The iPhone has lost its lead and needs a rethink, not a retread

“iPhone is a revolutionary and magical product that is literally five years ahead of any other mobile phone,” Steve Jobs, Jan 9, 2007

Introducing the iPhone

From the first version of the iPhone through at least a couple of revisions of its hardware and software, the thing stood so far ahead of any other phone in existence that anyone without one just cried and moaned and if you had the chance to get one you jumped. If your mom or your cousin or the guy three cubicles down asked which phone to buy, you replied without hesitation: get the iPhone.

Starting a few years ago, other phone makers started to catch up and the choice got harder — or at least more interesting. You paused for a few seconds, thought about Android or maybe web OS, but gave the usual advice: get the iPhone.

But finally, in the past year or two, the choice of smart phone got a lot more complicated, especially if you weren’t already deeply invested in Apple’s vast iTunes ecosystem. Among other recent and obvious evidence, check longtime Mac columnist Andy Ihnatko’s column about switching to Android, uber Apple booster Matt Siegler’s positive review of the Google Nexus 4 and Macworld writer Lex Friedman’s general praise of the Nokia Lumia 920 phone running Windows Phone 8. What’s next? Long time Apple blogger John Gruber admits he’s head over heels for Samsung’s Bada-Tizen hybrid phone love child?

Sixth anniversary celebration, anyone?

Personally, I finally got rid of work-mandated Blackberries and got an iPhone 3GS in 2009. But curiosity and a predilection for Google services got the better of me and I switched to a Nexus S running Android in December, 2010. I tried to switch back via the iPhone 4S for a few months in late 2011, but ended up not liking it, mainly for software-related reasons. Lately, I’m quite happy with a Galaxy Nexus and looking forward to trying the Nexus 4 soon.

None of this is to say that the iPhone is about to collapse or immediately decline in popularity. But what’s happened is others have closed the gap and have been able to grab more share in the still fast-expanding global market for smart phones. Eventually, those gains can’t help but eat into Apple’s future sales.

Given how Apple let its early lead in personal computing slip away, but did not let an early lead in iPods evaporate, the company knows what it needs to do, I suspect. Apple slipped in PCs when it ignored where the market was headed and what customers wanted (more recently, its fortunes revived with cheaper models and a broader range of choices). In the case of the iPod, Apple broadened its line by adding offerings at various sizes, colors and price points while still innovating at the cutting edge with the iPod Touch. Competitors were left no empty spaces to get a toe hold.

For a while, the iPhone was so far ahead of the competition that Apple’s simple product line was more than enough to capture huge market share. But as Android phone makers have caught up, the iPhone’s worldwide share peaked and started to slip. Apple so far has left several “open spaces” in the market, allowing competitors like Samsung to thrive by offering phones with larger screen sizes and at lower prices (even the “free” iPhone 4S in the United States costs $450 without a subsidy from a wireless carrier).

At this juncture, I expect the next iPhone will be a 5S-ish upgrade and will do quite well in isolation. But Apple should do what it did with the iPod and hit more price points and physical outlines. The software could use a lot more than that, updating a look that’s grown stale. Otherwise, it could be back to the PC future for Apple.