Ten years ago, Steve Jobs held up a pocket-sized slab of glass and metal to an audience of thousands and declared: "Apple is reinventing the phone".

The iPhone, unveiled a decade ago tomorrow, didn't look like much, and by today's standards its abilities look decidedly basic. The Daily Telegraph described it as a "one-button device that combines iPod, internet and a phone... can screen television shows and films, take photographs with a 2 megapixel camera, browse the internet, send emails and text messages".

At the time, however, the iPhone was a revelation. Touchscreens, internet browsers and music players had all been included on mobile phones before, but never with the grace and ease-of-use that Apple's device allowed.

By the time it was released in the UK later in November of that year via an exclusive deal with O2, Apple had sold a million of them. The Telegraph's reviewer, dubbing it the "Jesus phone", said it was "at once breathtakingly simple and gloriously clever", even if, as she noted, it lacked a 3G connection.


The iPhone kicked off the smartphone revolution: the biggest boom in technology since the dotcom days at the turn of the century. But just as the frenzy around internet companies collapsed in on itself in 2000, experts fear that the smartphone's golden era is ending, even if a repeat of the previous crash is unthinkable.

The new era came quicker than anyone had expected. One iPhone begat another, and another. Apple added sharper and bigger screens, better cameras, new designs and improved software.

Even amid the biggest financial crisis since the Great Depression, the iPhone proved to be recession-proof. In 2009 Apple overtook Nokia as the world's most profitable mobile phone maker and then again in 2011 as the world's biggest smartphone seller by volumes.

The iPhone had blown away the competition - Apple claimed its software was five years ahead of anything else available - but the competition did not stand still. Soon a slew of other devices running Google's free Android software, made by the likes of Samsung, HTC and Motorola, were on the market.

Apple derided them as copycats (Jobs declared Android a "stolen product") but the proliferation of cheap smartphones that the software allowed turned the mushrooming smartphone market into an explosion. In 2010 worldwide sales of smartphones grew by 76 per cent, a boom that would continue for several years.

Whole industries - social media, music streaming and mobile gaming - as well as multibillion dollar companies such as Uber and Snapchat have been built on a product that barely existed a decade ago, while those that have failed to adapt have diminished.

Smartphone sales had surged to 1 billion a year by 2013, and 1.3 billion the year after, but in 2015, growth in worldwide shipments fell from 28 per cent to 10.4 per cent, according to researchers at IDC. They estimate that shipments last year were 1.45 billion - barely more than in the previous year - and that growth will be slow again in 2017.

Some manufacturers have seen dramatic rises and falls. HTC, which made the first Android phone in 2008, is now making heavy losses. Amazon released a phone to great fanfare in 2014, but discontinued it a year later. Google paid US$12.5 billion ($18b) for Motorola in 2012; two years later it sold out for less than US$3b ($4.3b).


There were other casualties. Nokia's failure to keep up with Apple and Android cost it dearly: In 2011 its then chief executive Stephen Elop told staff they were "standing on a burning platform" and radically needed to change; two years later Nokia sold its mobile phone division to Microsoft, which was itself paranoid about missing out on the mobile revolution (Microsoft has now all but closed the division, its smartphone ambitions cut back drastically).

BlackBerry once appeared all-conquering but the iPhone sent it into a slow and painful decline. The smartphone era's crowning moment came in 2011 when Apple's market capitalisation overtook ExxonMobil, making it the world's biggest company.

But even the biggest players have not been without their challenges. Sales of the iPhone, the device that changed the market, have fallen in each of Apple's last three quarters, and the company reported its first fall in annual profits in a decade and a half last year.

Samsung, which surpassed its American rival as the world's biggest smartphone seller in late 2011 and has stayed there since, has fared little better. Its most recent flagship phone, the Galaxy Note 7, plunged the company into crisis when faulty handsets were found to explode, forcing Samsung to recall the phone twice and wiping billions off its value.

Three years ago, Samsung and Apple accounted for half the market between them; it is now less than a third. The major reason for slowing growth in smartphone sales, says Ranjit Atwal, a research director at Gartner, is that the market grew quicker than anybody had expected.

"The transition [from basic phones] into smartphones has been pretty dynamic over the last three or four years, both in the mature markets and China and other emerging markets," he says. "People buying smartphones for the first time are trailing off, there is now saturation in terms of people that can afford to buy phones."

However, there is also a feeling that established smartphone owners are becoming less inclined to upgrade as the innovation of previous years tails off. The second iPhone made leaps such as 3G connections, GPS and the App Store, and later models made radical design changes, introduced high-definition screens and allowed video calls.

A customer sets up his new iPhone 7 Plus, right, as he switches from an iPhone 6 at an Apple Store. Photo / Bloomberg
A customer sets up his new iPhone 7 Plus, right, as he switches from an iPhone 6 at an Apple Store. Photo / Bloomberg

More recent changes have been less obvious, and the iPhone's design has stayed the same for three successive years. Progress has instead been at the bottom end of the market, in terms of the spread of astoundingly cheap but high-quality phones.

Devices with the power of last year's high-end phones, made by manufacturers in India and China willing to accept cut-throat margins, are available at a fraction of the price of the high-end Apple and Samsung devices, meaning consumers have less reason to upgrade as they might with a car. "Historically the expectation was that individuals would upgrade, but in the basic segment those phones have become much better," says Atwal.

As a result, consumers are upgrading less often, and in some Western markets, sales have declined. It is hardly a crisis - Apple sold its billionth iPhone last year - but not what investors might have hoped for.

The threat is now that as consumers upgrade less often, the smartphone's trajectory comes to mirror that of the PC, where slower replacement cycles and diminishing improvements in technology, have seen sales fall for five consecutive years.

To avoid such a fate, manufacturers must simply remain desirable by making their next phones significantly better than what came before - a feat more easily said than done. The improvements consumers demand most, such as improved batteries, have proved difficult to crack.

Failing that, many companies have thrown themselves into new markets. HTC's virtual reality headset has won significant acclaim and Samsung has positioned itself at the heart of the "internet of things" - connected household objects such as fridges and dishwashers.

Apple, meanwhile, has extended into wearable technology with its smartwatch, and is relying on booming software sales for growth - last week it said revenues from the iPhone App Store were up 40 per cent.

But none of these areas are likely to the smartphone's success. The fact may be that the revolution Jobs began a decade ago is impossible to replicate.