Does the iPhone still matter? Huawei, not Apple, now drives the mobile conversation
Anniversaries are opportunities to reflect on what has come before -- and to imagine what may transpire in the future. For some, an anniversary is a time for reconfirmation and reaffirmation of beliefs; for others, it is an opportunity to acknowledge the past and to move on.
This weekend, industry analysts and volume buyers are returning from CES in Las Vegas, having just seen the multitude of gadgets and mobile devices that are in the pipeline for the consumer electronics industry.
Not all of these devices will come to fruition or necessarily enter the US market, but it is a very good indication of the kind of things that are in store for the rest of us.
Always conspicuously absent, since 1992, has been Apple. It was the 800-pound gorilla that was not in the room, but whose shadow was inescapable.
For at least the last 15 years, since the introduction of the ground-breaking iPod in 2001, every analyst walking into the cavernous, massively climate-controlled Las Vegas Convention Center knew that no matter what products were displayed at the show, Cupertino was going to release something months later that could tectonically shift the conversation as far as coverage and industry impact was concerned.
And in 2007, 10 years ago this weekend, such a tectonic event occurred: The unveiling of the first iPhone.
The iPhone was not the first smartphone. BlackBerry and Windows CE predated it by about a decade, and Palm had successfully turned its personal digital assistants into smartphones as well. None of those, however, had the same combination of compelling features and functionality as the iPhone -- even in the earliest and most primitive form of the device that Apple released in June 2007.
It was what Apple did afterward that really created the modern smartphone platform: The introduction of the App Store and the iPhone SDK and removing the device's dependence on the personal computer for syncing iTunes music and other media, which cemented it as the primary, Post-PC device that we know today. The untethering turned it into a monster.
Part of what ensured iPhone's success was establishing the logistics and the manufacturing infrastructure to fulfill huge amounts of direct and re-sellable product orders. For this task, in January 2007, Apple CEO Steve Jobs enlisted Tim Cook, a 10-year Apple veteran, former IBMer, and and expert in supply chain management, as director of operations.
The rest, of course, is history, and probably the biggest success story in the chronicle of the technology industry. But iPhone did not just make Apple a titan of industry. It created other industry titans in the process. It was a supercatalyst.
The supply chain infrastructure that Cook needed to manufacture the iPhone (and, later, the iPad) required leveraging the capabilities of multiple companies in Asia. This included Samsung for microprocessors, displays, batteries and DRAM; Sharp for additional displays; and Hon Hai Precision Industry, also known as Foxconn, for integrated manufacturing, just to name a few.
Road to iPhone X: The evolution of Apple's smartphone
The expertise these Asian companies acquired in fulfilling Apple's orders gave them the knowledge they needed to compete with Apple directly. Samsung especially profited from this and became a smartphone and tablet player itself, in addition to building up its extremely lucrative contract manufacturing business.
That there happened to be a readily available and maturing open-source mobile operating system in the form of Android only accelerated their ability to compete.
Samsung dominated the Android smartphone scene for years. However, given China's manufacturing capability and the size of its labor force -- and considering the size of the country's domestic smartphone market -- it was only a matter of time before Chinese smartphone expertise went elsewhere.
Hardware
To make matters worse for Samsung, the 2011 Tōhoku earthquake and tsunami that devastated Japan's industry and accelerated the slowdown of their economy, as well as their ability to compete in the consumer electronics industry, led to Foxconn's acquisition in August 2016 of Sharp, a company considered to be the leader in OLED and IGZO display technology.
Foxconn, a Taiwanese company with substantial manufacturing presence on the Chinese mainland, now owns one of the key Japanese technologies used in the iPhone.
The industrial might of Guangdong and Sichuan may have been built on iPhone and iPad, but their future was going to be Android.
A lot of this Asian smartphone brain trust ended up at five very large Chinese companies -- Huawei, ZTE, Lenovo, Xiaomi, and Oppo -- that leveraged much of the same manufacturing capabilities Apple effectively ceded.
As the horsemen of the smartphone apocalypse battled for market share all over the world by continually driving down the cost of premium products, customers began to win. We no longer had only two premium smartphone manufacturers to choose from (or to pay their prices) to get high-quality devices.
