"We want to capitalize on our first-mover advantage," Apple COO Tim Cook told analysts and media during an April 20 earnings call, discussing his company's decision to "aggressively" price its tablet PC.
That comment came soon after the iPad's release, but it also neatly summarized Apple's broader strategy throughout 2010: Unlike tech companies such as Microsoft, which built their empires on being "fast followers" and capitalizing on emerging trends, Apple seemed determined to push into new territory.
The prime example of that was the iPad. After months of speculation, Apple CEO Steve Jobs took a San Francisco stage Jan. 27 to formally unveil the 9.7-inch touch-screen device, which included a 1GHz A4 proprietary processor and a choice of WiFi-only or 3G-enabled connectivity. Analysts immediately began debating the iPad's potential impact on the market, and its sales prospects in both the short- and long-term.
From the outset, Apple seemed to bet that third-party developers would create the apps that would make the iPad a truly robust competitor in areas such as gaming, e-readers and productivity. At the same time, analysts questioned whether a bulked-out tablet would cannibalize the market for lower-end netbooks and mobile devices.
By the time the iPad was released in early April, that question remained unanswered. "U.S. consumer PC, and especially notebook, growth decelerated in January when Apple introduced the iPad and again in April when the iPad launched," Katy Huberty, an analyst with Morgan Staney, wrote in a May 6 research note. "Given the corresponding increase in [average selling prices] in the market, we believe much of the demand shortfall came from netbooks and low-cost notebooks."
Even as the iPad sold roughly 1 million units in its first month of release, Apple's aggression in the mobile-devices category-particularly mobile apps-led to antitrust rumblings. On May 3, a New York Post story suggested that the company's mobile applications policy was being scrutinized by either the Department of Justice or the Federal Trade Commission. According to an unnamed source for that article, the government was looking into whether excluding applications built with tools such as Adobe Flash CS5 violated other smartphone platforms' ability to stay competitive, given the popularity of the iPhone OS.
The Great Gizmodo Caper of 2010
The iPad continued its spectacular sales rate, and Apple geared up for the annual summer release of its next-generation iPhone. Before the company could unveil the device in one of its carefully orchestrated events, though, corporate disaster struck in the form of a careless moment in a northern California bar, where an Apple software engineer celebrating his birthday reportedly left a prototype of Apple's upcoming smartphone.
Gawker Media, parent company of tech blog Gizmodo, supposedly paid a source $5,000 for the device, and then gave it a very public dissection online April 19. Features included a front-facing camera, high-resolution display, and secondary mic for noise cancelation. Having had its way with the hardware, Gizmodo's people then returned it to Apple in response to a legal request.
Case closed? Not quite. On April 23, the Superior Court of San Mateo issued a warrant to search Gizmodo editor Jason Chen's home and vehicles for digital property associated with the prototype iPhone. "My wife and I drove to dinner and got back at around 9:45PM," Chen wrote in an April 26 statement posted on Gizmodo. "When I got home I noticed the garage door was half-open, and when I tried to open it, officers came out and said they had a warrant to search my house and any vehicles on the property -in my control.'"
The raid on Chen's home was conducted by members of California's REACT (Rapid Enforcement Allied Computer Team). Gizmodo's lawyers argued that the search warrant was invalid, on the grounds that Chen's computers contained data about sources and were thus protected from seizure under Section 1070 of the Evidence Code. Chen eventually had his equipment returned.
A few weeks after the smartphone loss, Gizmodo's mega-traffic posting, and the raid on Chen's home, the Vietnamese online forum Taoviet posted images and video of another alleged iPhone prototype. When the iPhone 4 was formally unveiled, its hardware ended up retaining few secrets: there was, indeed, a front-facing camera for video conferencing, along with a larger battery. The iOS4 operating system, however, boasted some all-new tricks, including multitasking. Design-wise, the smartphone featured two glass panels sandwiching an exterior antenna rim-and with that particular detail, Apple's troubles began.