12 years of iPhone: Why Apple's first smartphone was far from a guaranteed success

Posted:
in General Discussion
Apple may never have been under as much pressure as it was in the months between unveiling the iPhone and shipping it to customers on June 29, 2007, exactly twelve years ago today.

Detail from the Apple website promoting the original iPhone in 2007
Detail from the Apple website promoting the original iPhone in 2007


"This is a day I've been looking forward to for two and a half years," said Steve Jobs at the unveiling of the iPhone on January 9, 2007. We had to then spend almost a full six more months waiting to get our hands on one, but finally the iPhone shipped on June 29, 2007 and for once, Apple's claims were meekly understated compared to what actually happened.

That first iPhone was the embodiment of why people like Apple -- and why others do not. If you like computing and if you like devices, you could look at the technical specifications for this phone and call it a failure. Plenty of people did.

Even compared to other phones of its day, the iPhone was technically anemic. It lacked the physical keyboard every other phone had, and while that criticism now seems quaintly prehistoric, others are still with us to this day. The iPhone cost too much and it was slow. Even today, you get criticized if you're not somehow both fast and cheap.

Development at a cost

Except most people do not focus on lists of specifications, they look at what the device can do for them. And in that respect, there simply was no comparison with the other phones of its day.

Apple knew that, Apple was banking on it, and Apple reportedly spent $150 million putting their money where its mouth was. Yet nobody could be certain the iPhone would sell and nobody could imagine how enormous it would become.

So in the build up to that January unveiling, the iPhone was an enormous gamble.

"None of this could really have happened without Steve Jobs," author Fred Vogelstein told CNN. "In order to build the iPhone, you essentially had to bet the company.He essentially had to shut down all product development on everything else and suck all his most talented engineers into this one project."

"So if the iPhone had failed," he continued, "there were no other products in the pipeline that Apple could've fallen back on."

All of this contributed to just how tense the iPhone team was as Jobs unveiled their creation. What made that moment worse was that his keynote presentation was the first time that the iPhone demo had worked all the way through.

If you watch the launch video, any time Jobs is behind a plinth demonstrating a feature on the iPhone, you can see spare iPhones ready to be picked up if anything goes wrong with the first one.

What you can't see is the row of Apple engineers passing a bottle of whisky between themselves as each risky element of the demo worked without a hitch.






It must've felt great to be part of the iPhone team that day. Maybe you were a bit the worse for wear from the whisky, surely you were all exhausted from the two or more years of development, but the reaction in that room was everything Apple could've hoped for.

The reaction outside was not. Everyone was talking about the iPhone, and they were talking so much that it was like a gift of millions of dollars of free advertising. And plenty of people were excited, but we wouldn't hear from them until June 29 when they could demonstrate their excitement by buying the device.

In the months leading up to that, those people who we did hear from, who had a platform from which to speak, they were not excited. They may have been fearful, and they certainly saw some valid flaws, but they were certain Apple had blown it.

Waiting time

The iPhone was announced in January chiefly because regulations meant its existence was going to be known soon anyway. Apple was making a telecommunications device and that has to go through approvals process. Apple just got ahead of the process being announced.

In the five months and 20 days between then and the iPhone actually shipping, Apple had to make the phone work. They got away with what they called a 'golden path' demo, where it worked so long as you did precisely the specified things in the right order. You couldn't ship that to customers.

Steve Jobs with the original iPhone
Steve Jobs with the original iPhone


And as they worked, the world waited -- and the world did not wait patiently. Throughout the half year between unveiling and release, the iPhone faced increasing criticism.

Famously, Microsoft's then CEO Steve Ballmer mocked it.

"There's no chance that the iPhone is going to get any significant market share," he told USA Today. "No chance. Would I trade 96% of the market for 4% of the market? I want to have products that appeal to everybody."

"It's a $500 subsidized item," he continued. "They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I'd prefer to have our software in 60% or 70% or 80% of them, than I would to have 2% or 3%, which is what Apple might get."

That was not an instant reaction, though. It was not a competitor's knee-jerk response, because Ballmer said it in April 2007, nearly four months after the unveiling.

In hindsight Ballmer was wrong, and even he has said so since, but it wasn't a casual first-thought analysis, it was after consideration.

Not everyone considered the iPhone in this wait, not for very long anyway. Mike Lazaridis, then co-CEO of Blackberry, was impressed by the phone.

