The Origins and Development of the iPhone

[Evangelion]

I find it interesting that the engineers considered Linux for the phone, but SJ overturned them. And the tidbit about "Tablet PC" was very interesting...

SJ said last year that "most innovation is going to take place in post-PC-devices like the iPhone and the iPod". I wouldn't be one bit surprised if we saw more "post-PC"-devices from Apple in few days ....

 

[andrewag]

Great article.

It's practical to see that there was an evolution of touchscreen technologies for future products (even if they don't turn into "tablet pcs").

 

[Project]

This is why those iSuppli product breakdowns annoy me. Coming out with headlines that the iPhone only cost $200 to make and thus Apple is taking huge margins on them..

While $150m might sound trivial to Apple, its the equivalent of adding an extra $150 to the cost of the iPhone for the first 1m sales. And r&D costs need to be recovered if possible as they are a business.

And thats just pre launch R&D. It doesnt take into account ongoing sotware development costs, training, marketing, website upkeep, sales (retail stores and whatnot)


But yeah, this was a great article. I wish Jobs still created those videos of internal meetings like he did 20 years ago at NeXT. Apples creative process is one of the most interesting things about the company.

 

[daneoni]

epic article....needs to be made into a documentary

 

[RealMcCoy]

iPhone 2

Mark my words: On tuesday ... iPhone Version 2 (whatever name it will be) !

 

[elgruga]

Its interesting to see how few people realise that Jobs is actually somewhat special.
Perhaps we think that other cell phone manufacturers could do something like the iPhone, but they really can NOT.

The controlling world is stronger than ever, but Jobs is not caught by it.

They always have excuses for not developing new products that people can really use, but the main reason is FEAR.
Watch Gates and his quivering little-greedy-boy performance at CES in Vegas, then compare with the adult Jobs at MacWorld.
One is a fearful, tight-fisted creature, the other is unafraid and clear-sighted.

Apple's brilliance is about Jobs, and there are precious few like him, sadly for our various societies around the globe.

I wish Apple would design a car, a house, a system for growing vegetables in urban settings, a bicycle, etc. etc.

With such clear vision, they could improve almost anything.

Consider the cell phone and how long you put up with crap. Apple stopped that with iPhone.

There are lots of things like that - look at the bicycle chain and gear system - its amazingly crappy, and over 150 years old, but there is no impetus to change it.

Look at hybrid cars - they are supposed to be so great, but they are dull and not as gas efficient as they should/could be.

Its fear and greed that dominate our world, and Apple and Jobs do their bit to defeat it with their human-centered products.

 

[sunfast]

It's a fascinating article - especially about the new balance of power.

However, I fail to see why lack of carrier subsidy hands power to consumers. If I get an iPhone (likely before too long) I will break the habit of a lifetime by paying for a handset.

 

[Pukey]

I find it interesting that the engineers considered Linux for the phone, but SJ overturned them. And the tidbit about "Tablet PC" was very interesting...

SJ said last year that "most innovation is going to take place in post-PC-devices like the iPhone and the iPod". I wouldn't be one bit surprised if we saw more "post-PC"-devices from Apple in few days ....

Yeah, it's kind of scary to hear "Post PC", assuming PC means all computers or all Apple computers. Is it just me or does that sound like Jobs wants to move the focus of Apple from computers to other things? For example, taking the name Computers out of "Apple Computers"? Not that I have any problem with the iPhone, I think it's a great innovation. I would just hate to see Apple take their focus off what always was their main staple, computers.

 

[OllyW]

However, I fail to see why lack of carrier subsidy hands power to consumers. If I get an iPhone (likely before too long) I will break the habit of a lifetime by paying for a handset.

I don't get that either. In the UK you are still tied to O2 for 18 months, with a poor value contract and you have to pay full price for the phone. As I see it, O2 still has the power

Very interesting article though. I'm always impressed with the attention to detail that the Apple design team gives to new products.

 

[Evangelion]

Yeah, it's kind of scary to hear "Post PC", assuming PC means all computers or all Apple computers. Is it just me or does that sound like Jobs wants to move the focus of Apple from computers to other things? For example, taking the name Computers out of "Apple Computers"? Not that I have any problem with the iPhone, I think it's a great innovation. I would just hate to see Apple take their focus off what always was their main staple, computers.

I think the reality is a bit more complex than that, and less worrisome . Think about it: We got personal computers in the early eighties. And since then, things haven't progressed that much. Sure, we have A LOT more powerful computer these days, but if you look at the latest iMac and the original Macintosh, you can see the clear resemblance. Not only in the computer and the peripherals, but in the UI as well.

