Battle of the Titans: How the Fight to the Death Between Apple and Google is Transforming our Lives
Battle of the Titans: How the Fight to the Death Between Apple and Google is Transforming our Lives
Fred Vogelstein
The deathmatch between Apple and Google is not just a story of corporate competition – it’s a dramatic saga of a friendship gone sour, of trust and agreements betrayed, of visionaries Steve Jobs and his successor Tim Cook versus Larry Page, Sergey Brin, and Eric Schmidt. This is a story of bickering, backstabbing, poaching and paranoia, of hardware versus software and patents versus products.After more than a decade of reporting on this rivalry, Fred Vogelstein has incredible access to the boardroom conversations, unofficial reactions, outbursts, personalities, deals, lawsuits and allegations that have shaped how we use these products.
BATTLE OF THE TITANS
Fred Vogelstein
Copyright (#ulink_6f113110-da05-5a79-a19e-539383446de1)
William Collins
An imprint of HarperCollinsPublishers 77–85 Fulham Palace Road, Hammersmith, London W6 8JB
WilliamCollinsBooks.com (http://WilliamCollinsBooks.com)
First published as Dogfight: How Apple and Google Went to War and Started a Revolution in Great Britain by William Collins in 2013
First published in the United States by Farrar, Straus and Giroux in 2013
Copyright © Fred Vogelstein 2013
Fred Vogelstein asserts the moral right to be identified as the author of this work.
A catalogue record for this book is available from the British Library.
All rights reserved under International and Pan-American Copyright Conventions. By payment of the required fees, you have been granted the non-exclusive, non-transferable right to access and read the text of this e-book on-screen. No part of this text may be reproduced, transmitted, down-loaded, decompiled, reverse engineered, or stored in or introduced into any information storage and retrieval system, in any form or by any means, whether electronic or mechanical, now known or hereinafter invented, without the express written permission of HarperCollins
Source ISBN: 9780007448401
Ebook Edition © 2013 ISBN: 9780007448418
Version: 2014-10-01
Dedication (#ulink_154cd3bb-68e2-59db-9f76-9c2d89876c92)
For Evelyn, Sam, and Beatrice
Contents
Cover (#uc243080b-2c74-5ce3-8b79-273e9ae57d8d)
Title Page (#u6fb28459-7f30-533e-9ee6-cd342e43e68b)
Copyright (#u4f31facd-7d4d-5c18-8711-565b47d68c28)
Dedication (#ub4612826-5ad6-5df7-bf1a-3a67f73ee845)
Introduction (#ue2568732-d1d6-5fbf-8120-dd4443bbfaab)
1. The Moon Mission (#ue01ed341-1083-55a9-8d34-a881852ed2db)
2. The iPhone Is Good. Android Will Be Better. (#u8f2b7074-015b-5f3d-823c-d1cda2315de7)
3. Twenty-Four Weeks, Three Days, and Three Hours Until Launch (#litres_trial_promo)
4. I Thought We Were Friends (#litres_trial_promo)
5. The Consequences of Betrayal (#litres_trial_promo)
6. Android Everywhere (#litres_trial_promo)
7. The iPad Changes Everything—Again (#litres_trial_promo)
8. “Mr. Quinn, Please, Don’t Make Me Sanction You.” (#litres_trial_promo)
9. Remember Convergence? It’s Happening (#litres_trial_promo)
10. Changing the World One Screen at a Time (#litres_trial_promo)
A Note on My Reporting (#litres_trial_promo)
Notes (#litres_trial_promo)
Index (#litres_trial_promo)
Acknowledgments (#litres_trial_promo)
About the Author (#litres_trial_promo)
About the Publisher (#litres_trial_promo)
Introduction (#ulink_2a7722be-4321-5497-9957-5e4c81ae636a)
When Steve Jobs stood before the world at the beginning of 2007 and said he was going to reinvent the cell phone, the expectations were modest—at best. Jobs had upended the music business with the iPod and iTunes. But taking on the cell phone industry? That seemed unlikely. The wireless carriers, who controlled the market, had been foiling cell phone innovators for years. And the iPhone, while cool looking, seemed no match for their iron grip on the industry. It was more expensive than most phones out there. And it was arguably less capable. It ran on a slower cell/data network. And it required users to type on a virtual, not a physical, keyboard. To some critics, that meant the iPhone was dead on arrival.
If anything, Jobs undersold the iPhone that day. It truly was a breakthrough. The iPhone wasn’t really a phone, but the first mainstream pocket computer that made calls. With its touchscreen, it did so many things that other phones could never do that consumers overlooked its shortcomings. Consumers got used to the virtual keyboard, and Apple continued to make it better and better. It cut the price to equal that of other phones. It quickly upgraded the slower cell/data radios to make its technology competitive. It developed displays with unheard-of resolutions. It bought a chip design company to make sure the iPhone was always the fastest device out there. It rolled out a completely new version of the iPhone software every year. And it designed iconic television ads—as it had done for the iPod—that made consumers feel special about owning one.
The subsequent frenzy of demand gave Apple and Jobs the leverage to turn the tables on the wireless carriers and start telling them what to do. More important, it ignited a technology revolution that today touches almost every corner of civilization. The iPhone has become
one of the most popular cell phones of all time, selling more than 135 million units in 2012 alone. It has become the platform for a new and hugely profitable software industry—phone apps—that has generated more than $10 billion in total revenues since starting five years ago, in 2008. And the iPhone has become the source of an entire rethink of how humans interact with machines—with their fingers instead of buttons or a mouse. The iPhone and its progeny—the iPod Touch and the iPad—haven’t just changed the way the world thinks about cell phones, they have changed the way the world thinks about computers for the first time in a generation, arguably since the advent of the Macintosh in 1984.
Since 2010, when Jobs followed the iPhone with the iPad, the questioning has grown frenzied. Who said our computer had to sit under our desk or on our lap? Can’t it just be a screen that fits in our pocket or purse, or something we leave lying around the house? Indeed, if you compare iPad sales to sales of desktops and laptops, Apple is now the largest
PC maker in the world. It now sells more iPads per quarter than Dell or HP sells laptops and desktops. Apple’s total sales of iPhones, iPads, and iPod Touches now exceed 200 million devices a year. That’s about the same number of TVs sold by all manufacturers every year and about four times the number of cars sold worldwide. All of this has turned Apple, the corporation, into a colossus larger than even Jobs’s enormous ambitions. Once on the precipice of bankruptcy, in 1997, Apple today is one of the most valuable and profitable companies anywhere.
And yet Apple behaves like a corporation under siege—because despite all this success, it is. From the moment in late 2007 that Google unveiled Android—and its own plan to dominate the world of mobile phones and other mobile devices—Google hasn’t just tried to compete with the iPhone, it has succeeded in competing with the iPhone. Android took hold in 2010, and it has exploded in popularity since. To Apple’s astonishment
, there are now more smartphones and tablets running Android software than there are iPhones, iPads, and iPod Touches running Apple’s software, known as iOS. In 2012 there was even debate about whether the iPhone was the most popular smartphone anymore. During the third quarter of 2012
, some surveys said, Samsung sold more Android-powered Galaxys than Apple sold iPhones.
Apple ended the “who has the most popular smartphone” discussion at the end of 2012, when it unveiled the iPhone 5. But more and more wonder whether this is even relevant anymore. The differences between the two platforms are narrowing by the day. Sure, they are different structurally. Apple makes every inch of the iPhone—the hardware and the software (though the devices are assembled in China). Google just makes the software for Android phones. It allows phone manufacturers such as Samsung to make the hardware. But both platforms now have an equivalent number of pluses and minuses: Apple’s platform is a little easier to use, but it only offers three products—the iPhone, the iPad, and the iPod Touch. Google’s platform offers many more phone choices, and often has the latest phone features ahead of Apple, but it lacks the polish of Apple’s interface. Still, both platforms are now equally available among large carriers worldwide, and, with the exception of Apple stores, they are available for purchase in the same places.
Seeing Apple’s market dominance challenged so swiftly and broadly was uniquely painful for Jobs and remains that way for the company’s other executives. Jobs thought, and Apple executives still think, that Google and the Android community cheated to create their success. They think that Google executives stole Apple’s software to build Android, and that Android’s largest phone maker, Samsung, copied Apple’s designs to build its supersuccessful Galaxy phones. They feel betrayed. Apple and Google weren’t just business partners when the iPhone was unveiled in early 2007. They were spiritual allies—the yin and yang of the technology revolution. This was one of the closest alliances in American business. Apple made great devices. Google made great software. Google’s founders considered Jobs to be a mentor. Google’s then CEO, Eric Schmidt, sat on Apple’s board of directors. They had a common enemy: Microsoft. Together they planned for a long and prosperous marriage.
