Tony Fadell Talks Original iPhone's Business Model 'Disaster', Amazon Echo, and Self-Driving Cars

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iPod father Tony Fadell has been making the rounds in the days ahead of the anniversary of the first iPhone's launch, which is today, June 29. In two new interviews with Bloomberg Businessweek and Reuters shared today, Fadell continued reminiscing about Apple history by discussing the iPhone's "disaster" of a business model over the first year, his view on how the Amazon Echo compares to Apple's creation of the iPod, and his doubt of the self-driving automobile industry.

After a little over one year on the market, Apple had sold ten million iPhones, but Fadell recalled an initially bumpy road for sales of the company's first smartphone. Apple reduced the price of the iPhone during its first holiday season by $200, which is said to have been a factor in helping the company reach its goal of ten million iPhones sold, achieved in October 2008.


Apple has sold more than 1 billion iPhones since June 29, 2007, but the first iPhone, which launched without an App Store and was restricted to the AT&T Inc network (T.N), was limited compared to today's version. After sluggish initial sales, Apple slashed the price to spur holiday sales that year.

"The business model for year one of the iPhone was a disaster," Tony Fadell, one of the Apple developers of the device, told Reuters in an interview on Wednesday. "We pivoted and figured it out in year two."
When looking towards the future, Fadell sees the emerging space of the smart home speaker as an area of huge potential. The former Apple executive argued that only Amazon could have launched the first successful intelligent speaker, Echo, because, "Out of the companies you mentioned--Apple, Google, and Amazon--which ones would you most trust to listen to you all the time? There are very few people who don't trust Amazon."

He went on to compare the creation of Echo to the iPod and Apple's history of being late to a product category, but attempting to make their entry into the category the best possible option for customers.
I think it's similar to when Apple came to me and "Let's do the iPod," except it wasn't an iPod yet. We said, "Look at all these ****** MP3 players. I think we can do this better." I give Amazon credit for it. They weren't the first home assistant. We at Nest were building one, and there were a couple of startups on Kickstarter and Indiegogo doing this.

But Amazon went, "Oh, maybe we can make a real version of it. Some other company came up with a prototype, and now let's put our flavor on it." For Amazon, it's like a perfect way to take a consumer who already loves them and make ordering stuff frictionless.
In regards to many technology companies joining in on the self-driving automobile craze, Fadell is less enthusiastic about the future. He warned, "Don't believe the hype" surrounding automatic driving systems -- which Apple is readily working on -- and self-driving vehicles, because the technology that will get them to compete with modern vehicles is "a lot further off than people are telling you."
Don't believe the hype. There are going to be demos, and they'll get better and better, but to get to the point where you're going to buy one that can run at a speed that you're accustomed to--55 miles or 100 kilometers per hour--that's a lot further off than people are telling you.

I think the car world is going to look pretty similar to what it looks like today. There are new brands, like Tesla and some Chinese brands, that could be challengers in the decade after that, but this isn't something that is going to happen as quickly as the mobile phone industry changed with the release of the iPhone. Phones get turned over every 18 months. It takes much longer with cars. And with cars, we're talking about laws changing and police having to adjust to them. It's a lot harder than rolling out a 3G network and getting people to change phones.
While the interviews covered many non-iPhone topics, Fadell still looked back upon his time with late Apple CEO Steve Jobs and recognized how important the creation of the iPhone was for Apple and all of its customers. "Being able to democratize computing and communication across the entire world is absolutely astounding to me," Fadell told Reuters. "It warms my heart because that's something Steve tried to do with the Apple II and the Mac, which was the computer for the rest of us. It's finally here, 30 years later."

For a deep dive into the history of the iPhone, check out the MacRumors tenth anniversary post for Apple's original smartphone.

Article Link: Tony Fadell Talks Original iPhone's Business Model 'Disaster', Amazon Echo, and Self-Driving Cars
 

Jakexb

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Mar 18, 2014
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There sure are a lot of car companies that have announced roadmaps with self-driving cars in the next 5 years. I'm curious why he thinks there's some kind of delusion going on there.
 

keysofanxiety

macrumors G3
Nov 23, 2011
9,471
24,218
Remember when we all got that $100 credit after the price drop? And remember how that first iphone was 4GB and 8GB. ha
Nope! My first iPhone was the 4. I remember I had some dog-butt Nokia touch/stylus crap phone before that. "Does everything the iPhone does, but cheaper!" oozed the salesman. Boy was I a sucker.