When SJ said that innovation will take place in "post-PC"-devices, he did not mean that Apple is going to move away from computers. He just acknowledged the fact that in the future it will be other devices than the computer which are going to change our lives. That in the future we will be accessing information with other devices besides computers. Computers changed our lives in many ways since they appeared in the eighties. But that change is more or less over now. We are living in the "PC world" so to speak. the next wave of change is going to come from those "post-PC"-devices.

Computers will be around for a long time, both in the society and at Apple. But the fact is that computers are "old". The concept has not really progressed at all from the mid eighties or so. Innovation is happening elsewhere, with computers we basically have refinement of 20+ year old technology.

Taking "computer" away from "Apple Computer" made sense. Like SJ said: large part of their business does not come from computers anymore, so calling the company "Apple Computer" would have been somewhat misleading. Note: that does not mean that they are moving away from computers. It just means that they have other sources of income these days than just omputers. And there's nothing wrong with that. And if you look at all the devices and services Apple sells, you will see that they all have one thing in common: they need a computer. Computers are absolutely essential to Apple, and they will NOT be abandoning them.

 

[page3]

I don't get that either. In the UK you are still tied to O2 for 18 months, with a poor value contract and you have to pay full price for the phone. As I see it, O2 still has the power

...or an excellent value package. It all depends on your call/text/data habits. Although I don't deny O2 still seem to have a disproportional amount of power.

 

[aswitcher]

Very observant.

I spotted the same thing and drew the same conclusion.

Dante

Surely something this year based upon that.

epic article....needs to be made into a documentary

iPyrates of Silicon Valley 2

 

[danielpi]

It's a fascinating article - especially about the new balance of power.

However, I fail to see why lack of carrier subsidy hands power to consumers. If I get an iPhone (likely before too long) I will break the habit of a lifetime by paying for a handset.

The idea is that the jerkwad phone companies are the ones that set the exorbitant prices (not manufacturers) for their crappy little phones, and then they will pay for the "expensive" handset, as long as you sign your soul to them for two years. Of course, they're not really paying Nokia or LG or anyone the "list price" -- they just made whatever astronomically high number they wanted, so it seems like you're getting a real bargain when you sign up with them. The phones themselves cost practically nothing to produce, with minimal R&D.

So, the trick is this: Nokia makes a $20 phone (that is, it costs $20 to manufacture). AT&T advises Nokia that the phone is worth $100. Nokia sets the price at $100. AT&T will offer to GIVE you the phone, if you sign up with AT&T. AT&T pays Nokia maybe something like $30 for the phone. You think you've saved $100. Your first monthly bill is $80, of which $49 is profit for AT&T, after they paid Nokia. Each subsequent bill is $79 of pure profit.

The difference with iPhone (and the reason that AT&T isn't giving them out if you sign up) is that 1) Apple set the price, not AT&T; 2) Apple actually expects to get $400 for every iPhone they sell (minus whatever percentage for phones sold in AT&T stores); and 3) The iPhone actually is a $400 phone. That is to say, the cost to research, develop, manufacture, and garner a (reasonable) profit makes $400 a sensible price -- no "wiggle room" for AT&T.

 

[Abstract]

Ok, so who was putting the fake programming in the devices that were being given to the hardware teams? Apple must have a anti-espionage division.

"Hello world".

 

[Evangelion]

So, the trick is this: Nokia makes a $20 phone (that is, it costs $20 to manufacture). AT&T advises Nokia that the phone is worth $100. Nokia sets the price at $100. AT&T will offer to GIVE you the phone, if you sign up with AT&T. AT&T pays Nokia maybe something like $30 for the phone. You think you've saved $100. Your first monthly bill is $80, of which $49 is profit for AT&T, after they paid Nokia. Each subsequent bill is $79 of pure profit.

I don't think so. Over here (Finland) the sales of subscriptions and sales of handsets was strictly separated for years. In fact, it was illegal to bundle the two in to "sign up for x years, get phone for free!"-type deals. You bought the phone separately, and then you could shop around for a suitable subscription. And the prices of the phones weren't that low when compared to other countries where bundling phones and subscriptions was the norm.

As it happens, Nokia got in to the trouble in USA (in case you missed it, Nokia's market-share in USA is a fraction of what it is in other parts of the world) is because they refused to satisfy the demands of the operators. Their exec went on the record and said "we want to sell phones that consumers want, not phones that operators want". End-result was that operators didn't carry their phones, and their market-share tanked.

 

[Manic Mouse]

The iPhone actually is a $400 phone. That is to say, the cost to research, develop, manufacture, and garner a (reasonable) profit makes $400 a sensible price

Don't forget, it's not $400. It's $400 plus whatever Apple get over the contract length. Which no other phone manufacturer asks for.

