iPhone Cafe

Back in 2001, Apple had fallen on hard times and was a shell of the vibrant company it had once been in the 1980s. Countless years of losses to Microsoft had left the company with few options.  It had virtually no market share in the personal computer industry, and little brand image.  Then the company invented a seemingly insignificant little device that would go on to change everything, the iPod.

The iPod not only turned around Apple’s finances, it redefined the entire company.  Apple went from being on the brink of financial collapse to a stylish trend-setter delivering music to the masses and with plenty of cash to burn.  In Q1 2006, just 5 years after the launch of the iPod, the iconic device accounted for 55.6 percent of Apple’s sales.

Something interesting has been happening over the last few years though and that is the iPod has grown increasingly insignificant to Apple. First there was the “halo effect” in which increased sales of iPods led to increased sales of Mac computers and OSX with the halo effect Apple’s computers became hot items.

Then came the iPhone, which has become an instant hit. In less than two years Apple has become the third biggest cell phone maker in the U.S. The iPhone has been a massive new source of income for Apple. All of these changes were in thanks to the iPod, without out that little device who knows where Apple would be today.

It’s official, Apple is now officially the third most popular brand of mobile smartphone, with Nokia at number one and Samsung in number two. Considering Apple’s lack of experience in the communications field, and the revolutionary nature of the iPhone’s interface this is nothing short of stunning. While the rest of the industry watched with skepticism, Apple immediately dominated an industry well known not only for being lucrative but for constantly leaving users disappointed. As it turns out, what people want isn’t $2 downloadable ringtones, complicated voice and data plans or phones with hundreds of features; No, what people want from a cell phone is coincidentally, exactly what they wanted from an mp3 player that Apple was able to provide and no other company has come close to matching, even after six years of Apple’s domination of that industry.
The whole time, the halo effect has been quietly working away in the background as Mac sales have grown year after year. The idea that Apple can do a good job of a phone or mp3 player so maybe they can do the same thing with the Mac computers isn’t new, but since the inception of the iPod Apple’s Mac market share has risen from around 4% to nearly 10%, and that’s with a range of products targeted only at the high end of computing.
Expect Apple to continue to dominate all three core areas of their current expertise, at least until they become irrelevant, and when that happens you can expect that they’ll have played a part in shaping the future of those areas.