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The day the first iPhone was introduced, Apple’s lead engineers were in the audience of San Francisco’s Moscone Center, drinking heavily.
Each time a portion of the 90-minute presentation went off without a visible hitch, the person responsible for the featured technology would drink from a shared flask of Scotch.
As Fred Vogelstein tells the story in Dogfight: How Apple and Google Went to War and Started a Revolution, the engineers were exhausted and terrified and the iPhone was nowhere near ready for spotlight.
It would crash without notice or reason. It randomly dropped calls. On many units—only about 100 had been created—there was a noticeable gap between the screen and the plastic edge. The engineers had even hard-coded the demo devices (Jobs secretly had several on stage with him, so that if one crashed, he could discreetly swap it for another) to show a five-bar cell connection no matter what.
But Jobs had set his mind on what he wanted and when he wanted it. So he willed and bullied and negotiated and cajoled his development team until it became reality. And it was an instant success.
“People were always saying, ‘Wouldn’t it be nice if my iPod and my phone could be one device?’ and then Steve Jobs was on stage introducing it,” said Jack Narcotta, an analyst with Technology Business Research (TBR). “At a time when BlackBerry was trying to figure out how to be a little less square, Apple comes out with this thing that’s all glass and no keyboard.”
The iPhone was by no means the first smartphone, and neither was it the first phone with email or an Internet connection or access to music or applications. But it did all of these things more simply and more attractively than any previous mobile phone. It was designed by designers for consumers, instead of by engineers for business users, and it brought pleasure to the experience of interacting with a device that had generally been treated as a work tool.
“Before, when you’d use email, the calendar, the browser on a phone, you would go in, get the information you needed and get out as fast as you could,” Jan Dawson, principal analyst with Jackdaw Research, told eWEEK.
“Apple made music an immersive experience. It made the Web an immersive experience. The iPhone made you want to spent time in the personal part of your life with your smartphone,” Dawson said.
For these reasons, Jan. 9, 2007, is a dividing line in the world of mobile phones. There is everything that came before it—Motorola’s first cell phone call in 1974, Gordon Gekko’s DynaTAK 8000X in 1983, the Symbian-running Nokia 9000 Communicator in 1996 and the first BlackBerry with a fully functioning phone in 2003—and everything that happened after Jobs took the stage at Macworld 2007 and announced: “Today Apple is going to reinvent the phone.”
Seismic Changes
At the time of the iPhone’s introduction, Nokia, Palm, Samsung, BlackBerry and others were already selling smartphones, but these were devices that came with detailed manuals that people tended to dutifully read so they could understand how to use their many features. The iPhone was more intuitive and shipped with a brief tip sheet.
eWEEK at 30: Apple Redefined the Smartphone as a Fun-to-Use Device
Its design was also revolutionary. While touch-screens weren’t new to people, the idea of replacing the stylus with one’s finger, along with Apple’s multi-touch technology, was a new approach.
“There was little-to-no learning curve,” said Narcotta. “It was made to appeal to normal people … right down to the packaging, which was something of an innovative step. Opening the box, as corny as it sounds, was like being a kid on Christmas morning. It was an experience. It made you excited about using it.”
Narcotta puts the introduction of the iPhone in league with electricity or the Model T.
“It was that kind of seismic change. It completely affected everything,” he said. “The phone on my desk right now is a direct descendant of the iPhone. Without the iPhone, this phone wouldn’t have the user interface or the app system that it does. It wasn’t just hardware that Apple changed, it was the whole way of approaching a product.”
Ezra Gottheil, a principal analyst with TBR, also nodded to the Model T.
“Steve Jobs brought to smartphones what Henry Ford brought to automobiles,” said Gottheil. “There were plenty of cars before the Model T, but they were hobbyist devices—you needed to know how to keep one going.”
Today, of course, anyone can drive a car and anyone can use a smartphone.
iPhone Far From Perfect
The first iPhone could only interact with Web-based apps—Apple didn’t introduce the App Store and the concept of letting users download third-party apps until a year later, with its introduction of the iPhone 3G. (The App Store, said Dawson, “cemented Apple’s advantage in a way that hasn’t completely been overcome.”)
