Category: Science & Technology Key figures: Steve Jobs (Apple CEO); Tony Fadell (VP iPod); Scott Forstall (VP iPhone Software); Jony Ive (SVP Industrial Design)
Summary
On January 9, 2007, Apple CEO Steve Jobs unveiled the original iPhone at the Macworld Conference & Expo in San Francisco’s Moscone West convention center. Jobs described the device as a combination of “a widescreen iPod with touch controls,” “a revolutionary mobile phone,” and “a breakthrough Internet communicator,” and declared that Apple was “five years ahead of any other mobile phone.” The announcement was made without physical distribution to press or developers, and the device was not available for purchase until June 29, 2007.
The first iPhone went on sale in the United States on June 29, 2007, at 6:00 p.m. local time, with Apple stores closing at 2:00 p.m. to prepare for the launch. Thousands of customers had lined up at Apple retail stores and AT&T outlets nationwide. The device was offered in two configurations: a 4 GB model at $499 and an 8 GB model at $599, both requiring a two-year contract with AT&T (then Cingular Wireless), the exclusive U.S. carrier.
The iPhone’s hardware represented a significant industrial design departure: it eliminated nearly all physical hardware buttons in favor of a 3.5-inch multi-touch LCD touchscreen (480×320 pixels), used a glass screen (substituted for plastic six weeks before launch), and ran a version of Apple’s OS X operating system. It included a 2-megapixel rear camera, Safari web browser, Google Maps integration, and visual voicemail. It did not initially support third-party native applications; Apple encouraged web-based apps instead, before launching the App Store in July 2008.
Apple sold 270,000 iPhones in the first week, reaching 1 million units within 74 days and approximately 1.4 million by November 2007. In September 2007, Apple reduced the 8 GB model’s price to $399 amid criticism that early adopters had overpaid. The original iPhone was discontinued on July 11, 2008, when the iPhone 3G was released, with approximately 6.1 million total units sold.
Development History
Project Purple
The iPhone’s development began in 2004 as a highly classified Apple initiative codenamed “Project Purple,” conceived partly as a response to discussions between Steve Jobs and several Apple board members — including former Google CEO Eric Schmidt — about the threat that Microsoft’s planned Origami touchscreen tablet might pose to the iPod market. Jobs redirected an existing tablet project into a phone form factor. The core engineering team, drawn from Apple’s iPod division under Tony Fadell and from the software group under Scott Forstall, worked in a secured building on Apple’s Cupertino campus where windows were covered and access was restricted even from other Apple employees.
The central design challenge was the interface: existing smartphones used either a stylus (Windows Mobile, Palm OS) or a physical numeric keypad (most Nokia and Motorola devices). Apple’s hardware research team, working with multitouch display technology developed in collaboration with Fingerworks (a startup Apple acquired in 2005), built a capacitive touchscreen sensitive enough to respond to finger presses rather than a precision stylus. Jony Ive’s industrial design group insisted on a glass display rather than the plastic screens that had been industry standard, both for scratch resistance and for the quality of the touch experience.
The phone Jobs unveiled in January 2007 still carried a plastic screen; weeks before the June 29 release, after the prototype scratched in his own pocket, Jobs ordered a switch to a scratch-resistant aluminosilicate glass manufactured by Corning. The material derived from a chemically strengthened glass Corning had developed in the 1960s under its “Project Muscle” research program (marketed as “Chemcor”) but never widely deployed; Apple’s request prompted Corning to restart production in time for the launch, and the glass was later branded Gorilla Glass. The collaboration has since been cited as an example of vertical supply-chain coordination.
Carrier Negotiations
Apple negotiated exclusively with Cingular Wireless (which became AT&T after AT&T’s acquisition of Cingular in March 2007) after discussions with Verizon Wireless broke down in late 2004. Verizon declined to meet Apple’s requirement that it have full control over the user interface and software, without carrier “crapware” pre-installed. Cingular agreed to Apple’s terms, which were unprecedented in the industry: Apple would control all software, branding, and user interface design; AT&T would provide network infrastructure and receive a portion of iTunes Store revenue. The exclusivity agreement ran for five years. The financial terms were not publicly disclosed, but Apple reportedly received approximately $11 per month per subscriber — an arrangement that gave Apple recurring revenue from the carrier rather than the one-time hardware margin that other phone manufacturers received.
The January 9 Announcement
Jobs’s Macworld keynote presentation on January 9, 2007, is widely regarded as one of the most effective product demonstrations in business history. He opened the presentation by announcing that Apple was “introducing three revolutionary products” — a wide-screen iPod with touch controls, a mobile phone, and an internet communications device — before revealing that all three were in fact the same device. The structure of the reveal — building anticipation through three separate announcements before the resolution — became a much-analyzed example of product marketing narrative.