Leading that charge is Huawei, which was selected as the contract manufacturer for Google's Nexus 6P smartphone. Having experienced some initial success in North America, Huawei began releasing smartphones in multiple international markets under its own brands, first with Qualcomm chips, and then with multi-core ARM SoCs of its own design, the HiSilicon Kirin 9xx.
Huawei demonstrated its ability to match Samsung and Apple on build quality and come in much lower on price point last summer, with the dual-camera, premium P9, which preceded the iPhone 7 Plus launch by several months.
It then quickly followed that with a value-priced version of the P9, the Honor 8, which got accolades from our own Matthew Miller and other outlets for its sleek design and excellent performance.
At this year's CES, on the heels of Samsung's Galaxy Note 7 debacle, Huawei unveiled the Mate 9 flagship phablet. Early response to this phone has been overwhelmingly positive. I have been using one myself for several weeks, and it easily matches the Galaxy Note 7 and the iPhone 7 Plus on features at a lower price point -- and without the added combustibility of Samsung's ill-fated device.
But don't take my word for it, read what our mobile columnist has to say. Spoiler alert: He loves the thing.
And if you feel bad that you aren't spending enough money on a Chinese-made smartphone to impress your friends, you could always opt for the Porsche Design version of the device with 6GB of RAM, 256GB of flash storage, and an AMOLED 2K display. It is an absolute monster device.
Nobody knows what it costs yet. I've handled one, and it is the sexiest Android phone that has ever been made.
It would be easy to point out that the Chinese Android monster is of Apple's own making and a major reason why the company's industry dominance is fading as its growth slows. But it isn't the only reason.
Apple is actually a victim of its own success. It has made so much money from iPhone that it has become complacent, and its product releases have become entirely data-driven and iterative and ham-fisted and ignorant of customer needs since Cook took over as CEO after the death of Jobs.
I mean, what do you expect when you put a supply chain genius at the helm of a company known for its innovation, one that traditionally was never afraid to throw its babies out with the bathwater every five or 10 years or so?
How else do you explain the purely iterative iPhone 7 with the headset-port-ectomy and the new MacBook Pro with the dated, Star Trek-TNG-style LED touchbar of questionable functionality, sans full touchscreen, dongle-chaining nightmare that has even Apple fans scratching their heads?
Yeah, remove key functionality instead of a complete redesign. That's a recipe for success. I know another very large West Coast technology company that tried that a few years ago and learned a lesson the hard way. It ended up replacing its CEO. He's doing an awesome job.
A recent blog post by former Apple employee and Silicon Valley Kremlinologist Chuq Von Rospach made this point particularly well:
Apple's always been a data driven company, but I think they've gotten overly reliant on data to drive business decisions. Spreadsheets can tell you where the sweet spots in the market are and how to hit them, but they struggle at finding and bringing forward strategic areas that also need coverage. That was, actually, one thing that Steve excelled at. It means you need people in leadership who understand their user base and which bits are strategic and need to have product coverage.
Apple's view of its users doesn't match its users: I think Apple's lost sight of its users. It clearly has a model of what their user base is, but there have been multiple instances in the last 18 months where the user reaction has clearly been much different than Apple expected it to be.
Unlike Cook, a.k.a. Mr. Data, Jobs was the Silicon Valley god of product line sacrifice. I had my qualms with the man while he was alive, but in hindsight, even with all the issues I had with the way he dealt with partners and developers, and ultimately burning customers, I recognize that he had an incredible ability to drive his company to do disruptive things.
There are certainly plenty of people worthy of market disruption at Apple today. The problem is they are not the people driving the balance of the company's revenue. Instead, they are working on R&D-type stuff and in lines of business that are not the most profitable part of the company.
Apple's culture has now become so "not invented here" that anyone in those organizations that could possibly gestate something potentially disruptive to their own cash cows would likely be taken out and shot.
If anyone thinks that I want Apple to fail, they would be completely wrong. Apple is one of the jewels of the US technology industry, and it is critical to that industry's survival that Apple remains a center of innovation.
I don't want any of our technology leaders to fail. But now that it has created the Chinese monster, Apple needs to make course changes and disrupt from within -- or all mobile industry conversations going forward will be in Mandarin.