Apple's iPhone turns 10

Apple's iPhone turns 10 Thursday, evoking memories of a rocky start for the device thatended up doing the most to start the smartphone revolution andstirring interest in where it will go from here.

Apple has sold more than onebillion iPhones since June 29,2007, but the first iPhone, which launched without an App Storeand was restricted to the AT&Tnetwork, was limitedcompared to today's version.

The business modelfor year one of the iPhone wasadisaster.- TonyFadell, iPhone developer

After sluggish initial sales, Apple slashed the price tospur holiday sales that year.

"The business model for year one of the iPhone was adisaster," Tony Fadell, one of the developers of the device, told Reuters in an interview on Wednesday. "We pivotedand figured it out in year two."

The very concept of theiPhonecame as a surprise to some ofApple's suppliers a decade ago, even though the company, led by CEOSteve Jobs, had already expanded beyond computers with theiPod.

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"We still have the voice mail from Steve Jobs when he calledthe CEO and founder here," said David Bairstowat Skyhook,thecompany that supplied location technology to early iPhones. "Hethought he was being pranked by someone in the office and ittook him two days to call Steve Jobs back."

The iPhone hit its stride in 2008 when Apple introduced theApp Store, which allowed developers to make and distribute theirmobile applications with Apple taking a cut of any revenue.

Ten years later, services revenue is a crucial area ofgrowth for Apple, bringing in $24.3 billion in revenue lastyear.

New model

Fans and investors are now looking forward to the 10thanniversary iPhone 8, expected this fall, asking whether it will
deliver enough new features to spark a new generation to turn toApple.

That new phone may have 3-D mapping sensors, support for"augmented reality" apps that would merge virtual and realworlds, and a new display with organic LEDs, which are light andflexible, according to analysts at Bernstein Research.

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A decade after launching into a market largely occupied byBlackBerry and Microsoft devices, the iPhone now competeschiefly with phones running Google's Android software, which isdistributed to Samsung Electronics and other
manufacturers around the world.

Even though most of the world's smartphones now run onAndroid, Apple still garners most of the profit in the industry
with its generally higher-priced devices.

More than two billion people now have smartphones, accordingto data from eMarketer, and Fadell, who has worked for bothApple and Google parent company Alphabet, sees that as the hallmark of success.

"Being able to democratize computing and communicationacross the entire world is absolutely astounding to me," Fadellsaid. "It warms my heart because that's something Steve tried todo with the Apple II and the Mac, which was the computer for therest of us. It's finally here, 30 years later."