“An iPod, a phone and an internet communicator … Are you getting it? These are not three separate devices. This is one device. And we are calling it iPhone.”
That is how the world first met the iPhone a little over ten years ago in January 2007, when Steve Jobs took to the stage to announce Apple’s latest and greatest innovation. The world stopped what it was doing to take a look.
And then there was the Super Bowl. Sure Peyton Manning won his first Championship Ring, which was the second most memorable thing that happened. The first was that the iPhone said its first official “Hello” to the world:
With 30 “Hellos,” a three-second glimpse of the product and a notation that it was coming in June, the iPhone had everyone hooked. Americans may not at that point fully have known why, but they knew that they wanted it.
And on June 29, 2007, we finally got it. Well, some of us did — mostly those who were willing to sleep on the sidewalk outside an Apple Store got it on day one. But over the course of the next ten years, almost everyone got an iPhone — or one of the veritable army of other smartphones that look an awful lot like it.
Changing the World
In 2007, the first version of the iPhone was very different from the standard issue smartphone over 80 percent of Americans carry in their pockets (and over 70 percent of the planet are forecasted to carry by the end of 2020). There was no App Store or front-facing camera; streaming video was not an option. Texting a photograph wasn’t even possible. When the first version of Apple’s App Store launched in 2008, there were only 500 apps in it.
Flash forward 10 years, and there are 2.1 million apps in the Apple App store, not to mention the additional 3.4 million in competitor Google’s Play store. App Annie expects global app usership will double to 6.3 billion people in the next four years and that the average app spend — including app-store purchases, advertising spend and, most importantly, commerce — will increase from around $379 per person today to $1,008 in 2021.
The big driver of that spend according to App Annie? Mobile commerce — by a lot.
Mobile commerce — defined as the purchase of goods and services through mobile apps — represented 90 percent of the total app economy in 2016 and will represent 95 percent in 2021. That’s an estimated $1.3 trillion in estimated value for global mobile commerce today — and an estimated $6 trillion in value four years from now in 2021. And that growing spend, apart from being visible by the numbers, is also visible in falling foot traffic to physical retailers, as consumers are increasingly preferring to shop (and browse and price compare) with their phones, as opposed to physically appearing at the mall.
The iPhone has more than changed the way we shop, it’s kicked off a major sea change in how we work. The gig economy, which was largely non-existent a decade ago, now employs 4.1 million Americans and is powered by smartphones.
We even take pictures differently now than we once did. Freed from the shackles of paying for film (and with countless opportunities to display our lives on mobile social media platforms), people worldwide will take 1.2 trillion photographs this year on Earth; 85 percent of them will be taken on smartphones.
In short, a lot of products come onto the market with big claims about changing the world. The iPhone is one of the few in history that actually lived up to the hype. As it turns out, Steve Jobs was only partially right in his iPhone introduction — it certainly was an iPod, internet communicator and phone all in one, but it was also a lot more.
It was also the beginning of a new era in American commerce.
That’s the last 10 years. But, of course, here at PYMNTS we’re always interested to know what’s next.
So we did what all smart people do when they want to see the future.
We asked a Magic 8 Ball.
Just kidding — though we do have one, and it is a lot more accurate than you might think.
No, we asked a few payments and commerce experts to give us their guidance on the story so far, and what they think is yet to come.
And, we got some interesting answers.
Khalid Fellahi, SVP, Western Union Digital
In the last 24 hours, I have used my iPhone to pay for my parking (PaybyPhone), an upgrade for my flight (United App), to recharge my car at the airport (ChargePoint), for transportation, my lunch (UberEATS), a couple of one-click buys for my vacation on Amazon and last but not least, to send some immediate cash via the Western Union mobile app to my daughter who had an urgent need to buy some “incredible” item at a flea market in London.
Apple created a movement that spanned across OS platforms toward truly consumer-friendly smartphones, where experience was re-imagined with “simplicity” in mind. The iPhone platform has enabled an incredible number of innovations that have made payments easier and more secure.
It has paved the way for a mash-up of processes to work behind the scenes to drive a seamless experience — whether that is compliance, payments, personal identification, personal preferences, aided product and service journeys, real-time updates and service fulfillment based on the customer-driven time preferences — instantaneous or otherwise.
Looking at current trends, with the smartphone becoming more and more a personal concierge, I expect deeper integrations with Siri (and its cousins Alexa, Cortana, etc), chatbots and others that may follow with commerce and payments. Biometrics, device features will help secure transactions for payments and multi-form factor transactions will be common. Devices will need to stay connected, and Apple Pay (or other similar mobile pay applications) seems an interesting conduit for that.
Daniel Kornitzer, CPO, Paysafe
Apple’s achievement is nothing short of spectacular. They entered an industry where they had no prior experience and that was dominated by the then-giants of Blackberry — the inventors of the smartphone — Motorola and Nokia, etc. They then went on to basically ‘own’ it, along with Android/Google. Having redefined the user experience in mobile, the iPhone was then the catalyst for a brand new ecosystem for apps, with the ability to charge accounts and bring hundreds of millions of consumer cards on file.
On the heels of this massive market disruption, Apple Pay — both POS and in-app (later in-browser, too) — was then launched, effectively leading the way for biometric-enabled mobile wallets.
I believe Apple Pay — and the other mobile wallets such as Android Pay, Samsung Pay, etc — are the natural evolution of PayPass/payWave, allowing biometrics to secure larger-value transactions and to essentially bring convenience and speed to the consumer. In fact, in countries where NFC cards are ubiquitous, tap-to-pay has become extremely popular, but usage tends to saturate due to limits on transaction values. Ultimately, the value proposition needs to be underscored by a killer convenience factor: something that a bank card really can’t do. I think this will take several years to play out, although there are positive signs for the future for mobile wallets in general.
