eWEEK at 30: Apple Redefined the Smartphone as a Fun-to-Use Device
"Corning took a factory in Harrodsburg, Kentucky, that had been making LCD displays and converted it … 'We produced glass that had never been made. We put our best scientists and engineers on it and we just made it work,' Weeks said." Jobs also talked AT&T (formerly Cingular) into offering the iPhone and eventually also heavily subsidizing it. Jim Ryan, a Cingular executive who'd been "assembling complex carrier deals for nearly a decade" told Vogelstein that negotiating with Jobs "taxed every ounce of his negotiating skills." Jobs, said Gottheil, "needed one big contract. It could have been with any carrier. But, one, those guys didn't want to make themselves vulnerable to Apple and Jobs. and, two, they wanted to control the user interface that their subscribers experienced. At the time, phones had a Verizon interface or an AT&T interface, and it was always trying to sell you stuff. Jobs said, 'No, no, no. You're going to get people who didn't know they wanted a data plan to sign up for a 24-month data contract. We'll sell the extra stuff.'"The iPhone became available June 29, 2007, and in 74 days, Apple passed the 1 million sales mark. On Sept. 5, Apple announced that, to make the iPhone more affordable to more customers during the holidays, it was lowering the starting price to $399. During the fourth quarter of 2007, Apple sold 1.9 million iPhones, according to Gartner, making it the third top-selling smartphone vendor in the world and placing it behind Nokia (with 18.7 million) and Research In Motion (4 million). On June 9, 2008, Apple introduced the iPhone 3G, the App Store and a new low starting price of $199 with a new two-year AT&T contract. It was a business model that the wireless industry would only begin to shake off in 2013, when T-Mobile announced it was separating device and data plan pricing. "What I'm about to explain may seem obvious, but I'm not sure anyone fully understands the sort of tectonic and fundamental shift taking place in the tech sector with the development and fruition of the new smart phone as epitomized by Apple Inc.'s iPhone," John C. Dvorak wrote in MarketWatch on Sept. 26, 2008. Microsoft's smartphones were "nothing really unique." They were phones first and computers second. Apple, however, "flipped the model and centered the buzz around the oddball but often practical applications that run on the iPhone," Dvorak continued, his volume and enthusiasm seeming to rise on the page. "The eventual market for these devices as envisioned by Steve Jobs and Apple will eventually be bigger than anything we've ever seen and should surpass the massive PC and desktop computing market before the dust settles." That prediction came true during the fourth quarter of 2010, when IDC reported that smartphone shipments reached 100.9 million, while PC manufacturers shipped 92 million units. The Apple Effect In 2005, Google had a team working on smartphone designs. By the time Jobs made his January 2007 presentation, there were Google employees who had been working "60- to 80-hour weeks for fifteen months—some for more than two years—writing and testing code, negotiating software licenses and flying all over the world to find the right parts, suppliers and manufacturers," wrote Vogelstein.
With the exclusive backing of AT&T, the starting price for the iPhone was $499 with a two-year contract.