The live demonstration Jobs gave of the device — making a phone call, browsing websites with pinch-to-zoom, listening to music, and watching a video, all seamlessly — was accomplished under considerable technical risk. The demo units were notoriously unstable; engineers had ordered Jobs to follow a specific order of operations to avoid crashing the software, including making calls from a particular position in the auditorium to maximize cellular signal. Jobs never disclosed these constraints during the presentation.
Apple stock (AAPL) rose 8 percent on January 9, 2007, closing at $97.80, up from $90.86 the previous trading day. The market capitalization gain on the day of announcement was approximately $3.6 billion. The announcement triggered extensive commentary from the technology press and from competitors: Microsoft CEO Steve Ballmer told CNBC on January 17, 2007, that he saw no chance the iPhone would get “any significant market share,” given its $500 price and lack of a physical keyboard. Palm co-founder Jeff Hawkins similarly dismissed it in press interviews.
Commercial Launch and First Year
June 29 Launch
Apple stores across the United States reported customers lining up days in advance of the June 29 on-sale date. Apple did not disclose exact queue sizes, but media coverage at the flagship Fifth Avenue store in Manhattan and the Palo Alto store adjacent to Apple’s campus showed queues extending several city blocks. The AT&T activation process, conducted through iTunes rather than in the retail store, initially overwhelmed Apple’s servers; many early purchasers experienced activation delays of several hours.
Price Cut and Early Adopter Response
In September 2007 — just 68 days after launch — Apple reduced the price of the 8 GB iPhone from $599 to $399. The move was intended to accelerate sales ahead of the holiday season but provoked an immediate backlash from early adopters who felt they had overpaid by $200. Jobs responded with an open letter on September 6, 2007, apologizing and offering early purchasers a $100 Apple Store credit — a concession that represented an estimated $50 million in Apple credits but stabilized customer sentiment.
Third-Party Applications
The original iPhone did not support third-party native applications. Apple’s official position, articulated by Jobs at the Macworld announcement, was that the iPhone’s real “killer app” was the internet, and that web-based applications accessed through Safari constituted a sufficient development platform. This position attracted significant criticism from developers, who argued it prevented the creation of sophisticated, device-integrated software.
Apple reversed course in October 2007, announcing an iPhone software development kit (SDK) would be released to developers in February 2008, with an application storefront to follow. The App Store launched on July 10, 2008 — the same day as the iPhone 3G — with 552 applications available. Within 24 hours, users had downloaded more than 10 million applications. The model — a curated marketplace through which developers could sell applications and Apple retained a 30 percent commission — redefined software distribution for mobile devices globally.
Significance
The original iPhone fundamentally reshaped the smartphone industry and mobile computing. By integrating phone, internet, and media playback into a single device with a finger-friendly touchscreen interface — without a stylus or physical keyboard — it established a design paradigm that competitors rapidly adopted, rendering existing smartphone platforms (particularly Nokia’s Symbian and Palm OS) obsolete within a few years. Time magazine named the iPhone its “Invention of the Year” for 2007. Nokia, which in 2007 held 50 percent of the global smartphone market by volume with its Symbian-based devices, would cede that position to Android and iOS within five years; Nokia’s handset division was sold to Microsoft in 2014 for $7.2 billion, a fraction of its former value.
The launch also accelerated Apple’s transformation from a computer company into a consumer electronics and services giant: Apple’s stock (AAPL) rose sharply following the announcement, and by Q4 2007 Apple had become the second-largest U.S. smartphone vendor. The July 2008 App Store launch — enabled by the iPhone’s platform — created an entirely new software distribution ecosystem and spawned a multibillion-dollar mobile application economy. By 2012, more than 200 million iPhones had been sold globally, and the iPhone line became Apple’s single largest revenue source. The iPhone’s influence extended to Android, Google’s competing mobile OS first released in October 2008, which adopted a similar touchscreen-centric approach and became available on devices from dozens of manufacturers.
The iPhone launch occurred in the same year as the Facebook Platform Launch, which opened Facebook’s social graph to third-party developers in May 2007 — the two developments together created the conditions for the mobile-social media convergence that would define consumer computing through the 2010s.
Sources
- iPhone (1st generation) — Wikipedia
- History of the iPhone — Wikipedia
- Steve Jobs debuts the iPhone — History.com
- Today in Apple history: Steve Jobs unveils the iPhone — Cult of Mac
- Steve Jobs Macworld 2007 Keynote (full video) — YouTube/Apple — the original January 9, 2007 announcement presentation.
- App Store — Wikipedia — history of the App Store launch, 552 initial applications, 10 million downloads in 24 hours.
- Project Purple: The Secret History of the iPhone — The Verge — development history of the iPhone, Lab126, and the Corning glass decision.