Then, as can happen in a marriage, the relationship frayed. Secrets were kept. Promises were broken. And the two went to war. When Jobs died in October 2011, there was hope that the dogfight would feel less like personal betrayal and quiet down—that Apple’s new CEO, Tim Cook, would take the emotion out of the battle and find a way to settle it. But if anything, Apple has gotten more aggressive and nasty toward Google since then. It still has dozens of patent lawsuits in at least seven countries pending against the Android community—mostly against Samsung and Motorola (owned by Google). In the summer of 2012, it took the unheard-of step of having its fight with Samsung, Google’s top distributor of Android phones, tried in front of a jury in San Jose. It won a $1 billion judgment, though the damages were subsequently reduced by nearly half on appeal. In September 2012 Apple stopped selling the iPhone preloaded with Google Maps. It replaced the app with one of its own, despite wide consumer complaints that the app was inferior. Apple is believed to be working on a video service to compete with YouTube, which Google owns.
Apple has even begun replacing
some Google search technology in the iPhone with search technology from its old enemy, Microsoft. Now when you use Siri, the iPhone’s voice recognition feature, Apple’s newest software no longer uses Google search. Instead, she queries Microsoft’s Bing search engine, which has been clawing at Google for a decade over search market share. To get Siri to use Google’s search, you have to specifically ask her to “search Google” before each request. Google is still the default search engine inside the iPhone’s web browser. But for those with long memories, the idea that Apple would dump any Google technology for Microsoft’s—when Microsoft was the bitter enemy of both for so long—is an astonishing development.
Google’s public posture in its fight with Apple has consistently been “Who, us? We’re just a bunch of geeks out to change the world.” But in its quiet, nerdy way Google has fought back ferociously. It defied Apple’s demands that it remove software from Android phones or face patent lawsuits. It bought the cell phone maker Motorola for $12.5 billion in 2012, its largest acquisition by far. It said the only purpose of the purchase was to buy Motorola’s patents. It said it would be easier to fight a litigious opponent like Apple if it owned the company that invented the modern cell phone and all the patents associated with that. That’s true, but the claim hid another equally powerful reason: the acquisition means that Google will always be able to make phones to compete with Apple no matter how successful Apple is with its lawsuits against other phone and tablet manufacturers. The purchase also gives Google leverage in case new challengers emerge.
Last, Google now finds itself doing something most thought it would never do: it is making its own consumer electronics from scratch to compete with Apple devices in the living room. Google has all the pieces not only to hook users on cell phones running its Android software, but to reach them wherever they go, inside or outside their homes.
Usually, the story of two companies and their powerful leaders going at it makes a great magazine piece and little more. Company X attacks company Y. Company Y fights back. One wins. One loses. But this is a much bigger tale than that. It’s hard to imagine a more revolutionary object than the object the two companies started fighting over: the smartphone. The smartphone has fundamentally changed the way humans get and process information, and that is changing the world in ways that are almost too large to imagine. Ponder the individual impacts of the book, the newspaper, the telephone, the radio, the tape recorder, the camera, the video camera, the compass, the television, the VCR and the DVD, the personal computer, the cell phone, the video game, and the iPod. The smartphone is all those things in one device that fits in your pocket. It is radically changing the way we learn in school, the way doctors treat patients, the way we travel and explore. Entertainment and all media are accessed in entirely new ways. That sounds like something Jobs might have said at one of his famous product launches. But it is not an exaggeration.
What this means is that Apple versus Google isn’t just a run-of-the-mill spat between two rich companies. It is the defining business battle of a generation. It is an inflection point, such as the moment when the PC was invented, when the Internet browser took hold, when Google reinvented web search, and when Facebook created the social network. In this massive reexamination of how technology, media, and communications intersect, two of the most powerful companies in the world to dominate that new landscape are in open warfare.
Yes, invariably this reminds you of previous fights among entrepreneurs in Silicon Valley, such as Apple versus Microsoft in the 1980s or Microsoft versus Netscape in the 1990s. But the stakes are infinitely higher now. In the 1980s personal computing was a nascent market, and both Apple and Microsoft were new companies. In the 1990s people saw the potential of the Internet, especially in a device that fit in your pocket. But wireless bandwidth was still too slow and expensive. Today, 1.8 billion cell phones
are sold worldwide every year, and in five to ten years most of them are going to be smartphones. No one knows how big the tablet market is going to be yet, but the tablet is already becoming an important new technology for people to read books, newspapers, and magazines, not to mention watch TV or play video games. In other words, the stakes of this battle are infinitely higher than any earlier struggles.
It’s not just that there is a lot more money to be made and lost in the Apple/Google fight than in previous Silicon Valley battles. It’s that the fight feels—to the players, at least—like a winner-take-all situation. Why? Because they’re not just fighting over which side has the hottest devices, they’re battling for control of the online stores and communities these devices connect to—the so-called cloud. A lot of what we buy via Apple’s iTunes store—apps, music, movies, TV shows, books, etc.—doesn’t work easily on Android devices or at all, and vice versa. And both companies know that the more money each of us spends on apps and other media from one store, the less likely we are to switch to the other. They know we will ask, “Why rebuy all that content just to buy an Android phone instead of an iPhone?” Many companies have free apps that work on both platforms, but even having to redownload them, and re-set them up, is enough to keep many users from switching. In Silicon Valley parlance, it’s a platform war. Whether your example is Microsoft with Windows and Office, eBay with auctions, Apple with the iPod, Amazon with books, Google with search, or Facebook with social media, history suggests that the winner in fights like this gets more than 75 percent of the market share, while the loser struggles to stay in that business.
This is a big deal. In the coming years most of what we consider information—news, entertainment, communications—will get funneled through either Apple’s or Google’s platform. Doubt me? It’s already happening. We now spend as much time connected to the Internet as we do watching television, and more and more of our access to the Internet comes through smartphones and tablets. Think about how much time you spend staring at your phone or tablet now—not just responding to email, reading the news, tweeting, facebooking, watching a video, playing games, or surfing the web. Include the seconds you spend in elevators, standing in line, at stoplights, in the restroom too. Now ask yourself this question: Who controls what you see on your television? Your cable company. Who controls what you see on your smartphone? Ultimately, it is Apple and Google.
I remember when, as a contributing editor for Wired, I first started thinking about the mobile revolution. At that time the top-selling phones worldwide came from Nokia, RIM (which makes the BlackBerry), Sony Ericsson, and Motorola. Then the iPhone was announced. It quickly seemed inevitable that Apple and Google would end up fighting. Few agreed with me. An editor friend of mine said the idea seemed preposterous. How could Apple and Google compete when they were in entirely different businesses? he asked. Technically he was right. Apple makes money selling the devices it creates. Google makes money selling online advertising. What he and many missed is that those are now only means to a much bigger end. Both companies see themselves as becoming new kinds of content distribution engines—twenty-first-century TV networks, if you will. They won’t make content as the TV networks do today; but their control of huge global audiences, and their enormous balance sheets, will enable them to have a big impact on what gets made and who sees it.
This may seem counterintuitive. It’s hard to imagine the geeks at Apple or Google producing Mad Men. But makers of movies and TV shows essentially care about only two things: How much is their project going to cost? And how many people are going to see it? No two companies have more reach than Apple and Google. Fewer still have more money. Together they controlled $200 billion in cash alone by mid-2013. That’s not only enough to buy and/or finance an unlimited amount of content for their audience; it’s actually enough to buy most of Hollywood. The market capitalizations of News Corp., Time Warner, Viacom, and CBS total that much combined. Although most people don’t think
of Apple and Google as entertainment giants, Apple through iTunes controls roughly 25 percent of all music purchased and 6 to 10 percent of the $18 billion home video market. Meanwhile, Google is investing millions of dollars in original programming for YouTube, which is already a video destination for tens of millions of consumers around the world.
This isn’t to suggest that there won’t be enormous room for new and old companies to build substantial businesses of their own in this new world. In early 2013 Netflix boasted 30 million subscribers, as many as HBO. Two years ago it looked to be a company that might not make it. Studios jacked up the price of their content to unaffordable levels. Movie and TV-show selection fell and customers started to leave. So Netflix—a technology company based in Los Gatos, not a Hollywood studio—started financing its own programming. Its first stab at this, the series House of Cards, with Kevin Spacey, has been an enormous hit. Amazon and Microsoft are getting production facilities up and running too. Meanwhile, Facebook, with more than 1 billion members—half the Internet—has become a favorite stop for Hollywood agents looking to use this giant global audience as another way to finance and distribute their clients’ work.
But despite the power of Facebook, Amazon, Netflix, and Microsoft, at the moment they all still have to largely go through two companies—Apple and Google—to get to the increasingly massive audiences using smartphones and tablets for their news, entertainment, and communications. What this means is that the Apple/Google fight is not just a story about the future of Silicon Valley. It is about the future of media and communications in New York and Hollywood as well. Hundreds of billions of dollars in revenue are at stake, and for at least the next two years, and probably the next five, these companies, their allies, and their hangers-on will be going at it full bore.
In many ways what is happening now is what media, communications, and software moguls have been predicting for a generation: The fruits of Silicon Valley’s labor and those of New York and Hollywood are converging. This is as close to tragic irony in business as one ever gets. For two decades—the 1980s and 1990s—a procession of celebrated media executives marshaled the best technology they could assemble to position themselves for the new world they saw coming. They spent hundreds of billions of dollars buying one another to bulk up. But their timing was so off, their innovations were so bad, and their mergers were so disastrous—such as AOL’s purchase of Time Warner in 2001—that by 2005 convergence had become a discredited idea, and few dared to mention the word.