"These guys are really, really good," he is reported to have said about Apple's iPhone.

"It's okay," his co-CEO Jim Balsillie apparently replied, "we'll be fine."

So the heads of technology firms thought Apple had blown it. Much or maybe even most of the media did too.

Steve Jobs jokes about an rotary-dial iPhone, not mentioning that Apple actually considered something like it
Steve Jobs jokes about an rotary-dial iPhone, not mentioning that Apple actually considered something like it


AdAge predicted "Why the iPhone Will Fail" in a June 18, 2007 article. Just days before the phone shipped, the magazine concluded that it would be "a major disappointment."

TechCrunch went further and said the iPhone "will bomb."

"That virtual keyboard will be about as useful for tapping out emails and text messages as a rotary phone," it said. "Don't be surprised if a sizable contingent of iPhone buyers express some remorse at ditching their BlackBerry when they spend an extra hour each day pumping out emails on the road."

Even closer to launch day, Walt Mossberg, then of All Things D, identified genuine issues such as the lack of copy-and-paste, but also predicted success.

"The iPhone is simply beautiful," he wrote. "Expectations for the iPhone have been so high that it can't possibly meet them all. It isn't for the average person who just wants a cheap, small phone for calling and texting. But, despite its network limitations, the iPhone is a whole new experience and a pleasure to use."

After the launch, David Pogue of The New York Times, criticized its sealed battery and how it was on a slow network.

"As it turns out, much of the hype and some of the criticisms are justified," he wrote in the New York Times. "The iPhone is revolutionary; it's flawed. It's substance; it's style. It does things no phone has ever done before; it lacks features found even on the most basic phones."

Yet still, he also produced a musical tribute to it.






We'd waited half the year for the iPhone and then it was available. During the remaining half of the year, Apple sold 1.39 million iPhones (according to Statista).

In comparison, the iPhone would peak at 231.22 million sold in 2015.

Apple did conclude that the iPhone was over-priced and quickly dropped it from $599 to $399. That's the equivalent today, with inflation, of about $500. The cheapest currently available model is the iPhone 7, which costs $449. Of the latest phones introduced in 2018, the cheapest is $749.

The most expensive is the iPhone XS Max which can run you up to $1,499. In 2007's money, that's $1,200 or twice as much as the original iPhone's first retail price.

We expected a successful product, we expected millions of people to use them," iPhone senior manager Andy Grignon told CNN on the phone's tenth anniversary in 2017.

"Honestly, I don't know that I expected a billion people to use it," he continued. "It's how you find jobs, it's how you communicate, it's how you do all these things, we had no idea that this was the product we were trying to create."

Keep up with AppleInsider by downloading the AppleInsider app for iOS, and follow us on YouTube, Twitter @appleinsider and Facebook for live, late-breaking coverage. You can also check out our official Instagram account for exclusive photos.

Comments

  • Reply 1 of 18
    GeorgeBMacGeorgeBMac Posts: 5,137member
    I didn't switch over to an iPhone till the iPhone 5 was released.
    Till then my Samsung smart phone & later Palm Treo -- which was a combination of Palm Pilot and cell phone that could browse the internet actually met my functional needs far better than an iPhone:  Not only could it store my medical manuals that I needed on the run but it could use GPS mapping to get me around the county from patient to patient.

    It was mostly the demise of the Palm operating system that pushed me into switching to an iPhone -- and that was a mixed blessing blessing:  I gained a better web browser with a bigger screen but lost the medical manuals and the mapping stunk.

    While most focus on the UI, for me the question was:  "What will it do for me?"  And the answer to that was that Palm based phones did more.
  • Reply 2 of 18
    williamhwilliamh Posts: 671member
    Shouldn’t the price of the XS Max in 2007 money be more than the price in 2017?
  • Reply 3 of 18
    williamh said:
    Shouldn’t the price of the XS Max in 2007 money be more than the price in 2017?
    No. Money loses value over time so you need more to have the same purchase power.

