buying an iPhone at least initially)

I think that's mainly related to the the PowerPC to Intel transition. It's not clear if the iPod really had a huge impact on Mac sales since Mac's market share started growing much faster when iPod had already peaked. Then after iPhone sales started accelerating Mac sales growth rates began declining which would imply that handheld and PC segments aren't necessarily related that much.

If Apple hadn't released the iPhone, Mac probably would have done just fine on its own and iPod sales would have remained stagnant or declined significantly (e.g. worldwide they weren't doing that well compared to Sony Ericsson's phone sales in 2006-2007, who IIRC leaned heavily into MP3/media in those in those years). It was pretty obvious that phones/smartphones were the future regardless of what Apple did (the transition would have just been quite a bit slower without them).

Of course (compared to you) I really have no clue what the internal sentiment inside Apple was a at the time so I'm just commenting on the market as a whole.