Where did all these very smart and very wealthy people go wrong? They had the wrong devices in mind. The media and communications tycoons all predicted that the convergence would happen on the personal computer—that their equipment supplying television programming, such as set-top boxes, would ultimately control our personal computers too. The software tycoons—largely Microsoft and Bill Gates—predicted that it would be personal computers that would take over our television sets. Instead, the touchscreen smartphone and touchscreen tablet are driving all the changes—two devices that hadn’t been invented until recently. The problem with the television is that it is a lousy device to do any kind of work on. The problem with the PC is that it is a lousy device to consume entertainment on. The smartphones and tablets, because they are portable and so easy to use, are turning out to be the perfect blend of both. You’d never pull out a laptop to play a game or watch a movie when you’re standing in line or sitting in the back of a cab. But we do that with our smartphones and tablets all the time. We accept the trade-off of screen size for portability because, unlike with previous portable devices, there are no other compromises we need to make. Their screens, while small, are actually sharper than those of most televisions. Their batteries last all day. They turn on immediately. They are connected to wireless networks that are fast enough to stream movies. And they are powerful enough to effectively run the same applications as every other machine we have.
By the end of this book you’ll have a good idea who I think is winning the Apple/Google fight. But you’ll also develop enough respect for what each side has had to go through just to stay in the game that you might feel bad rooting for either side. One of the things that I didn’t expect when I took on this project was how hard it is to conceive and build the products that Steve Jobs liked to casually pull out of his pocket onstage. Whether you are an Apple engineer, a Google engineer, or any engineer, building products that change the world isn’t just work. It’s a quest. It leaves its participants not only tired the way all jobs sometimes do but mentally and physically exhausted—even traumatized—at the end. Part of Jobs’s appeal as a leader and a celebrity was that he successfully hid all this from public view. He made innovation look easy. Now he is gone. And, as you’ll see in the following pages, there are many engineers at both companies who want the rest of the world to know what changing the world really has been like. Before there could be the smartphones and tablets we all now buy and take for granted, there was yelling, screaming, backstabbing, dejection, panic, and fear over what it would take to get those projects off the ground and into consumers’ hands. They want you to understand what the iPhone and Android projects were like at the beginning—and so that is where this book will start.
1 (#ulink_0d75fcb4-92fd-5897-9519-470e0039f3f7)
The Moon Mission (#ulink_0d75fcb4-92fd-5897-9519-470e0039f3f7)
The fifty-five miles from Campbell to San Francisco is one of the nicest commutes anywhere. The journey mostly zips along the Junipero Serra Freeway, a grand and remarkably empty highway that abuts the east side of the Santa Cruz Mountains. Known as 280 to locals, it is one of the best places in Silicon Valley to spot a start-up tycoon speed-testing his Ferrari and one of the worst places for cell phone reception. For Andy Grignon in his Porsche Carrera, therefore, it was the perfect place for him to be alone with his thoughts early on January 8, 2007.
This wasn’t Grignon’s typical route to work. He was a senior engineer at Apple in Cupertino, the town just west of Campbell. His morning drive typically covered seven miles and took exactly fifteen minutes. But today was different. He was going to watch his boss, Steve Jobs, make history at the Macworld trade show in San Francisco. Apple fans had for years begged Jobs to put a cell phone inside their iPods so they could stop carrying two devices in their pockets. Jobs was about to fulfill that wish. Grignon and some colleagues would spend the night at a nearby hotel, and at 10:00 a.m. the following day they—along with the rest of the world—would watch Jobs unveil the first iPhone.
Getting invited to one of Jobs’s famous product announcements was supposed to be a great honor. It anointed you as a player. Only a few dozen Apple employees, including top executives, got an invite. The rest of the spots were reserved for Apple’s board of directors, CEOs of partners—such as Eric Schmidt of Google and Stan Sigman at AT&T—and journalists from around the world. Grignon got an invite because he was the senior engineer for all the radios in the iPhone. This is a big job. Cell phones do innumerable useful things for us today, but at their most basic they are fancy two-way radios. Grignon was in charge of the equipment that allowed the phone to be a phone. If the phone didn’t make calls, connect with Bluetooth headsets, or connect to Wi-Fi setups, Grignon had to answer for it. As one of the iPhone’s earliest engineers, he’d dedicated two and a half years of his life—often seven days a week—to the project. Few deserved to be there more than he did.
But as Grignon drove north, he didn’t feel excited. He felt terrified. Most onstage product demonstrations in Silicon Valley are canned. The thinking goes, why let bad Internet or cell phone connections ruin an otherwise good presentation? Jobs’s presentations were live, however. It was one of the things that made his shows so captivating. But for those in the background, such as Grignon, few parts of the job caused more stress. Grignon couldn’t remember the last time a Jobs show of this magnitude had gone sideways. Part of what made Steve Jobs such a legend was that noticeable product-demo glitches almost never happened. But Grignon found it hard to recall the last time Jobs was so unprepared going into a show.
Grignon had been part of the iPhone launch-preparation team at Apple and later at the presentation site in San Francisco’s Moscone Center. But he had rarely seen Jobs make it all the way through his ninety-minute show without a glitch. Jobs had been rehearsing for five days, yet even on the last day of rehearsals the iPhone was still randomly dropping calls, losing the Internet connection, freezing, or just shutting down.
“At first it was just really cool to be at rehearsals at all—kind of like a cred badge. ‘Fuck yeah, I get to hang out with Steve,’” Grignon said. Like everything else that surrounded Jobs, the preparations were as secret as a U.S. missile attack on Afghanistan. Those who were truly in felt as if they were at the center of the universe. From Thursday through the end of the following week, Apple completely took over Moscone. Backstage it built an eight-by-eight-foot electronics lab to house and test the iPhones. Next to that it built a greenroom with a sofa for Jobs. Then it posted more than a dozen security guards twenty-four hours a day in front of those rooms and at doors throughout the building. No one got in or out without having his or her ID electronically checked and compared with a master list that Jobs had personally approved. More security checkpoints needed to be cleared once visitors got inside. The auditorium where Jobs was rehearsing was off-limits to all but a small group of executives. Jobs was so obsessed with leaks that he tried to have all the contractors Apple had hired for the announcement—from people manning booths and doing demos to those responsible for lighting and sound—sleep in the building the night before his presentation. Aides talked him out of it.
“It quickly got really uncomfortable,” Grignon said. “Very rarely did I see him become completely unglued. It happened. But mostly he just looked at you and very directly said in a very loud and stern voice, ‘You are fucking up my company,’ or, ‘If we fail, it will be because of you.’ He was just very intense. And you would always feel an inch tall [when he was done chewing you out].” Grignon said that you would always ask yourself two questions during one of these lectures: “‘Is it my shit that broke this time?’ and ‘Is it the nth time it broke or the first time?’—because that actually mattered. The nth time would frustrate him, but by then he might have figured out a way around it. But if it was the first time, it added a whole new level of instability to the program.” Grignon, like everyone else at rehearsals, knew that if those glitches showed up during the real presentation, Jobs would not be blaming himself for the problems, he would come after people like Grignon. “It felt like we’d gone through the demo a hundred times and that each time something went wrong,” Grignon said. “It wasn’t a good feeling.”
The iPhone didn’t work right for a good reason; it wasn’t close to being finished. Jobs was showing off a prototype. He just didn’t want the public to know that. But the list of things that still needed to be done before the iPhone could be sold was enormous. A production line had yet to be set up. Only about a hundred iPhones even existed, all of them of varying degrees of quality. Some had noticeable gaps between the screen and the plastic edge, others had scuff marks on the screen. Thus no one in the public was allowed to touch an iPhone after Jobs unveiled it, despite a day of press briefings and a whole exhibit set up for them in the convention center. The worry was that even the best prototypes wouldn’t stand close scrutiny, Grignon said. They’d look fine at a distance and for Jobs’s demo, but if you held one in your hand, “You would laugh and say, ‘Wow, this thing really looks unfinished.’”
The phone’s software was in even worse shape. A big chunk of the previous four months had been consumed figuring out why the iPhone’s processor and its cell radio wouldn’t reliably communicate. This huge problem was akin to a car with an engine that occasionally doesn’t respond to the accelerator, or wheels that occasionally don’t respond to the brake pedal. “It almost brought the iPhone program to a halt,” Grignon said. “We had never seen a problem this complicated.” This was ordinarily not a problem for phone makers, but Apple’s obsession with secrecy had kept Samsung, the manufacturer of the phone’s processor, and Infineon, the maker of the phone’s cell radio, from working together until Apple, in desperation, flew teams of engineers from each company to Cupertino to help fix the problem.
Jobs rarely backed himself into corners like this. He was well-known as a master taskmaster, seeming to always know just how hard he could push his staff so that they delivered the impossible. But he always had a backup, a Plan B, that he could go to if his timetable was off. Six months prior he’d shown off Apple’s upcoming operating system, Leopard. But that was after letting the date for the final unveiling slip.