    $399 in 2007 is about $500 today, as mentioned in the article.
    watto_cobra
  • Reply 4 of 18
    iOS_Guy80iOS_Guy80 Posts: 225member
    The word cheap or cheapest has such a bad connotation associated with it. Apple does not make cheap, inferior, low quality products or software. They make value based products covering a varied price range. Inexpensive and expensive are relative terms. The bottom line
    across all models and devices is Apple makes the best, most innovative, reliable, secure hardware and software at a very competitive price point. Consumers and shareholders alike are fortunate to have access to these marvelous devices and services that are part of our daily lives.

    watto_cobra
  • Reply 5 of 18
    sflocalsflocal Posts: 4,699member
    I didn't switch over to an iPhone till the iPhone 5 was released.
    Till then my Samsung smart phone & later Palm Treo -- which was a combination of Palm Pilot and cell phone that could browse the internet actually met my functional needs far better than an iPhone:  Not only could it store my medical manuals that I needed on the run but it could use GPS mapping to get me around the county from patient to patient.

    It was mostly the demise of the Palm operating system that pushed me into switching to an iPhone -- and that was a mixed blessing blessing:  I gained a better web browser with a bigger screen but lost the medical manuals and the mapping stunk.

    While most focus on the UI, for me the question was:  "What will it do for me?"  And the answer to that was that Palm based phones did more.
    I used to be a Palm developer back in the day. Loved their devices.  Unfortunately, they had really burned their developer base.  Most abandoned the platform after the introduction of the iPhone.

    Management treated their developers badly.  PalmOS has shut down.  WebOS for the Treo was coming but by then the damage was done.  I still remember clear as day the head of marketing personally contacting me to get me back to developing for their platform.  She was quite enthusiastic about Palm’s future.

    I told her her company was on borrowed time and the best thing she could do is look for another job before Palm shuts down due to company mismanagement.  I would not spend one iota more of my life contributing to such a badly-run company.

    We all knew the iPhone spelled the end of Palm.  The rest afterwards was history.  Talk about a bunch of monkeys running the company.

    it was a wild time back then.  Apple had really caught the industry off guard.
    pscooter63GeorgeBMactmaywatto_cobra
  • Reply 6 of 18
    DAalsethDAalseth Posts: 719member
    At the time of the iPhone’s release the only touch screens I had used were unreliable slightly squishy things from LG and others. Because of this, I kept my “feature phone” for a long time after the iPhone arrived. Finally I got an iPod Touch, 4th gen. (Between a sale and trade in on a couple of old iPods I paid ~$80). It really changed my mind on touch screen devices. Still I was comfortable carrying the iPod Touch and my dumb phone for several years more. My first iPhone was a used 5c I inherited. After a year I upgraded to an SE. You see I still wasn’t sure I’d use the iPhone enough to justify the cost of a really good one. But now three years and a bit later I use the SE all the time. This fall I’m looking at upgrading to the XR.
    edited June 29 GeorgeBMacwatto_cobra
  • Reply 7 of 18
    mobirdmobird Posts: 268member
    I remember driving about an hour to get to the closest AT&T store and getting in line hoping that the store would not run out of inventory. I got one and then went home to activate the iPhone using iTunes. My Wife was in the kitchen and thought I was crazy listening to my excitement as I went through the activation process.
    watto_cobra
  • Reply 8 of 18
    GeorgeBMacGeorgeBMac Posts: 5,137member
    sflocal said:
    I didn't switch over to an iPhone till the iPhone 5 was released.
    Till then my Samsung smart phone & later Palm Treo -- which was a combination of Palm Pilot and cell phone that could browse the internet actually met my functional needs far better than an iPhone:  Not only could it store my medical manuals that I needed on the run but it could use GPS mapping to get me around the county from patient to patient.

    It was mostly the demise of the Palm operating system that pushed me into switching to an iPhone -- and that was a mixed blessing blessing:  I gained a better web browser with a bigger screen but lost the medical manuals and the mapping stunk.

    While most focus on the UI, for me the question was:  "What will it do for me?"  And the answer to that was that Palm based phones did more.
    I used to be a Palm developer back in the day. Loved their devices.  Unfortunately, they had really burned their developer base.  Most abandoned the platform after the introduction of the iPhone.

    Management treated their developers badly.  PalmOS has shut down.  WebOS for the Treo was coming but by then the damage was done.  I still remember clear as day the head of marketing personally contacting me to get me back to developing for their platform.  She was quite enthusiastic about Palm’s future.

    I told her her company was on borrowed time and the best thing she could do is look for another job before Palm shuts down due to company mismanagement.  I would not spend one iota more of my life contributing to such a badly-run company.

