A digital banking junkie
reviews The One Device

OneDevicesmallThe One Device: The Secret History of the iPhone Brian Merchant. New York: Little, Brown, 2017

NOW AND THEN along comes an innovation that sends the future careening down a path no one anticipated. Gutenberg’s movable type led to education and human rights advances and correlates with diminishing wars between major powers. Ford’s mass-produced, affordable automobile changed the landscape and the economy by making possible much that we now take for granted, such as motels, gas stations, paved roads, highways, neighborhood shopping centers, a freeway system, the tire industry, and suburban living. Farnsworth’s newfangled image dissector led to billion dollar industries from TV manufacturing to broadcast and cable networks to Netflix, and helped reshape societies by bringing world events into living rooms. 

iPhone could well claim the title of most-recent future-changer. Smartphones based on its design have attained such ubiquity that it’s a little startling to remember that 2017 marks only its ten-year anniversary. Fittingly and certainly not coincidentally, author Brain Merchant’s The One Device: The Secret History of the iPhone has been recently published to no shortage of positive reviews. Why am I offering one more ? I wanted to take a look from the vantage of the payments industry. 

I was prepared for the book to test my stamina as a reader. One does not expect to find a page-turner in the biography of a device. You cannot imagine how pleased—and relieved—I was to discover that Merchant has done, if not the impossible, the highly improbable. The One Device is painstakingly thorough, intelligently organized, and, incredibly, a compelling read. 

Steve Jobs introduced the iPhone at an Apple press conference in January of 2007. Its design preemptively defined the smartphone, forcing Google to scrap the design it was ready to bring to market and return to the drawing board.

Though AOS devices would eventually lead smartphone sales, iPhone set a standard that revolutionized, usurped, and in some cases obviated myriad products and services. Collateral damage in iPhone’s wake include landlines, calculators, cameras, printed maps, publishing, education, communication, news reporting, compasses, social interaction, election campaigns, tape recorders, and, of course, banking. 

Merchant loses no time dispelling the Lone Inventor Myth as it pertains to Steve Jobs. It was not Jobs but a clandestine group of Apple rogues who first toyed with the idea of a touchscreen device. They dubbed the project ENRI, for “Explore New Rich Interactions,” and kept it hidden from fellow employees—primarily to keep it hidden from Jobs. Depending on his mood, Jobs was known to dismiss ideas, even good ones, with a wave of the hand. Jobs in fact did dismiss ENRI with a wave of the hand when the team finally summoned the courage to show him a crude prototype. He reconsidered after a few days. At that point, in classic Orwellian fashion, it became a “fact” that a touchscreen device had been Jobs’s vision all along. Jobs truly does deserve credit, however, for later deciding that Apple’s first touchscreen product would not be a tablet but a phone. 

At and after iPhone’s launch, Jobs failed to foresee what would ultimately transform it into Apple’s crowning cash cow. He emphatically refused to allow third party apps, which he felt would sully his device. Besides, he insisted, iPhone’s “killer app” was its phone function. Market forces led Jobs to capitulate, and none too soon. “The iPhone was almost a failure when it first launched,” Merchant quotes Brett Bilbrey, now-retired head of Apple’s Technology Advancement Group. “When the iPhone was launched its sales were dismal.” Yet last year, observes Merchant, “… there were 7.4 billion cell phone subscribers in a world of 7.3 billion people.” 

What made the difference was the decision to open the app door to third party developers. The decision did more than save Apple and iPhone’s bacon. It launched a mega-industry. The Apple Store now markets over two million apps. Of those, 85 percent are games, which in 2015 accounted for $35 billion in revenue. Merchant shamelessly, in fact, almost gleefully devotes three pages to iFart as a leading indicator of third-party app potential, the digital whoopee cushion netting its developer a half-million dollars within weeks. 

As for iPhone’s killer app being its phone function, the market would soon set Jobs straight on that one, too. “If you fit the profile of the average user,” Merchant quotes technology analyst and Apple expert Horace Dediu referring to the iPhone, “then you are using it to check and post on social media, consumer entertainment, and as a navigation device, in that order.” 

Merchant also ably dispatches the “Apple invented it all” myth. Touchscreen technology began in 1960. Accelerometer technology goes back to the 1920s. For that matter, the iPhone was not the first smartphone. That honor goes to Simon, an IBM device invented by Frank Canova Jr. in 1993, which didn’t take hold. 

Merchant weaves a compelling tale, but from the perspective of a digital payments junkie The One Device comes up short. Merchant makes no mention of the revolution iPhone catalyzed in the financial services industry. Digital banking all but obviates physical banking for a consistently growing number of small businesses and consumers, especially Millennials and younger. (Fiserv researches and reports on the topic on a quarterly basis. Please refer to my articles for The Financial Brand here and here.) 

But don’t let the omission put you off The One Device. Despite its overlooking digital banking, I have five reasons for recommending it. First, it’s an enjoyable read. Second, it’s a fascinating study in how seeming instant innovations in fact stretch back decades. Third, with iPhone parts coming from all over the globe, it’s a lesson in the realities of world economics. Fourth, it’s a tour de force in the interactions of good and bad management, timing, and dumb luck. And fifth, it’s a sobering reminder that, sometimes, placing a small, rectangular object in the road will spin the future off in a new direction. 

Bankers didn’t see any of this coming when Jobs convened his press conference in January of 2007. Kind of makes you wonder what’s under our noses right now that may merit a more serious look.

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