But Jobs had no choice
but to show off the iPhone. He had given this opening keynote at every Macworld since he’d returned as Apple’s CEO in 1997, and because he gave public presentations only once or twice a year, he had conditioned Apple fans to expect big things from them. He’d introduced iTunes here, the iMac that looked like a fancy desk lamp, the Safari web browser, the Mac mini, and the iPod shuffle.
It wasn’t just his own
company that Jobs had to worry about disappointing this time. AT&T was expecting Jobs to unveil the iPhone at Macworld too. In exchange for being the exclusive carrier of the iPhone in the United States, AT&T had given Jobs total control of the design, manufacture, and marketing of the iPhone. It had never done anything like this before. If Jobs didn’t launch on time, AT&T could back out of its deal. It’s not hard to explain that a product called the iPhone that couldn’t make calls would sell poorly. Days before, Jobs had flown to Las Vegas to give AT&T’s top mobile executives a limited demo of the iPhone. But they were expecting a full show at Macworld.
Lastly, the iPhone was truly the only cool new thing Apple was working on. The iPhone had been such an all-encompassing project at Apple that this time there was no backup plan. “It was Apple TV or the iPhone,” Grignon said. “And if he had gone to Macworld with just Apple TV [an experimental product back then], the world would have said, ‘What the hell was that?’”
The iPhone’s problems were manifest. It could play a section of a song or a video, but it couldn’t play an entire clip without crashing. It worked fine if you sent an email and then surfed the web. If you did those things in reverse, however, it did not. Hours of trial and error had helped the iPhone team develop what engineers called “the golden path,” a specific set of tasks, performed in a specific way and in a specific order, that made the phone look as if it worked.
But even when Jobs stayed on the golden path, it required all manner of last-minute work-arounds to make the iPhone functional. On announcement day the software that ran Grignon’s radios still had bugs. So too did the software that managed the iPhone’s memory. And no one knew whether the extra electronics Jobs had required to be added to the demo units would make these problems worse.
Jobs had required the demo phones he would use onstage to have their screens mirrored on the big screen behind him. To show a gadget on a big screen, most companies just point a video camera connected to a projector at the gadget. That was unacceptable to Jobs. The audience would see his finger on the iPhone screen, which would mar the look of his presentation. Instead, he had Apple engineers spend weeks fitting extra circuit boards attached to video cables onto the backs of the iPhones he would have onstage. The video cables then connected to the projector showing the iPhone image on the screen. When Jobs touched the iPhone’s calendar app icon, for example, his finger wouldn’t appear, but the image on the big screen would respond. The effect was magical. People in the audience felt as if they were holding an iPhone in their own hands. But making the setup work flawlessly given the iPhone’s other major problems seemed hard to justify at the time. “It was all just so monkey-patched together with some of the ugliest hacks you could imagine,” Grignon said.
The software in the iPhone’s Wi-Fi radio was so unstable that Grignon and his team ultimately soldered antenna wires to the demo phones and ran them offstage along the wires to the projection setup. The iPhone would still connect wirelessly to the network, but the signal wouldn’t have to travel as far. Even then, Grignon and his team needed to make sure no one in the audience could get on the frequency they were using. “Even if the base station’s ID was hidden [and therefore not showing up when laptops scanned for Wi-Fi signals], you had five thousand nerds in the audience. They would have figured out how to hack into the signal.” The solution, Grignon said, was simply to tweak the AirPort software to think it was operating in Japan instead of the United States. Japanese Wi-Fi uses some frequencies that are not permitted in the U.S.
There was even less they could do to make sure the phone call Jobs planned to make from the stage went through. All Grignon and his team could do was make sure the signal was good and pray. They had AT&T bring in a portable cell tower so they knew reception would be strong. Then, with Jobs’s support, they preprogrammed the phone’s display to always show five bars of signal strength regardless of the true signal. The chances of the radio’s crashing during the few minutes that Jobs would use it to make a call were small, but the chances of its crashing at some point during the ninety-minute presentation were high. “If the radio crashed and restarted, as we suspected it might, we didn’t want people in the audience to see that. So we just hard-coded it to always show five bars,” Grignon said.
None of these kluges fixed the iPhone’s biggest problem: it often ran out of memory and had to be restarted if asked to do more than a handful of tasks at a time. Jobs had a number of demo units onstage with him to manage this problem. If memory ran low on one, he’d switch to another while the first was restarted. But given how many demos Jobs planned, Grignon worried that there were far too many potential points of failure. If disaster didn’t strike during one of the dozen demos, it was sure to happen during Jobs’s grand finale, when Jobs planned to show all the iPhone’s top features operating at the same time on the same phone. He’d play some music, take a call, put it on hold and take another call, find and email a photo to the second caller, look up something on the Internet for the first caller, and then return to his music. “Me and my guys were all so nervous about this. We only had 120 megabytes of memory in those phones, and because they weren’t finished, all these apps were still big and bloated,” Grignon said.
The idea that one of the biggest moments of his career might implode made Grignon’s stomach hurt. At forty, Grignon looks like the kind of guy you’d want to drink with—and he is. When he moved from Campbell to Half Moon Bay in 2010, he quickly became friendly with the sommelier at the Ritz-Carlton Hotel. He even had a wine fridge in his office. But behind that gregarious exterior is a fierce intellect and an ultracompetitive streak. Once when trying to get to the bottom of a slew of software bugs in an iPhone subcontractor’s equipment, he turned the AC on high in the conference room he used to make the subcontractors uncomfortably cold. When that didn’t get them moving fast enough, he tried a more aggressive approach: he accused them of holding out on him and threw his laptop against the wall.
By 2007 he’d spent virtually his entire fifteen-year career at Apple or companies affiliated with it. While at the University of Iowa in 1993, he and his friend Jeremy Wyld—now cofounder with Grignon of Quake Labs—reprogrammed the Newton MessagePad to wirelessly connect to the Internet. That was quite a feat back then, and it helped them both get jobs at Apple right out of school. Wyld actually worked on the Newton team, and Grignon worked in Apple’s famous R & D lab—the Advanced Technology Group—on video conferencing technology. Even though the Newton did not succeed as a product, many still think of it as the first mainstream handheld computer. But by 2000 Grignon had found his way to Pixo, a company spun out of Apple that was building operating systems for cell phones and other small devices. When Pixo’s software found its way into the first iPod in 2002, Grignon found himself back at Apple again.
By then, thanks to his work at Pixo, he’d become well known for two other areas of expertise besides building video conferencing technology: computer radio transmitters (what we now call wireless) and the workings of software inside small handheld devices such as cell phones. Grignon works in an entirely different world from that inhabited by most software engineers in the Valley. Most rarely have to think about whether their code takes up too much space on a hard drive or overloads a chip’s abilities. Hardware on desktop and laptop computers is both powerful, modifiable, and cheap. Memory, hard drives, even processors, can be upgraded inexpensively, and computers are either connected to electric outlets or giant batteries. In Grignon’s world of embedded software, the hardware is fixed. Code that is too big won’t run. Meanwhile, a tiny battery—which might power a laptop for a couple of minutes—needs enough juice to last all day. When Jobs decided to build the iPhone at the end of 2004, Grignon had a perfect set of skills to become one of the early engineers on the project.
Now, in 2007, he was emotionally exhausted. He’d gained fifty pounds. He’d stressed his marriage. It had been a grueling two years. Apple had never built a phone before, and the iPhone team quickly discovered the process didn’t resemble building computers or iPods at all. “It was very dramatic,” Grignon said. “It had been drilled into everyone’s head that this was the next big thing to come out of Apple. So you put all these supersmart people with huge egos into very tight, confined quarters, with that kind of pressure, and crazy stuff starts to happen.”
The iPhone didn’t start out as Apple’s “next big thing.” Jobs had to be talked into building a phone. It had been a topic of conversation among his inner circle almost from the moment Apple launched the iPod in 2001. The conceptual reasoning was obvious: Why would consumers carry two or three devices for email, phone calls, and music when they could carry one?
But every time Jobs and his executives examined the idea in detail, it seemed like a suicide mission. Phone chips and bandwidth were too slow for anyone to want to surf the Internet and download music or video over a cell phone connection. Email was a fine function to add to a phone. But Apple couldn’t leverage all the work it had put into building a music player such as the iPod to do that. Research in Motion’s BlackBerry was fast locking up that market, anyway. Apple even considerd buying Motorola in 2003, but executives quickly concluded it would be too big an acquisition for the company then.
Worst of all
, if Apple wanted to make and sell a phone in the United States, it would be at the beck and call of the U.S. wireless carriers. Back then, phone manufacturers such as Motorola were the serfs of high tech in the United States. They depended on carriers’ marketing dollars to get consumers into stores, and then they depended on carriers to make the phones affordable by subsidizing their purchase price. That made manufacturers powerless to resist carriers’ meddling in how each phone should be built. Manufacturers occasionally pushed back against this dominance and were always met with the same response from the carriers: “You can build the phone your way, but we might not subsidize it, market it, or allow it on our network.” Manufacturers always caved in the face of this threat.