    We all knew the iPhone spelled the end of Palm.  The rest afterwards was history.  Talk about a bunch of monkeys running the company.

    it was a wild time back then.  Apple had really caught the industry off guard.
    Thanks!   That was interesting and informative....

    For myself, I wondered what was going on because it was clear that, although the company had a really good product, that it was not progressing or fulfilling its potential -- particularly knowing the lucrative, corporate market that they had tapped into.

    Regardless though, it took years for Apple to catch up to what those devices could do.  And, in fact, there are still features that I still miss.
    watto_cobra
  • Reply 9 of 18
    mobird said:
    I remember driving about an hour to get to the closest AT&T store and getting in line hoping that the store would not run out of inventory. I got one and then went home to activate the iPhone using iTunes. My Wife was in the kitchen and thought I was crazy listening to my excitement as I went through the activation process.
    A lot of people don’t remember how long it took to activate the original iPhone. Some people waited 3+ days. 

    Also I remember paying $800 for it because much like today there were no subsidies for it. 
    watto_cobra
  • Reply 10 of 18
     I was one of the early adopters before they lowered the price, at least they gave us early adopters an Apple Store credit after they lowered the price.  I remember coming from a flip phone and being absolutely astounded with the screen resolution & size. 
    mobirdwatto_cobra
  • Reply 11 of 18
    JapheyJaphey Posts: 64member
     I was one of the early adopters before they lowered the price, at least they gave us early adopters an Apple Store credit after they lowered the price.  I remember coming from a flip phone and being absolutely astounded with the screen resolution & size. 
    I can clearly remember the day I got that email from Apple with my $200 credit after the price dropped. Needless to say, it was completely spent by the end of the day!  Those were the good ole days. I remember everyone always asking to see it and play around with it. In those early days, the iPhone was definitely a status symbol; though not as a sign of affluence, but more as a sign of tech savvy. Great article!
    mobirdwatto_cobrajony0
  • Reply 12 of 18
    retrogustoretrogusto Posts: 737member
    This article by John Dvorak about why Apple should “pull the plug on the iPhone” is a classic of the genre:

    https://www.marketwatch.com/story/apple-should-pull-the-plug-on-the-iphone
    Solitmaywatto_cobrajony0
  • Reply 13 of 18
    sflocalsflocal Posts: 4,699member
    sflocal said:
    I used to be a Palm developer back in the day. Loved their devices.  Unfortunately, they had really burned their developer base.  Most abandoned the platform after the introduction of the iPhone.

    Management treated their developers badly.  PalmOS has shut down.  WebOS for the Treo was coming but by then the damage was done.  I still remember clear as day the head of marketing personally contacting me to get me back to developing for their platform.  She was quite enthusiastic about Palm’s future.

    I told her her company was on borrowed time and the best thing she could do is look for another job before Palm shuts down due to company mismanagement.  I would not spend one iota more of my life contributing to such a badly-run company.

    We all knew the iPhone spelled the end of Palm.  The rest afterwards was history.  Talk about a bunch of monkeys running the company.

    it was a wild time back then.  Apple had really caught the industry off guard.
    Thanks!   That was interesting and informative....

    For myself, I wondered what was going on because it was clear that, although the company had a really good product, that it was not progressing or fulfilling its potential -- particularly knowing the lucrative, corporate market that they had tapped into.

    Regardless though, it took years for Apple to catch up to what those devices could do.  And, in fact, there are still features that I still miss.
    Palm management were literally taking the money and running out the company in its final years.  PalmOS had shut down with little to no news for developers and management gave no indication about WebOS.  They really left us hanging out to dry.  Rubenstein came on board and essentially ran the company into the ground.  He had zero clue what to do.  It was really sad.  Palm could have been a real contender against the iPhone but management was just like a deer looking at headlights.
    GeorgeBMacwatto_cobra
  • Reply 14 of 18
    mobirdmobird Posts: 268member
    If I recall, didn't HP buy Palm? And wasn't there a football stadium sponsored by Palm at one point or something like that?
    watto_cobra
  • Reply 15 of 18
    radarthekatradarthekat Posts: 3,130moderator
    My first Apple product was a MacBook Air, late 2010 model.  Then came an iPod, then the iPhone 4S in 2011.  I made my first investment in Apple shares that year, and also taught myself to trade options.  I’d been let go, the entire management and founder team of my company was replaced, as is the fashion when a big venture capital firm acquired a big stake in a budding startup.  I was out after 26 years in the software startup game.  So I took up my investing hobby as my new career, and have since turned an initial $300k investment in Apple into a position (stock and call spreads) worth about $1.8m, and threw off a lot more along the way that’s now diversified into other holdings.  That was the effect of Apple and the iPhone on my life.  I’ve also owned the 5, 5S, 6 and now 8+.  In October I’ll fly to Hong Kong or Singapore or Bangkok to buy the latest at an official Apple store, being there still are none here in Vietnam where I’m currently hanging out.  