Jeremy Gumbley, CTO, Creditcall
A great but shaky start [for Apple Pay] mainly due to the lack of points of acceptance in certain geographies. For me, the killer use case has always been in-app payment. It’s clean, efficient and doesn’t add massive friction to the checkout process. The implementation of the contactless wallet is often fiddly and sometimes has a mind of its own, mainly due to touch lag — the lag between touching and something happening.
I expect to see in-app payment in common apps will increase hugely over the coming years. I would also expect that Apple will embrace other forms of biometric authentication in line with the trajectory of the EMV standard. There is also a potential for Apple to adopt other alternative payment methods too. It is quite probable that payments will end up in their Car Play and Home offerings.
Melissa Lowry, VP of Brand and Marketing, Early Warning
The iPhone has dramatically changed the way people interact with their phones. First, consumers had access to information at any time, and then they were able to make a purchase within a few taps. This made the iPhone app ecosystem successful as it allowed businesses to connect with consumers anytime, anywhere, outside of a physical retail environment — also impactful to how financial institutions connect with their customers. For example, we are already starting to experience the next wave of innovation for mobile banking apps in the area of payments, where digital transactions are replacing cash.
Key to this transition will be enabling a convenient user experience while reducing risk of transactions by leveraging device, network and behavioral data.
Bill Lodes, EVP, Business Development and Strategy, First American Payment Systems
Overall, the Apple iPhone has changed our social behavior since its launch 10 years ago. People’s lives now revolve around their phones for communication, knowledge, directions, music and, most recently, to make a payment via Apple Pay. They have focused on enhancing the customer experience, and adding payments is an extension of that strategy. The launch of Apple Pay and the continual enhancements made to the iPhone has really changed the landscape by which we look at payments today. When we look at consumer transactions now, we have to account for the fact that there might not be a physical wallet anymore with credit cards, but a phone that is facilitating all payment transactions via secure, biometric technology.
Looking to the future, there are many opportunities for extending the iPhone’s payments and commerce capabilities. Apple is continuing to enhance and change the customer experience when it comes to making users lives simpler. They are consistently pushing the envelope when it comes to commerce, which now incudes in-app purchases, additional partnerships with financial institutions and future biometric payment methods via a phone, watch, in-home devices or future products. People will be buying more goods and services on their phones and connected devices then ever before thanks to these capabilities over the next several years.
John Gessau, Director, Mobile Product Management, ACI Worldwide
It’s been a period of measured engagement. Apple held back in the hype cycle of Google Wallet and Softcard and some of the early NFC and HCE implementations and then entered with a solid and elegant solution.
Despite muted initial adoption by consumers of Apple Pay, I expect Apple will continue to increase their offering — strengthening the capabilities of both iPhones and iPads to support consumer payments on all channels, as well as investing in enhanced value-added service integration. And I anticipate they will make a play in offering merchant-driven payment acceptance, opening opportunities to add further value through strategic partnerships.
Richard Steggall, CEO, Urban FT
As an industry, payments is quick to resort to hyperbole and claim that this or that permutation is a “disruptor” — when, in reality, very little of what’s new is truly disruptive. The iPhone, however, is one of those rare innovations that qualifies as a true disruptor for payments and commerce.
Putting aside the argument of whether iPhone is the best smartphone, the fact is the iPhone (1) moved mobile wallets from theory to reality and motivated others — for example, Samsung and Android — to jump into the game; (2) spurred the growth of m-commerce (What would Amazon look like without consumers ordering on their iPhones?) and (3) facilitated the rapid adoption of mobile banking. Would those advances have happened without the iPhone? Maybe. But, for me, it’s clear that in its 10 years of existence, iPhone has pushed payments and commerce faster and further than any other single innovation.
Anyone who predicts what payments and commerce will look like 10 years from now isn’t paying attention to what’s happened in the past 10 years. I dare say no one in 2007 could have predicted their current state. And, if you believe — as I do — that innovation and its applications are growing exponentially, it would be foolhardy to even try to guess. The only thing I’m sure of is that in 10 years, payments and commerce will look nothing like they do today, and something that hasn’t yet been invented will be the catalyst in shaping the future.
Apple, under Steve Jobs, produced an extraordinary innovation that changed the world. But Apple’s next decade will likely look a lot different than its first. The iPhone was an innovation — and the App Store became the foundation for entirely new ways to create and strengthen relationships between merchants and consumers, businesses and businesses and people to other people. Apps on mobile devices can send money to friends, order pizza for delivery, allow the pizza delivery guy to accept a digital payment when he comes to your door, order an Uber, rent an Airbnb, do banking, pay bills, check out in a store, track and use rewards and coupons. All offered by businesses, in many cases that were conceived and born after the iPhone came into the world. And apps, in all cases, that now live in lots of different places, too: Android devices, the mobile web, as skills in Alexa or Google Home.
The next decade for Apple will be defined by its ability to produce that “next big thing” that is the “iPhone + + +.” The iPhone is a tough act to follow, and trying to outdo one of the greatest innovations in the world every two years is a very tough thing to do and sell it at scale. Especially in a world where apps, and skills, can live anywhere that a consumer wants to do business. An Apple analyst yesterday said that he predicts iPhone sales to decline in 2019. His bet is that Apple Glasses will take hold and cannibalize iPhone sales.
If wishes were horses, perhaps?