You're extolling Apple as if they're some benevolent God coming to save us from evil Nokia and Sony Ericsson. Which is pretty much the opposite of what's actually happening, the iPhone is the most expensive phone ever produced. To own one in the UK you have to sign up to the most horrible contract in the entire industry, where you pay twice as much as others and get half as much for your money. I don't personally think that's such a great thing...

 

[Evangelion]

You're extolling Apple as if they're some benevolent God coming to save us from evil Nokia and Sony Ericsson. Which is pretty much the opposite of what's actually happening, the iPhone is the most expensive phone ever produced.

More expensive than Vertu

 

[Manic Mouse]

More expensive than Vertu

But do you have to sell your soul to Steve Jobs to own one? I think not!

 

[Evangelion]

But do you have to sell your soul to Steve Jobs to own one? I think not!

Do you have to sell your soul to SJ in order to get an iPhone?

 

[mccldwll]

I can't believe how much money apple gets from these things. $400+$240 per contract?? That's WITHOUT accessories. What was their estimated cost to build, 200? (really stretching the memory on that one, not at all confident).

Don't believe everything you read. Ever. It's an interesting, nicely written story pieced together from many "not so inside" sources, but there are details in the story (such as costs, revenue sharing and five year exclusivity) which are pure speculation. Sort of like watching a movie about Moses. The following from the story should give everyone a heads-up:

"(Details of this and other key moments in the making of the iPhone were provided by people with knowledge of the events. Apple and AT&T would not discuss these meetings or the specific terms of the relationship.)"

 

[bigandy]

Does two cores running at 1.6GHz count?

MacRumors isn't the vacuum of knowledge and common sense that is eBay, so no, two 1.6Ghz cores does not equal 3.2Ghz.

 

[macmike47]

Hardware engineers worked on circuitry that was loaded with fake software, while software engineers worked off circuit boards sitting in wooden boxes..

People who are serious about software should make their own hardware.

Surely having hardware and software teams separated goes right against this philosophy.

But I'm not complaining. It worked out in the end didn't it!

 

[mccldwll]

Don't forget, it's not $400. It's $400 plus whatever Apple get over the contract length. Which no other phone manufacturer asks for.

You're extolling Apple as if they're some benevolent God coming to save us from evil Nokia and Sony Ericsson. Which is pretty much the opposite of what's actually happening, the iPhone is the most expensive phone ever produced. .

LOL. Sounds like Ballmer!
The iPhone is far from the most expensive phone ever made, and for what you get, if you can use it, it's the best deal out there. If they weren't being marketed to a very large audience which allows apple to recoup development costs in smaller chunks/phone, you're looking at a $1000 device. Easy. Jobs has sold iPhones to soccer moms and others who never would buy an extremely sophisticated handheld computer, in the guise of an easy to operate, beautifully designed ipod/phone. And stop complaining about whatever apple may be getting from the carrier on the monthly contracts. It's from the carrier, not from you. In the U.S. at least, $20/month over the cost of the basic calling plan for free garbage phones, to get internet/unlimited data, etc. is a bargain.

 

[jouster]

They spent a year working on Tablet PC tech?

Oh really?

This makes me more confident that a tablet-type Mac will be shown at MWSF.

Despite Jobs's reasons for not building one?

Well, I hope you're right.

It's a fascinating article - especially about the new balance of power.

However, I fail to see why lack of carrier subsidy hands power to consumers.

It doesn't. It hands some to the device manufacturers, which is what the article states.

You're extolling Apple as if they're some benevolent God coming to save us from evil Nokia and Sony Ericsson. Which is pretty much the opposite of what's actually happening.....

You consider Sony and Nokia to be benevolent gods? Interesting.

 

[Fabio_gsilva]

"...Apple was also prepared to buy wireless minutes wholesale and become a de facto carrier itself..."

If only they had stuck to this... The one thing that puts me off the iPhone is carrier choice.

Imagine Apple as Software / Hardware developer of the iPhone AND the carrier - could only be a good thing. Yes, they would have to spend more on call centre support etc for the device, and the wider reach of retail outlets of the carriers gives them better sales coverage - but there are other companies out there doing it successfully.

It makes me wonder why they would want to introduce a 3rd party?, especially greedy carriers who don't have consumer experience at their core...

Well, I could imagine a lot of people here complaining on day one that Apple Carrier sucks so much, because a loto of certain city still uncovered, that the plans are too expensive, that it would be better to go with AT&T or another big carrier...