I still wanted an iPhone but at the time, the iPhone was only limited to O2 only and I was with Vodafone. Too lazy to switch carrier but I wish I had. The Nokia always went wrong; I always had to take out the battery, and boy was the software buggy. Terrible apps and really frustrating to use.

Man the iPhone 4 was such a step up when I finally got one. It was blisteringly good and the competition still weren't anywhere close at that point. Luckily there are now great phones regardless of which ecosystem you're in.
 

TurboPGT!

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"Don't believe the hype. There are going to be demos, and they'll get better and better, but to get to the point where you're going to buy one that can run at a speed that you're accustomed to--55 miles or 100 kilometers per hour--that's a lot further off than people are telling you."

Truer words are rarely spoken in the tech geek world about autonomous driving. It is just no where near where some deluded people think it is, and its going to take a long long long time to get there.
 

SeattleMoose

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Amazon is no savior. They were on the ropes financially when Bezos got several hundred million in "loans" from the CIA/government. Since then they own him and are advancing the NWO agenda thru Amazon. Example - they just bought Whole Foods to eliminate organic products. Gadgetry and Tech will be introduced at the expense of the quality of the food. In a few years WF will just be an "automated" version of Safeway with all the original vision of healthy food...lost. At this point of the big 4 - Google, Amazon, Microsoft, and Apple....I STILL trust Apple the most followed by Microsoft. The other two are snakes...
 
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macduke

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Each time I read quotes from this man I feel he wants to be saying profound things but is unable to. He continues to seem like a man who wants to be a Steve Jobs.
There's rarely a feeling more comfortable than being your own man.

This man seems uncomfortable.
 

shiseiryu1

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Sep 30, 2007
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Limiting the iPhone to AT&T was a very bad decision and I think allowed Android to get a foothold in the premium cellphone market. I knew a bunch of people who wanted iPhones but couldn't or wouldn't switch to AT&T. Those people ended up getting "Droids" at the time. Don't know if they're still on Androids now but Apple had a chance to smother that baby in it's crib and didn't.

It was a good deal for AT&T...not so much for Apple.
 
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doelcm82

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"Don't believe the hype. There are going to be demos, and they'll get better and better, but to get to the point where you're going to buy one that can run at a speed that you're accustomed to--55 miles or 100 kilometers per hour--that's a lot further off than people are telling you."

Truer words are rarely spoken in the tech geek world about autonomous driving. It is just no where near where some deluded people think it is, and its going to take a long long long time to get there.
I’m not expecting to be there in five years. I am expecting to be significantly closer than we are now. Things like truly self-parking cars that can drop you off and go find a parking space. Cars that do 50% or more of the driving.

Not everyone will have them of course. ‘Feature cars’ will be the norm for a while.
 

CTHarrryH

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Jul 4, 2012
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There sure are a lot of car companies that have announced roadmaps with self-driving cars in the next 5 years. I'm curious why he thinks there's some kind of delusion going on there.
I agree with him - I think we'll see limited use - trucks that deliver goods across county maybe, cabs that pick up and deliver, rental cars, etc. I think when all this is ready the cost will come out and I think that will kill the concept of everyone or most people owning one. The vehicles will be very expensive as will the subscriptions needed. There are areas of the country that don't even have good wireless service if at all - how are you going to get the instantaneous traffic and weather that is required if you can't get to a network. To make it work as visioned will also require significant improvements to infrastructure and today we can't even get pot holes fixed.
Will there be usage - sure but I just don't see it common. Personally, it would be nice when you have to do a long highway trip. But would I pay additional money to drive the 2 miles to the store - no way.
 

JetTester

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Amazon is no savior. They were on the ropes financially when Bezos got several hundred million in "loans" from the CIA/government. Since then they own him and are advancing the NWO agenda thru Amazon. Example - they just bought Whole Foods to eliminate organic products.
Remember, just because you're paranoid, that doesn't mean that they aren't out to get you. And don't drink the water - fluoride is just a government mind control drug.
 

