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The story of the phone that changed the mobile world (Part 1)

Michal Ždanský
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When the first iPhone appeared at Macworld in 2007, the onlookers were in awe and a loud "wow" could be heard throughout the room. A new chapter of mobile phones began to be written that day, and the revolution that took place that day changed the face of the mobile market forever. But until then, the iPhone has been through a thorny path and we would like to share this story with you.

It all started in 2002, shortly after the launch of the first iPod. Even back then, Steve Jobs was thinking about the concept of a mobile phone. He saw many people carrying their phones, BlackBerrys and MP3 players separately. After all, most of them would prefer to have everything in one device. At the same time, he knew that any phones that would also be a music player would directly compete with his iPod, so he had no doubt that he had to enter the mobile market.

At that time, however, many obstacles stood in his way. It was clear that the phone was to be something more than a device with an MP3 player. It should also be a mobile internet device, but the network at the time was far from ready for that. Another obstacle was the operating system. The iPod OS was not sophisticated enough to handle many of the phone's other functions, while the Mac OS was too complex for a mobile chip to handle. In addition, Apple would face strong competition from the likes of the Palm Treo 600 and RIM's popular BlackBerry phones.

However, the biggest obstacle was the operators themselves. They dictated the conditions for the mobile market and phones were practically made to order. None of the manufacturers had the leeway to make phones that Apple needed. Operators saw phones more as hardware through which people could communicate over their network.

In 2004, iPod sales reached a share of around 16%, which was an important milestone for Apple. At the same time, however, Jobs felt a threat from increasingly popular phones operating on the fast 3G network. Phones with a WiFi module were soon to appear, and the prices of storage disks were falling unstoppably. The previous dominance of iPods could thus be threatened by phones combined with an MP3 player. Steve Jobs had to act.

Although in the summer of 2004 Jobs publicly denied that he was working on a mobile phone, he teamed up with Motorola to get around the hurdle posed by carriers. The CEO at the time was Ed Zander, formerly of Sun Microsystems. Yes, the same Zander who almost successfully bought Apple years ago. At that time, Motorola had extensive experience in the production of telephones and above all it had a very successful RAZR model, which was nicknamed "Razor". Steve Jobs made a deal with Zandler, with Apple developing the music software while Motorola and the then-carrier, Cingular (now AT&T), agreed on the technical details of the device.

But as it turned out, the cooperation of three large companies was not the right choice. Apple, Motorola, and Cingular have had great difficulty agreeing on practically everything. From the way music will be recorded to the phone, to how it will be stored, to how the logos of all three companies will be displayed on the phone. But the biggest problem with the phone was its appearance - it was really ugly. The phone was launched in September 2005 under the name ROKR with the subtitle iTunes phone, but it turned out to be a big fiasco. Users complained about the small memory, which could only hold 100 songs, and soon the ROKR became a symbol of everything bad that the mobile industry represented at the time.

But half a year before the launch, Steve Jobs knew that the road to mobile prominence was not through Motorola, so in February 2005 he began secretly meeting with representatives of Cingular, which was later acquired by AT&T. Jobs made a clear message to Cingular officials at the time: "We have the technology to create something truly revolutionary that will be light years ahead of others." Apple was ready to conclude a multi-year exclusive agreement, but at the same time it was preparing to have to borrow the mobile network and thus become essentially an independent operator.

At that time, Apple already had a lot of experience with touch displays, having already been working on a tablet PC display for a year, which was the company's long-term intention. However, it was not yet the right time for tablets, and Apple preferred to redirect its attention to a smaller mobile phone. Additionally, a chip on architecture was introduced at the time ARM11, which could provide enough power for a phone that is also supposed to be a portable internet device and an iPod. At the same time, he could guarantee the fast and trouble-free operation of the entire operating system.

Stan Sigman, then the head of Cingular, liked Jobs' idea. At the time, his company was trying to push customers' data plans, and with Internet access and music purchases directly from the phone, the Apple concept seemed like a great candidate for a new strategy. However, the operator had to change the long-established system, which benefited mainly from several-year contracts and minutes spent on the phone. But the sale of cheap subsidized phones, which was supposed to attract new and current customers, slowly stopped working.

Steve Jobs did something unprecedented at the time. He managed to get freedom and complete freedom over the development of the phone itself in exchange for an increase in data tariffs and the promise of exclusivity and sex appeal that the iPod manufacturer presented. In addition, Cingular was to pay tithes on every iPhone sale and every monthly bill of a customer who purchased an iPhone. So far, no operator has allowed anything similar, which even Steve Jobs himself saw during the unsuccessful negotiations with the operator Verizon. However, Stan Singman had to convince the entire Cingular board to sign off on this unusual contract with Jobs. The negotiations lasted almost a year.

First part | Second part

Source: Wired.com
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