Jobs was personally offended
by this way of doing business and wanted no part of it. “We’re not the greatest at selling to the Fortune 500, and there are five hundred of them—five hundred CIOs [chief information officers] that are orifices you have to go through to get” that business. “In the cell phone business there are five. We don’t even like dealing with five hundred companies. We’d rather run an ad for millions and let everyone make up their own mind. You can imagine what we thought about dealing with five,” he said during an onstage interview at the All Things D conference in May 2003. Translation: I am not about to spend hundreds of millions of dollars to have a bunch of suits tell me how to build and sell my phone.
That sounded tough and principled. But by the end of 2003, as the iPod became Apple’s most important product since the Macintosh, it was also starting to look misguided. Cell phone makers were putting music-listening applications in their phones. And companies such as Amazon, Walmart, and Yahoo! were beginning to sell downloadable music. Executives such as iPod boss Tony Fadell worried that if consumers suddenly gave up their iPods for music phones, Apple’s business—only five years removed from its flirt with bankruptcy—would be crushed. “We didn’t really have a hit on our hands [with the iPod] until late 2003, early 2004, so we were saying maybe we don’t have the market domination—the retail channels—to expand the iPod’s business properly,” Fadell said.
It’s hard to imagine
a time when the iPod wasn’t an iconic product, selling more than 50 million units a year; but back then Apple had sold only 1.3 million devices in two years and was still having trouble getting retailers such as Best Buy to carry it. “So we were thinking, ‘How do we get above the noise? How do we make sure that we are at least competitive so that anyone who is carrying a cell phone can get iTunes music?’ Because if we lost iTunes, we would have lost the whole formula,” Fadell said.
Publicly, Jobs continued his
harangue against the carriers. At the D conference in 2004, Stewart Alsop, Jr., the venture capitalist and former journalist, actually begged Jobs to make a smartphone that would improve on the popular Treo. “Is there any way you can get over your feelings about the carriers?” Alsop asked, offering to connect Jobs with Verizon CEO Ivan Seidenberg, who was also in the audience. Not a chance, Jobs said. “We’ve visited with the handset manufacturers and even talked to the Treo guys. They tell us horror stories.” But privately, Jobs was thinking hard about the content of Alsop’s pitch.
Jobs’s first answer to the growing competition wasn’t the iPhone, but something much more modest—a music phone called the Rokr, to be built in partnership with Motorola and Cingular, the big wireless carrier that would, via two mergers, become AT&T. The deal, agreed to in early 2004, seemed like the best of all worlds for Apple. It would license its iTunes software to Motorola to be put on Motorola’s supersuccessful Razr cell phone, and Motorola would handle the rest. Apple would get a license fee for letting Motorola use the software, and Jobs wouldn’t have to deal with the wireless carriers. iTunes would help Motorola sell more phones, get Cingular more wireless customers, and enable Apple to compete with the music phones it feared. “We thought that if consumers chose to get a music phone instead of an iPod, at least they would be using iTunes,” Fadell said.
Instead, the Rokr was an embarrassment. When Jobs unveiled it nearly eighteen months later in September 2005, it was not capable of over-the-air music downloads, the device’s main selling point. It was big and chunky—nothing like the sleek Razr that Motorola had made famous. And its music capacity was artificially limited to a hundred songs.
The tension between the partners
, especially Apple and Motorola, was obvious quickly after Jobs was done demoing the device onstage at Moscone Center in San Francisco. Jobs had released the first iPod nano at the same time, and when a reporter asked Motorola CEO Ed Zander a few weeks later if he felt upstaged by the other products Jobs had unveiled, his answer was succinct: “Screw the nano.” Wired magazine soon put a story of the fiasco on its cover under the headline YOU CALL THIS THE PHONE OF THE FUTURE?
Jobs successfully pinned the Rokr screwup
on Motorola, but the fiasco was mostly Apple’s fault. Yes, Motorola had produced an ugly phone, and it continued to produce phones that didn’t sell well for the next four years until Zander resigned. But the Rokr project’s real problem was that Jobs’s reason for the deal evaporated almost as soon as it was signed, Fadell said. The deal was designed as a defensive maneuver, a hedge against companies’ trying to build music phones without having to deal with the carriers themselves. But with each passing month in 2004 it became clearer that the last thing Apple needed to do with iTunes and the iPod was to play defense. It didn’t need the Rokr to help it more broadly distribute iTunes. It just needed to hang on as iPod sales took off like a rocket ship. In the summer 2003 Apple was selling only about three hundred thousand iPods a quarter. At the beginning of 2004 it was selling only eight hundred thousand a quarter. But by summer 2004 sales exploded. It sold 2 million during the quarter that ended September 30, 2004, and another 4.5 million in the final quarter of the year. By the time ugly Rokr prototypes showed up in the fall of 2004, many Apple executives saw clearly that they were on the wrong path, and by year-end Jobs had all but abandoned the project. He was still driving the iTunes team to deliver the software that would go in the Rokr, but he was listening more carefully to executives who thought the Rokr project had been folly from the start.
It wasn’t just the iPod’s success in 2004 that diluted Apple’s enthusiasm for the Rokr. By the end of the year, building its own phone no longer seemed like such a bad idea. By then it looked like most homes and cell phones would soon have Wi-Fi, which would provide high, reliable bandwidth over the homeowner’s DSL or cable connection. And outside-the-home cell phone bandwidth looked like it would soon be fast enough to stream video and run a fully functioning Internet browser. Phone processor chips were finally fast enough to run cool-looking phone software. Most important, doing business with the carriers was starting to seem less onerous. By the fall of 2004, Sprint was beginning to sell its wireless bandwidth wholesale. That meant that by buying and reselling Sprint bandwidth, Apple could become its own wireless carrier—an MVNO, short for “mobile virtual network operator.” Now Apple could build a phone and barely have to deal with the carriers at all. Disney, on whose board
Jobs sat, was already in discussions with Sprint about just such a deal to provide its own wireless service. Jobs was asking a lot of questions about whether Apple should pursue one as well.
Cingular executives involved in the Rokr project such as Jim Ryan watched Jobs’s interest in an MVNO with Sprint grow, and it terrified them. They worried that if Apple became a wireless carrier, it would cut prices to win customers and crush profits in the industry as other carriers cut prices to compete. So while they had access to Jobs and his team, they gently lobbied him to cut a deal with them instead. If Jobs would agree to an exclusive deal with Cingular, they said, they would be willing to throw out the rule book on carrier–manufacturer relations and give Jobs the control he needed to build a revolutionary device.
Ryan, who has never talked publicly about those days until now, said the experience taxed every ounce of his negotiating skills. He’d been assembling complex carrier deals for nearly a decade and was known in the industry as one of the early thinkers about the future of wireless. He’d grown Cingular’s wireless data business from almost nothing to $4 billion in revenue in three years. But Apple and Jobs had little experience negotiating with carriers, making it much harder for Ryan to predict how they would respond to his various offers. “Jobs hated the idea of a deal with us at first. Hated it,” Ryan said. “He was thinking that he didn’t want a carrier like us anywhere near his brand. What he hadn’t thought through was the reality of just how damn hard it is to deliver mobile service.” Throughout 2004, during the dozens of hours he and his team spent in meetings with Apple executives in Cupertino, Ryan kept reminding Jobs and other Apple executives that if Apple became a carrier itself, it would get stuck with all the hassles of running an inherently unpredictable asset—a cell phone network. A deal with Cingular would insulate Apple from all that. “Funny as it sounds, that was one of our big selling points to them,” Ryan said. “Every time the phone drops a call, you blame the carrier. Every time something good happens, you thank Apple.”
Cingular wasn’t just playing defense
. Executives such as Ryan thought partnering with the inventor of the iPod would transform the way customers thought about their own company. Apple’s explosive success with the iPod in 2004 and 2005—it sold 8.2 million iPods in 2004 and another 32 million in 2005—had taken Jobs’s status as a business and cultural icon to unparalleled heights. The likely torrent of new customers who would come to Cingular if it were the carrier for a phone as revolutionary as the iPod had been made them salivate.
Another Cingular executive who worked on the deal but who would not be named put it this way to me when I was working on a story for Wired in 2008: “Jobs was cool. He was hip. There were studies done in colleges that asked, ‘What is the one thing you can’t live without?’ For twenty years it was beer. Now it was the iPod. Things like that made us say this guy has got something. That probably gave us that much more energy to make sure this deal happened.”
While Cingular was lobbying Jobs from the outside, a handful of Apple executives, such as Mike Bell and Steve Sakoman, were pushing Jobs to sign off on building a phone from the inside. “We were spending all this time putting iPod features in Motorola phones. That just seemed ass-backwards to me,” said Bell, who now is cohead of Intel’s mobile-device effort. He told Jobs that the cell phone itself was on the verge of becoming the most important consumer electronics device of all time, that no one was good at making them, and that, therefore, “if we [Apple] just took the iPod-user experience and some of the other stuff we were working on, we could own the market.”
