Back to the Future: Today’s iPhone apps mirror TV of yesteryear

Oct 29, 2009
Finance

Uncle Miltie was an app. The iPhone boom and the television boom that started in the 1940s look a lot alike. In 1948, Milton Berle’s breakthrough TV show doubled sales of television sets.  To the then-new business of TV, Berle’s Uncle Miltie was, indeed, something of an app for TV sets. What happened with TV […]

Uncle Miltie was an app.

The iPhone boom and the television boom that started in the 1940s look a lot alike. In 1948, Milton Berle’s breakthrough TV show doubled sales of television sets.  To the then-new business of TV, Berle’s Uncle Miltie was, indeed, something of an app for TV sets.

What happened with TV sheds light on the current iPhone app boom, and suggests what might come next.

Both TV and the Apple’s App Store are what I call “wrecking ball moments” in my book, Trade-Off: Why Some Things Catch On, and Others Don’t.  These moments don’t come often, but when they arrive they don’t just create a new competitor in an established market – they send a wrecking ball through the previous market and start a whole new one.

The effect is something like breaking the seal of a vacuum. Companies and entrepreneurs rush to fill a market space that had been empty – and the onslaught won’t slow until that space is developed.

In the 1930s, most consumers had essentially two choices if they wanted professionally-produced entertainment. They could go to the movies, or they could stay home and listen to radio programs like Amos ‘n’ Andy. Radio, of course, was audio-only. It had serious limitations. You might think of 1930’s radio as the equivalent of 2000’s non-smart cell phones.

In the early 1940s, television edged into the market. The first sets – like the first smart phones – had small black-and-white screens and extremely limited programming. The U.S. government didn’t set standards for TV broadcasts until 1941, so for a while no single TV could tune in all of the approximately two dozen experimental TV stations.

Plus, TV sets cost a lot and broke down often. Again, that sounds a lot like smart phones pre-iPhone. (Like the Treos I kept buying.)

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In the mid-1940s, finally some clever manufacturers – Zenith, Philco, Motorola – brought along TVs that made it satisfying to watch programs. The industry, with government help, agreed on a standard, which provided a platform for program development. That’s when things took off for both programmers and television makers. From 1940 to 1950, TVs made their way into only 3.8 million U.S. households, about 9 percent of all homes. More than 100 TV stations in 60 cities went on the air. By 1950, TV was so good, it not only crumbled the radio industry – it started eating into the movie business.

Nine percent is, interestingly, about the iPhone’s share of the smart-phone market when the App store launched in 2008.  Before that, the mobile industry hadn’t agreed on a standard for applications – Apple leapt out and created a broad enough platform to generate a market for programmers. The programmers rushed in, and now offer more than 100,000 apps

Much like Milton Berle driving TV sales in the 1940s, today’s mobile apps are driving iPhone sales. Back then, people wanted to see Uncle Miltie’s outrageous character, so they bought a TV. The gee-whiz of the iPhone’s form factor and hardware has worn off. These days, the excitement isn’t about what the iPhone is, it’s about what the iPhone can do — i.e. the apps. Consumers want the location-based restaurant guides, Shazam and Pandora. The path to getting those apps is to buy an iPhone.

This is where the wrecking ball comes in. TV apps — Uncle Miltie, I Love LucyThe Honeymooners — wrecked the existing home entertainment market. Video programs didn’t just compete against audio programs — video just about wiped out audio programs. All of the action moved to video programming. And, very quickly, all of the public’s excitement was about the shows, not the TV sets.

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Today’s rich iPhone-style mobile apps are about to wreck the pre-existing mobile market. All of the action will move to mobile apps.  

The iPhone may not be the only future

But here’s where history suggests that things could get challenging for Apple.

The public’s excitement is shifting to the apps, not the phones. The tail is about to wag the dog. As with TV sets, the value is about to leak out of the hardware and into the programming. In that scenario, if someone – like Google with Android – creates a bigger and better universe of apps, that’s more of a danger to the iPhone than a competitor making a better piece of hardware.

Plus, other developers and platforms will allow product marketers to sell goods through free apps, a move Apple recently approved. As other platforms follow this lead, consumers will pay attention to those smart phones.

Of course, people still crave a great TV — look at all the money spent on big flat-screen sets. And people will always crave the latest, coolest smart phone. But the thrill is in what you can watch on the TV and what you can do on the phone.

If Uncle Miltie is any indication, in the end the apps steal the power.

Kevin Maney is a journalist and author who has been writing about technology for nearly two decades. His latest book, out in September, is Trade-Off: Why Some Things Catch On, and Others Don’t. Check it out here.

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