ApfelKuchen

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Limiting the iPhone to AT&T was a very bad decision and I think allowed Android to get a foothold in the premium cellphone market. I knew a bunch of people who wanted iPhones but couldn't or wouldn't switch to AT&T. Those people ended up getting "Droids" at the time. Don't know if they're still on Androids now but Apple had a chance to smother that baby in it's crib and didn't.

It was a good deal for AT&T...not so much for Apple.
It's not as simple as that. All the carriers at the time expected customization and control of the OS, which Apple would not allow. AT&T was the first to accept Apple's terms.
There sure are a lot of car companies that have announced roadmaps with self-driving cars in the next 5 years. I'm curious why he thinks there's some kind of delusion going on there.
Not delusion. I'd call it necessary over-optimism. The public is going to accept this very gradually, both in terms of adoption, and in terms of government. Meantime, the industry knows that it won't move forward at all without excitement and anticipation on the part of the public. The gradual introduction of autonomous features - automatic accidence avoidance, automatic parallel parking, etc. are key to the mainline auto industry's strategy - essentially, one or two new capabilities every 4-5 years, to coincide with the average vehicle replacement cycle. Outsiders/newcomers like Tesla and the ride sharing companies (Amazon will likely also be in the mix for delivery services) need to push that envelope to make their mark.

It takes time for the public to trust these things. Consider how few drivers use cruise control, which has been around in production autos since 1958. Further, intrenched interests (like those who drive for a living) will do their best to "ensure the pubic is absolutely safe" (as if no professional driver has ever caused an accident). Amazon and Uber will be sooner to "autonomize," as they don't have unionized work forces, but regulatory foot-dragging will likely delay their ambitions.

I expect the technology will be there in 5 years, but it could take another 10 for it to be accepted for deployment by the average driver/average vehicle. I'm thinking it could be 20-30 years before autonomous usage will be widespread. The real safety benefits won't begin to be reaped until then, as the unpredictable human behind the steering wheel is the biggest wildcard. Intelligent vehicles will communicate with each other and coordinate activities - they'll behave predictably. Even if a human-piloted vehicle communicates with its neighbors, there's no telling what random bit of idiocy will take place one second later.

At my age, I'm looking forward to autonomous vehicles - either it'll reduce the price of ride "sharing" services, making ownership unnecessary when I'm living on a retirement income, or it'll protect me and those around me from my reduced competence behind the wheel. I'm dealing with an aged parent whose driving skills are far below what he believes they are. But his independence is important to him, of course. Autonomous vehicles hold out the promise that I won't pose the same risk to society when I approach his age.
 

dypeterc

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Mar 5, 2012
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Were initial iPhone sales “sluggish”? Seems a little exaggerated. But anecdotally, I was at the release at my local Apple Store and it had the infamous line out the door.
 

KidAKidB

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Oct 1, 2014
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Toronto
There sure are a lot of car companies that have announced roadmaps with self-driving cars in the next 5 years. I'm curious why he thinks there's some kind of delusion going on there.
They might be starting up but doesn't mean they will be successful.
 

CWallace

macrumors 604
Aug 17, 2007
6,560
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Seattle, WA
There sure are a lot of car companies that have announced roadmaps with self-driving cars in the next 5 years. I'm curious why he thinks there's some kind of delusion going on there.
As ApfelKuchen noted, even if the tech is available, that does not mean it's going to be widespread. I see government regulations at all levels (National, State, Local) being a major headache as well as both the cost of these systems and the three-to-five year turn-over period of vehicles (tied primarily to leasing) slowing adoption.


Were initial iPhone sales “sluggish”? Seems a little exaggerated. But anecdotally, I was at the release at my local Apple Store and it had the infamous line out the door.
The iPhone launched without a carrier subsidy (so $500 for the 4GB and $600 for the 8GB) and required a two-year contract, so it was quite an expensive purchase.

Limiting the iPhone to AT&T was a very bad decision and I think allowed Android to get a foothold in the premium cellphone market.
As ApfelKuchen noted, Cingular Wireless (who became AT&T before the launch) were the only company both willing to allow Apple to design the hardware and software without carrier influence and Cingular also agreed to pay Apple part of the monthly contract for those units sold (in addition to the money Apple was making selling the phone itself). In return, Cingular demanded US exclusivity until 2011.