As for the features that other smartphones already offered but that Apple left out, David Pogue offered a long list in his June 27, 2007, review in The New York Times.
“There’s no memory-card slot, no chat program, no voice-dialing. You can’t install new programs from anyone but Apple; other companies can create only iPhone-tailored mini-programs on the Web. The browser can’t handle Java or Flash, which deprives you of millions of Web videos,” Pogue wrote.
“The two-megapixel camera takes great photos, provided the subject is motionless and well lighted,” he continued. “But it can’t capture video. And you can’t send picture messages (called MMS) to other cellphones.”
There was also, for a shockingly long time, no cut-and-paste feature.
“What Jobs was very good at,” said Gottheil, “was understanding what would be good enough to win. When it would be light enough. When it was thin enough. When the battery life was good enough. … and then how to pull together the ecosystem to make it go over and go over big.”
Jobs’ other “great, great strength,” adds Gottheil, was his ability to negotiate with third parties.
In Dogfight, Volgelstein tells a story of Corning CEO Wendell Weeks taking a meeting with Jobs and telling him about a super-hard glass the company had developed for fighter-jet cockpits, but that the Defense Department ultimately never used. Corning called it gorilla glass.
“Weeks told Jobs’ biographer Walter Isaacson that he remains amazed at what Jobs convinced him to do,” wrote Vogelstein.
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.'”
With the exclusive backing of AT&T, the starting price for the iPhone was $499 with a two-year contract.
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.
eWEEK at 30: Apple Redefined the Smartphone as a Fun-to-Use Device
When they saw the iPhone, they scrapped everything.
The phone Google was planning to introduce, code-named Sooner, could do a host of things the iPhone couldn’t—including connect to a store full of mobile applications and run software that could also run on any other smartphone, tablet or yet-to-be-created device. But compared with the iPhone, it was ugly.
“[Andy] Rubin and his team, along with partners HTC and T-Mobile, believed consumers would care more about the great software it contained than its looks. This was conventional wisdom back then,” wrote Vogelstein.
The iPhone proved that people wanted both. Further, it made them realize that if something worked well but wasn’t pleasurable to use—even if something complex by nature felt complex to use—that was bad design.
Products like the Nest thermostat are the result of Apple teaching people to think: I’m having a bad experience; this could be done better.
“That wasn’t just the iPhone. Apple established that first with the Apple II. That was Jobs’ passion, that technology should be the servant, not the master,” said Gottheil.
“Think of the iPod. There were portable MP3 players before the iPod, but you had to know how to convert your CDs to MP3s and all that. And Jobs said no, it’s absolutely not the user’s job to have to figure out how to operate it.”
Sustaining the Apple Mojo
With time, the iPhone’s growth numbers have slowed, in part because of Samsung and in part because there are only so many people on the planet—or at least so many people with the income to support an iPhone.
Jobs’ successor, Tim Cook, has said he expects China to become Apple’s number-one market. “It’s a watershed day,” Cook said in a televised Jan. 15 interview, as the iPhone 5S became available to China Mobile’s 760 million customers.
“Apple makes compelling products, with high prices and good margins. But that’s not a recipe for enormous market share,” said Jackdaw’s Dawson.
That recipe may also not hold up in China, where “it’s a completely different set of demographics,” says TBR’s Narcotta.
“You can see the challenges they’re facing, when Apple has a $700 device against a $200 Samsung device. Apple has to somehow transfer its caché and mojo to entice customers into their ecosystem. But is it worth the premium? That’s ultimately the question,” Narcotta continued.
In addition to Samsung, Apple faces a formidable rival in Lenovo, which is currently the second-largest smartphone seller in China. On Jan. 29, Lenovo expanded its global reach by purchasing Motorola Mobility from Google.
“Even without Motorola’s relationship and patents, Lenovo—well, let me put it this way,” said Narcotta. “We have these graphs that show year-to-year growth comparisons [in China], and Lenovo is what I call the graph wrecker. There’s this tight group that has consistent growth, and then there’s Lenovo’s way over on the right, with like 400 percent growth, Narcotta observed. “Their brand strength is pretty amazing.”