    Ironically my career began with a tiny company called Personics and a hardware accessory product for the original Macintosh, called the View Control System, a headset that replaced the mouse to let users have their hands free for typing.  That product initially failed, but found an audience among those without use of their hands; Johnnie Wilder (singer for the funk group Heatwave who was paralyzed in a car accident) used one to compose music on a Mac.  But after our brief foray into Mac hardware accessories we became a software publisher of DOS and Windows titles and I never used a Mac until the end of my career, 26 years later with that MacBook Air I bought for myself after my Windows PC caught yet another virus that wiped it out.  A fateful turn of events.  


    edited June 30 FileMakerFellerGeorgeBMac
  • Reply 16 of 18
    mbenz1962mbenz1962 Posts: 128member
    My first Apple product was an iPod Nano (Gen 3) that I bought new not long after it was released in the fall of 2007.  I was traveling a lot for work in 2007 and I was impressed with the nano's screen and the ability to rent a movie digitally and watch it on such a small device.  Previously I carried my HP laptop (that weighed quite a lot and was bulky) and rented disks in the airports (that was a thing back then).  I was so impressed with the nano's portability and quality that I decided to give up the HP and bought a white plastic macbook the next year.  I had considered the original iPhone when It debuted, but the lack of 3G and the upfront cost were a deal breaker for me at the time.  I was further convinced I had mad the right decision when apple cut the price by $200 shortly after launch.  I wondered if Apple would even continue this new iPhone line.
    I continued to follow the progress of the iPhone however, and my interest really increased when I saw how well my macbook worked for every day stuff. Then the 3G was announced not too long after I bought my macbook and, even better, it was subsidized by AT&T. I decided that even though I had just dropped $1,100 for the macbook I could afford the $199 price and so I went early before work and stood in line for more than an hour before the At&T store opened to get one.  I didn't and I was crushed.  I had to wait another 2 weeks before the AT&T store finally had stock again. The sales guy was willing to put one aside for me so I could get it after work (likely because he was sick of me calling every day to see if they had gotten more stock).  I switched from T-Mobile to AT&T to get it. It was fantastic to use and I convinced quite a few executives at my company to buy one and give up their antiquated Blackberry phones. 
    Like the article brings out, that first iPhone that started it all wasn't a guaranteed success. It had definite shortcomings, but it also had potential because of the solid and intuitive software.  This only became more obvious and pronounced when the App Store came out. Consequently, I bought every model of iPhone for many generations after.  My wife came on board the Apple train when I upgraded to the 3GS and she inherited my 3G.  iPhones were so well built they would easily last us the 2 years (year one me and year two her) and still be worth something on eBay. By the time the 6 came out iPhones were so capable that they were lasting us even longer and so I was able to skip the 6S and bought the 7 a year later. The rest is history.

    watto_cobra
  • Reply 17 of 18

    I had to buy an iPhone in the grey market, since the first iPhone was not officially released here. Like a good spouse, I gifted it to my significant other.

    I cannot even begin to describe what I felt when I loaded a website for the first time on the iPhone. It put an end to those hideous WAP pages pretty soon.

    The impact of the original iPhone was so great on me that I've since been buying every iteration of the iPhone.

    My favourite designs:

    iPhone X

    iPhone 4

    iPhone

    watto_cobra
  • Reply 18 of 18
    llamallama Posts: 54member
    My wife was first in our family to the iPhone party, as I had no particular interest in the iPhone which was weird considering we were professional Mac developers.  I got it for her Christmas of 2007 and then tried really hard not to steal it from her.  :)  iPhone has been taking my money ever since.  :D
    watto_cobra
Sign In or Register to comment.