Bell was a perfect executive to be making this pitch. He’d been at Apple fifteen years and had helped build some of the products, such as the iMac, that enabled Apple to avoid bankruptcy in 1997. Most important, because he ran not only a chunk of the Mac software division but the software group responsible for Apple’s AirPort Wi-Fi devices, he knew more about the wireless industry than most other senior executives inside Apple. He doesn’t claim credit for being the father of the iPhone. He ultimately didn’t run or even work on the project. Fadell ran it, before Scott Forstall took it over. But even today most say Bell was an important catalyst.
“So I argued with Steve for a couple of months and finally sent him an email on November seventh, 2004,” Bell said. “I said, ‘Steve, I know you don’t want to do a phone, but here’s why we should do it: [Design director Jony Ive] has some really cool designs for future iPods that no one has seen. We ought to take one of those, put some Apple software around it, and make a phone out of it ourselves instead of putting our stuff on other people’s phones.’ He calls me back about an hour later and we talk for two hours, and he finally says, ‘Okay, I think we should go do it.’ So Steve and I and Jony [Ive] and Sakoman had lunch three or four days later and kicked off the iPhone project.”
It wasn’t just Bell’s persistence and Ive’s designs that helped convince Jobs. Sakoman came to lunch having already done some early engineering work about what it might take to build a phone. He’d been at Palm until 2003, where, among other things, he helped build the software that went inside Treo smartphones. And as vice president of software technology at Apple, he had become the executive most familiar with the software inside the iPod. If Apple was going to make a smartphone, the iPod was a logical place to start. That’s what consumers were expecting Apple to do. So by the time Sakoman arrived for lunch, he and his team had already figured out a way to put a Wi-Fi chip inside an iPod and get it to connect to the Internet.
They’d even begun working on new software for the music player—a version of Linux—so that it could handle the increased demands of being a phone and an Internet browser. Linux, the open-source software made famous by Linus Torvalds in the 1990s, had not supplanted Microsoft Windows as many geeks predicted it would. But by then it had become the software of choice for less powerful and sophisticated electronics. Sakoman briefed Jobs on his team’s progress and later that afternoon told his team, “You better start figuring this out because this [phone project] is going ahead.”
Bell says one reason why he remembers the meeting is that he’d never seen anyone eat the way Jobs did that day. “You know how you remember certain things because of their bizarreness? So we’re meeting outside at the Apple cafeteria, and when Steve walks out, on his tray is a glass bowl full of avocado halves. Not one or two, but, like, fifteen covered in salad dressing. So I remember sitting there with Jony and Sakoman and watching Steve mow through a mound of avocados. I guess, having read Walter Isaacson’s biography [of Jobs], it was one of those food phases he was in to cure his cancer, but at the time I had no idea what was up.”
The final deal between Apple and AT&T, which acquired Cingular in 2006, took more than a year to hammer out. But it would prove easy compared to what Apple went through just to build the device. Many executives and engineers, riding high from their success with the iPod, assumed it would be just like building a small Macintosh. Instead, Apple designed and built not one iPhone but three entirely different devices in those two years. One executive on the project thinks Apple made six fully working prototypes just of the device it ultimately sold—each with its own set of hardware, software, and design tweaks. Many on the team were so burned-out, they left the company shortly after the first phone hit store shelves. “It was like the first moon mission,” said Fadell, who was one of the key executives on the project, and who left Apple to start his own company, Nest, in 2010. “I’m used to a certain level of unknowns in a project, but there were so many new things here that it was just staggering.”
Jobs wanted the iPhone to run a modified version of OS X, the software that comes with every Mac. But no one had ever put
a gigantic program like OS X on a phone chip before. The software would have to be a tenth the size, and even then there wasn’t a phone chip being made in 2005 that could run it fast enough and with a long enough battery life. The chips that run Apple laptops were never considered because they generated too much heat and would suck a phone battery dry in minutes. Millions of lines of code would have to be stripped out or rewritten, and until 2006 engineers would have to simulate chip speed and battery drain because actual chips weren’t available until then. “Initially we just worked on Gumstix boards [cheap circuit boards hobbyists buy],” said Nitin Ganatra, one of the early software engineers. “We started with the Mac address book—a list of names—and to see if we could make it scroll [on a screen] at between thirty to sixty frames a second. We just wanted to figure out if there was any way to make this [OS X on a phone chip] work—whether we were even in the right ballpark. We wanted to know if we could push bits fast enough to get that iPhone look and feel. If we couldn’t get it to work on a Gumstix board, we knew we might have a problem.”
No one had ever put a capacitive multitouch screen in a mainstream consumer product before either. Capacitive touch technology—which creates “a touch” when a finger or other conductive item completes a circuit on the device—had been around since the 1960s. Elevator buttons in office buildings and screens on ATMs often used it. And research into multitouch technologies had been around since the 1980s. Trackpads on laptops were probably the most sophisticated use of this technology because they could recognize the difference between one- and two-finger inputs. But it was also well known that to build the multitouch screen Apple put on the iPhone and produce it in volume was a challenge few had the money or guts to take on. The next steps—to embed the technology invisibly in a piece of glass, to make it smart enough to display a virtual keyboard with auto-correct, and to make it sophisticated enough to reliably manipulate content such as photos or web pages on that screen—made it hugely expensive even to produce a working prototype. Few production lines even had experience manufacturing multitouch screens. There were touchscreens in consumer electronics, but over the years these had typically been pressure-sensitive touchscreen devices on which users pushed on-screen buttons with a finger or a stylus. The PalmPilot and its successors such as the Palm Treo were popular implementations of this technology. Even if multitouch iPhone screens had been easy to make, it wasn’t at all clear to Apple’s executive team that the features they enabled, such as onscreen keyboards and “tap to zoom,” were enhancements that consumers wanted.
As early as 2003 a handful of Apple engineers, who had done cutting-edge academic work with touch interfaces, had figured out how to put multitouch technology in a tablet. But the project was mothballed. “The story was that Steve wanted a device that he could use to read email while on the toilet. That was the extent of the product spec,” said Josh Strickon, one of the earliest engineers on that project. “But you couldn’t build a device with enough battery life to take out of the house, and you couldn’t get a chip with enough graphics capability to make it useful. We spent a lot of time trying to figure out just what to do.” Before joining Apple in 2003, Strickon had been a student at MIT for a decade, getting his B.A., master’s, and Ph.D. in engineering. He was a huge proponent of touchscreen technology, having built a multitouch device for his master’s thesis. But he said given the lack of consensus at Apple about what to do with the prototypes he and his fellow engineers developed, he left the company in 2004 thinking it wasn’t going to do anything with multitouch.
Tim Bucher, one of Apple’s top executives at the time and the company’s biggest multitouch proponent, said part of the problem was that the prototypes they were building used software, OS X, that was designed to be used with a mouse, not a finger. “We were using ten- or twelve-inch screens with Mac mini–like guts … and then you would launch these demos that would do the different multitouch gestures. One demo was a keyboard application that would rise from the bottom—very much what ended up shipping in the iPhone two years later. But it wasn’t very pretty. It was very much wires, chewing gum, and bailing wire. It left too much to the imagination.” Bucher, who has never before talked publicly about his work at Apple, had hoped to keep pushing the effort forward, but he lost a political battle with other top executives and left Apple in early 2005.
Few even thought about making touchscreen technology the centerpiece of a new kind of phone until Jobs started pushing the idea in mid-2005. “He said, ‘Tony, come over here. Here’s something we’re working on. What do you think? Do you think we could make a phone out of this?’” Fadell said. “So we sat there and played with the demo (he was showing me) for a while. It was huge. It filled the room. There was a projector mounted on the ceiling and it would project the Mac screen onto this surface that was maybe three or four feet square. Then you could touch the Mac screen and move things around and draw on it. I knew about it [the touchscreen prototype], but I didn’t know about it in detail because it was a Mac thing [Fadell ran the iPod division]. So we all sat down and had a serious discussion about it—about what could be done.”
Fadell had serious doubts about whether such an enormous prototype could be shrunk so much. But he also knew better than to answer no to Steve Jobs. He was one of Apple’s superstars, and he didn’t get there by being timid about thorny technological problems. He’d joined Apple in 2001 as a consultant to help build the first iPod. By 2005, with iPod sales exploding, he had become, at thirty-six, arguably the single most important line executive at the company.
“I understood how it could be done,” Fadell said. “But it’s one thing to think that, and another to take a room full of special, one-off gear and make a million phone-sized versions of that in a cost-effective, reliable manner.” The to-do list was exhausting just to think about. “You had to go to LCD vendors [companies that make the screens that go in computer monitors and TVs] who knew how to embed technology like this in glass; you had to find time on their line; and then you had to come up with compensation and calibrating algorithms to keep the pixel electronics [in the LCD] from generating all kinds of noise in the touchscreen [sitting on top of it.] It was a whole project just to make the touchscreen device. We tried two or three ways of actually making the touchscreen until we could make one in enough volume that would work.”