And considering that the main argument I have heard from everyone who chooses to go Android is that they want the ability to modify their phone and/or do not like Apple's "walled garden" approach. So even if the iPhone was available on all US carriers at launch, I still believe Android would have succeeded as well as it has in the high-end. After all, there are probably plenty of high-end Android users on AT&T's network. :)
 
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PinkyMacGodess

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He is right about some things, and wrong about others, IMO.

The at&t exclusivity was part of what caused the Android operating system to exist. People didn't want to be chained, literally, to at&t, and the industry responded. Android started out a hot mess of nasty, and depending which of the seemingly thousands of versions out there, they have gotten more stable. The habit of at&t locking everything to their network also drove people to other carriers.

It's ironic that the Android OS has gotten more closed over the years, and Google has said that being more closed is the key to the future, but I don't have one, and no interest in acquiring one, so I don't know first hand.

Self driving cars, I feel, he's pretty spot on. The disaster that is about to come for that industry will leave carnage for years to come. Self driving cars are a way for people in this country, ironically, to have 'public transportation' on a more personal level. Why, heck, we *could* have a bullet maglev train that would ZOOM between New York, and Los Angeles, but one particular political party kills anything that resembles a 'public transportation system' every time. I'd LOVE to see an adoption of light rail, and perhaps dedicated transport systems that would allow people to have their own personal vehicle, but would be more like a maglev, 'captive' design.

People have pushed for light rail in my state, and area, and it would save thousands of lives, eliminate tens of thousands of vehicles on the crowded and ruckus highway system, and end up getting people to their destination without having to pile into those flying contamination sinks called 'regional jets'. I freaking HATE HATE HATE flying those things! The horror stories of people, and myself, flying on those things are legend. I now drive over 2 hours to fly out of the nearest large airport than submit myself to those disgusting things.

(One trip in particular I remember, a previous run, someone barfed on the floor on the way to their hub. When they got there, there wasn't enough time to get a proper cleaning crew to clean the mess, so they pretty much left it. They flew back here, with another nearly full flight of gagging passengers, to pick us up and shuttle us back to the hub. Several people used the airsick bags on that connector, and it was ungodly! And that's the regional jet industry. Created just to try to kill the pilot's unions)

Back to the subject: The UI of the iPhone was amazing, and it's gotten better (and worse) since the first one. I wish I had been able to get an iPhone, but I was in a contract and couldn't afford to buy one at the time, plus 'first gen product'. I will miss the iPod when it's declared to be officially dead. Giving up one of the single things that saved Apple will be tough...
 

TurboPGT!

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I’m not expecting to be there in five years. I am expecting to be significantly closer than we are now. Things like truly self-parking cars that can drop you off and go find a parking space. Cars that do 50% or more of the driving.

Not everyone will have them of course. ‘Feature cars’ will be the norm for a while.
I expect the tech itself to continue to evolve, with "features" coming over to actual production vehicles one at a time. Like how we are starting to see auto-braking, lane assistance, etc. These are all obviously essential to self driving car, but can augment what we have now. One little bit at a time, features will come over.

5 years? A car that does more than 50% of your driving is 15-20 years away. You must not realize how slow that industry moves.
 

CWallace

macrumors 604
Aug 17, 2007
6,560
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Seattle, WA
The at&t exclusivity was part of what caused the Android operating system to exist.
Android was created by Google to prevent Microsoft from potentially gaining dominance in mobile Internet that they had at the time on desktop Internet and then locking search down to Bing, keeping Google out of search.

We also need to remember that the iPhone was not locked to a single carrier everywhere on the planet so there was choice in other markets.
 

Moonlight

macrumors 6502a
Jul 9, 2002
637
659
Los Angeles
Amazon is no savior. They were on the ropes financially when Bezos got several hundred million in "loans" from the CIA/government. Since then they own him and are advancing the NWO agenda thru Amazon. Example - they just bought Whole Foods to eliminate organic products. Gadgetry and Tech will be introduced at the expense of the quality of the food. In a few years WF will just be an "automated" version of Safeway with all the original vision of healthy food...lost. At this point of the big 4 - Google, Amazon, Microsoft, and Apple....I STILL trust Apple the most followed by Microsoft. The other two are snakes...
Your tinfoil hat explanation of the CIA paying for Amazon cloud services is specious at best.

Want the real story? Here: https://www.theatlantic.com/technology/archive/2014/07/the-details-about-the-cias-deal-with-amazon/374632/
 
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