WIRED MAGAZINE: ISSUE 16.02
The Untold Story: How the iPhone Blew Up the Wireless Industry
By Fred Vogelstein Email 01.09.08
In 2002, shortly after the first iPod was released, Jobs started thinking about developing a phone. He saw millions of Americans lugging separate phones, BlackBerrys, and — now — MP3 players; naturally, consumers would prefer just one device. He also saw a future in which cell phones and mobile email devices would amass ever more features, eventually challenging the iPod's dominance as a music player. To protect his new product line, Jobs knew he would eventually need to venture into the wireless world.
If the idea was obvious, so were the obstacles. Data networks were sluggish and not ready for a full-blown handheld Internet device. An iPhone would require Apple to create a completely new operating system; the iPod's OS wasn't sophisticated enough to manage complicated networking or graphics, and even a scaled-down version of OS X would be too much for a cell phone chip to handle. Apple would be facing strong competition, too: In 2003, consumers had flocked to the Palm Treo 600, which merged a phone, PDA, and BlackBerry into one slick package. That proved there was demand for a so-called convergence device, but it also raised the bar for Apple's engineers.
Then there were the wireless carriers. Jobs knew they dictated what to build and how to build it, and that they treated the hardware as little more than a vehicle to get users onto their networks. Jobs, a notorious control freak himself, wasn't about to let a group of suits — whom he would later call "orifices" — tell him how to design his phone.
By 2004 Apple's iPod business had become more important, and more vulnerable, than ever. The iPod accounted for 16 percent of company revenue, but with 3G phones gaining popularity, Wi-Fi phones coming soon, the price of storage plummeting, and rival music stores proliferating, its long-term position as the dominant music device seemed at