Shrinking OS X and building a multitouch screen, while innovative and difficult, were at least within the skills Apple had already mastered as a corporation. No one was better equipped to rethink OS X’s design. Apple knew LCD manufacturers because it put an LCD in every laptop and iPod. The peculiarities of mobile phone physics, on the other hand, were an entirely new field, and it took those working on the iPhone into 2006 to realize how little they knew.
To ensure the iPhone’s
tiny antenna could do its job effectively, Apple spent millions buying and assembling special robot-equipped testing rooms. To make sure the iPhone didn’t generate too much radiation, Apple built models of human heads—complete with goo to simulate brain density—and measured the effects. To predict the iPhone’s performance on a network, Apple engineers bought nearly a dozen server-size radio-frequency simulators for millions of dollars apiece. One senior executive believes Apple spent more than $150 million building the first iPhone.
The first iPhone prototype was not ambitious. Jobs hoped that he would be able to develop a touchscreen iPhone running OS X. But in 2005 he had no idea how long that would take. So Apple’s first iPhone looked very much like the joke slide Jobs had put up when introducing the real iPhone—an iPod with an old fashioned rotary dial on it. The prototype was an iPod with a phone radio that used the iPod click wheel as a dialer. It grew out of the work Steve Sakoman had used to pitch Jobs on a phone project in the first place. “It was an easy way to get to market, but it was not cool like the devices we have today,” Grignon said. He worked for Sakoman at the time and is one of the names on the click wheel dialer patent.
The second iPhone prototype in early 2006 was much closer to what Jobs would ultimately unveil. It incorporated a touchscreen and OS X, but it was made entirely of brushed aluminum. Jobs and Ive were exceedingly proud of it. But since neither of them were experts in the physics of radio waves, they hadn’t realized they’d created a beautiful brick. Radio waves don’t travel through metal well. “I and Ruben Caballero [Apple’s antenna expert] had to go up to the boardroom and explain to Steve and Ive that you cannot put radio waves through metal,” said Phil Kearney, one of Bell’s deputies, who left in 2008. “And it was not an easy explanation. Most of the designers are artists. The last science class they took was in eighth grade. But they have a lot of power at Apple. So they ask, ‘Why can’t we just make a little seam for the radio waves to escape through?’ And you have to explain to them why you just can’t.”
Jon Rubinstein, Apple’s top hardware executive then and known to many as the Podfather for driving the creation and development in the iPod, said there were even long discussions about how big the phone would be. “I was actually pushing to do two sizes—to have a regular iPhone and an iPhone mini like we had with the iPod. I thought one could be a smartphone and one could be a dumber phone. But we never got a lot of traction on the small one, and in order to do one of these projects you really need to put all your wood behind one arrow.”
It all made the iPhone
project so complex that it occasionally threatened to derail the entire corporation. Many of the top engineers in the company were being sucked into the project, forcing slowdowns in the timetables of other projects. Had the iPhone been a dud or not gotten off the ground at all, Apple would have had no other big products ready to announce for a long time. Worse, its top engineers, frustrated by the failure, would have left Apple for other jobs, according to 2012 testimony by Scott Forstall, one of Apple’s top executives on the project and Apple’s head of iOS software until October 2012. He testified during the Apple v. Samsung patent trial.
Even Apple’s experience designing screens for iPods didn’t help the company design the iPhone screen. After much debate, Jobs decided the iPhone screen needed to be made of hard Plexiglas. He and his executives thought a glass screen would shatter when dropped—until Jobs saw how scratched a plastic prototype had gotten when he carried it around in his pocket with his keys. “Jobs goes, ‘Look at this. Look at this. What’s with the screen?’” said an executive who witnessed the exchange. “And the guy [a midlevel executive] takes the prototype and says, ‘Well, Steve, we have a glass prototype, but it fails the one-meter drop test one hundred out of one hundred times, and blah blah blah …’ Jobs cuts him off and says, ‘I just want to know if you are going to make the fucking thing work.’”
There was a good reason the executive argued with Jobs. This was September 2006. The iPhone would be unveiled in four months. And Jobs wanted to rethink the phone’s most prominent component.
Through his friend
John Seely Brown, Jobs reached out to Wendell Weeks, the CEO of glassmaker Corning in upstate New York, invited him to Cupertino, and told him he needed the hardest glass ever made for the screen of the iPhone. Weeks told him about a process developed for fighter-jet cockpits in the 1960s. But Weeks said the Defense Department never ended up using the material, known as gorilla glass, so it had never found a market. He said Corning had stopped making it decades ago. Jobs wanted Weeks to start production immediately, convincing Weeks that he could in fact get Jobs the glass he needed in six months. Weeks told Jobs’s biographer Walter Isaacson that he remains amazed at what Jobs convinced him to do. Corning took a factory in Harrodsburg, Kentucky, that had been making LCD displays and converted it, getting Jobs the glass he needed on time. “We produced glass that had never been made. We put our best scientists and engineers on it and we just made it work,” Weeks said.
“I still remember PC Magazine doing a screen durability test once the phone came out in July 2007,” said Bob Borchers, Apple’s then head of iPhone marketing. “They put it in a bag of coins and shook it up. They put keys in the bag and shook it up. They dropped it a few times on a carpet. And then they went out on the street and dropped it on the concrete three times. It survived all of that. We all laughed, looked at each other, and said, ‘Right, we knew that.’”
On top of all that, Jobs’s obsession with secrecy meant that despite being exhausted from working eighty hours a week, the few hundred engineers and designers working on the project couldn’t talk about the project to anyone else. If Apple found out you’d told a friend in a bar, or even your spouse, you could be fired. Before a manager could ask you to join the project, you had to sign a nondisclosure agreement in his office. Then, after he told you what the project was, you had to sign another document confirming that you had indeed signed the NDA and would tell no one. “We put a sign on over the front door of the iPhone building that said FIGHT CLUB because the first rule of fight club is you don’t talk about fight club,” Forstall would explain in his court testimony. “Steve didn’t want
to hire anyone from outside of Apple to work on the software, but he said I could hire anyone in the company I wanted,” Forstall said. “So I’d bring recruits into my office. Sit them down and tell them, ‘You are a superstar at Apple. Whatever you are doing now, you’ll do fine. But I have another project that I want you to consider. I can’t tell you what it is. All I can say is that you will have to give up untold nights and weekends and that you will work harder than you have ever worked in your life.”
“My favorite part,” said one of the early iPhone engineers, “was what all the vendors said the day after the unveiling.” Big companies such as Marvell Electronics, which made the Wi-Fi radio chip, and CSR, which provided the Bluetooth radio chip, hadn’t been told they were going to be in a new phone. They thought they were going to be in a new iPod. “We actually had fake schematics and fake industrial designs,” the engineer said. Grignon said that Apple even went as far as to impersonate employees of another company when they traveled, especially to Cingular (and, later, AT&T) in Texas. “The whole thing was you didn’t want the receptionist or whoever happens to be walking by to see all [preprinted Apple] badges lying out.”
On the other hand, Jobs wanted a handful of the top engineers on the iPhone project to use iPhone prototypes as their permanent phones. “It wasn’t ‘Carry an iPhone—and a Treo,’” Grignon said. “It was ‘Carry an iPhone and live on it,’ because that’s how we found bugs. If you can’t make a phone call because of a bug, you are going to be extra-motivated to start yelling to get that fixed. But it made for some awkward times where, if you were, say, in a club or an airport, you could spot an iPhone user a mile away because they were the person hunched over with their arms around their phone doing something mysterious. Snorting a line of coke—or using an iPhone?”
One of the most obvious manifestations of Jobs’s obsession with secrecy was the growth of lockdown areas all over campus—places that those not working on the iPhone could no longer go. “Each building is split in half, and there is this corridor that runs through the middle of them with common areas, and after one weekend they just put doors around the common areas so that if you were not on the project, and you were used to using that space, it was now off-limits,” Grignon said. “Steve loved this stuff. He loved to set up division. But it was a big ‘fuck you’ to the people who couldn’t get in. Everyone knows who the rock stars are in a company, and when you start to see them all slowly get plucked out of your area and put in a big room behind glass doors that you don’t have access to, it feels bad.”
Even people within the iPhone project itself couldn’t talk to one another. Engineers designing the iPhone’s electronics weren’t allowed to see the software it would run. When they needed software to test the electronics, they were given proxy code, not the real thing. If you were working on the software, you used a simulator to test hardware performance.
And no one outside Jobs’s inner circle was allowed into chief designer Jony Ive’s wing on the first floor of Building 2. The security surrounding Ive’s prototypes was so tight that employees believed the badge reader called security if you tried to badge in and weren’t authorized. “It was weird, because it wasn’t like you could avoid going by it. It was right off the lobby, behind a big metal door. Every now and then you’d see the door open and you’d try to look in and see, but you never tried to do more than that,” said an engineer whose first job out of college was working on the iPhone. Forstall said during his testimony that some labs required you to “badge in” four times.
The four months leading up to announcement day were particularly rough, Grignon said. Screaming matches broke out routinely in the hallways. Engineers, frazzled from all-night coding sessions, quit, only to rejoin days later after catching up on their sleep. Forstall’s chief of staff, Kim Vorath, slammed the door to her office so hard that the handle bent and locked her in; it took colleagues more than an hour and some well-placed whacks with an aluminum bat to free her. “We were all standing there watching it,” Grignon said. “Part of it was funny. But it was also one of those moments where you step back and realize how fucked-up it all is.”
To Grignon’s amazement
and to that of many others in the audience, Jobs’s iPhone demo on January 9, 2007, was flawless. He started the show saying, “This is a day I have been waiting for two and a half years.” Then he regaled the audience with a myriad of tales about why consumers hated their cell phones. Then he solved all their problems—definitively. Virtually everyone in the audience had been expecting Jobs to announce a phone, yet they were still in awe.
He used the iPhone to play some music and watch a movie clip to show off the phone’s beautiful screen. He made a phone call to show off the phone’s reinvented address book and voice mail. He sent an email and a text, showing how easy it was to type on the phone’s touchscreen keyboard. He scrolled through a bunch of photos, showing how simple pinches and spreads of two fingers could make the pictures bigger or smaller. He navigated Amazon’s and The New York Times’ websites to show that the iPhone’s Internet browser was as good as the one on his computer. He found a Starbucks with Google Maps—and called the number from the stage—to show how it was impossible to get lost with an iPhone.
By the end, Grignon wasn’t just happy, he was drunk. He’d brought a flask of Scotch to calm his nerves. “And so there we were in the fifth row or something—engineers, managers, all of us—doing shots of Scotch after every segment of the demo. There were about five or six of us, and after each piece of the demo, the person who was responsible for that portion did a shot. When the finale came—and it worked along with everything before it, we all just drained the flask. It was the best demo any of us had ever seen. And the rest of the day turned out to be just a shit show for the entire iPhone team. We just spent the entire rest of the day drinking in the city. It was just a mess, but it was great.”
2 (#ulink_77f423d7-4293-5da8-87e2-70f6b6556e8d)
The iPhone Is Good. Android Will Be Better. (#ulink_77f423d7-4293-5da8-87e2-70f6b6556e8d)
For all its fame and notoriety, Silicon Valley, as a place, isn’t much of a tourist attraction. There is no sign or Walk of Fame as in Hollywood. There isn’t an address, such as Wall Street, where the New York Stock Exchange has been for 150 years. It is just a slew of office parks sprawling thirty miles southeast from the San Francisco Airport to San Jose.
But a visual encapsulation
of the Valley’s brilliant, driven, and zany gestalt does exist. You just have to know someone at Google to go see it. Located thirty-five miles southeast of San Francisco next to Highway 101 in Mountain View, Google’s sprawling campus resembles few other corporate facilities in the world. The company started in a Stanford University dorm room in 1998 and has in fifteen years grown into one of the most important and powerful companies in the world. Google now controls more than sixty-five buildings in Mountain View and employs a third of its roughly fifty-five thousand workers there. Size hasn’t made Google slow or stuffy. Visual signs of its unconventional approach to problem solving remain everywhere. Googlers on red, green, and blue bicycles and motorized scooters zip from building to building. A fifteen-foot-high replica of a T. rex named Stan presides over the main outdoor lunch patio. A few feet away is a replica of SpaceShipOne, Burt Rutan’s first manned private spaceship in 2004. Many lobbies have pianos and vibrating massage chairs; and many restrooms have heated Japanese toilet seats—an odd experience on a hot day when the person before you has forgotten to turn the heater off. Google uses so many solar panels for power that it ranks as one of the largest corporate solar installations in the world. Meanwhile, an entire fleet of Wi-Fi-enabled commuter buses run to and from San Francisco, Berkeley/Oakland, and San Jose. They not only encourage employees to conserve gas by not driving, but they allow Google to tap into a bigger population of potential employees. Food and drink everywhere on campus are free.
It feels like a college campus, and that’s exactly how it’s supposed to feel. The source of Google’s success has been the quality of the engineers it hires out of top colleges. Rather than make them feel as if they’ve just joined the marines—as other corporations might—Google wants to keep them feeling that they’ve never left school so that they stay creatively wide-eyed. The campus has a swimming pool, gyms, a convenience store, a day-care center, a place to get haircuts, and drop-off dry cleaning. Almost every building has a laundry room. One summer back in 2004 a bunch of summer interns tried to live at Google rather than search for housing. They slept on couches and ran their whole lives out of the Googleplex until they were told they were violating the fire code.
“We made an explicit decision
to keep the buildings crowded,” Google executive chairman and former CEO Eric Schmidt told me back then. “There’s kind of a certain amount of noise that kind of gets everybody to work and gets them excited. It’s really based on how computer-science graduate schools work. If you go to a graduate school, like go to the Stanford Computer Science building, you’ll see two, three, or even four in an office. That model is one which is very familiar to our programmers and for us because we were all in those offices too, and we know it’s a very productive environment.”
Over the years
these perks and oddities have been so widely imitated by other corporations that it is now impossible to explain Silicon Valley without mentioning them. Google’s company bus fleet is arguably driving an entire reconfiguration of work-life patterns in the Bay Area. Most big Silicon Valley companies now offer such buses. The one downside of working in Silicon Valley after college used to be living in suburban Mountain View, Palo Alto, or Sunnyvale. City life in San Francisco wasn’t worth the more than two hours of driving it required to live there. Google’s buses, which all have Wi-Fi, make those commutes not only tolerable but some of the most productive hours of the day. So many high-tech workers now live in San Francisco that some of the newest technology companies have followed them. A decade ago companies such as Zynga and Twitter would have automatically located in Silicon Valley. When they started more than six years ago, they located in San Francisco. Benchmark Capital, a top venture capital firm, just opened its first office in their neighborhood too.
All this has made Google a rigorous yet chaotic place to work. Especially back in 2005 there were often dozens of engineering projects going at the same time. Many of them had conflicting ambitions. And some were so secret that only a handful of top executives knew about them. The most secret and ambitious of these was Google’s own smartphone effort—the Android project. Tucked in a first-floor corner of Google’s Building 44, surrounded by Google ad reps, its four dozen engineers thought that they too were on track to deliver a revolutionary device that would change the mobile phone industry forever. By January 2007, they’d all worked sixty-to-eighty-hour weeks for fifteen months—some for more than two years—writing and testing code, negotiating software licenses, and flying all over the world to find the right parts, suppliers, and manufacturers. They had been working with prototypes for six months and had planned a launch by the end of the year … until Jobs took the stage to unveil the iPhone.
Chris DeSalvo’s reaction to the iPhone was immediate and visceral. “As a consumer I was blown away. I wanted one immediately. But as a Google engineer, I thought, ‘We’re going to have to start over.’”
For most of Silicon Valley—including most of Google—the iPhone’s unveiling was something to celebrate. Jobs had once again done the impossible. Four years before he’d talked an intransigent music industry into letting him put their catalog on iTunes for ninety-nine cents a song. Now he had convinced a wireless carrier to let him build a revolutionary smartphone. But for the Google Android team, the iPhone was a kick in the stomach. “What we had suddenly looked just so … nineties,” DeSalvo said. “It’s just one of those things that are obvious when you see it.”
DeSalvo wasn’t prone to panic. Like many veteran engineers in the Valley, laconic would be a good description of his personality. He’s an expert sailor who had just returned from taking his family on a three-week excursion in Indonesia. He’d been writing software for two decades, first for video-game developers, then for Apple, and by 2000 for a start-up called Danger. There were few software-development issues he hadn’t encountered. After joining Google and the Android team in Mountain View at the end of 2005 and spending a year writing thousands of lines of code out of a utility closet (he likes writing code in silence), he’d moved to Chapel Hill, North Carolina, the week before to help the team integrate a recent acquisition. But as he watched Jobs’s presentation from a run-down office above a T-shirt shop there, he knew his boss, Andy Rubin, would be thinking the same thing he was. He and Rubin had worked together for most of the previous seven years, when DeSalvo had been an engineer at Danger, Rubin’s first start-up. Rubin was one of the most competitive people DeSalvo knew. Rubin was not about to release a product that suddenly looked so dated.
Six hundred miles away in Las Vegas, on his way to a meeting with one of the myriad handset makers and carriers that descend on the city for the Consumer Electronics Show, Rubin reacted exactly as DeSalvo predicted. He was so astonished by what Jobs was unveiling that, on his way to a meeting, he had his driver pull over so that he could finish watching the webcast. “Holy crap,” he said to one of his colleagues in the car. “I guess we’re not going to ship that phone.”
What the Android team had been working on, a phone code-named Sooner, sported software that was arguably more revolutionary than what had just been revealed in the iPhone. In addition to having a full Internet browser, and running all of Google’s great web applications, such as search, Maps, and YouTube, the software was designed not just to run on Sooner, but on any smartphone, tablet, or other portable device not yet conceived. It would never need to be tethered to a laptop or desktop. It would allow multiple applications to run at the same time, and it would easily connect to an online store of other applications that Google would seed and encourage. By contrast, the iPhone needed to connect to iTunes regularly, it wouldn’t run more than one application at a time, and in the beginning it had no plans to allow anything resembling an application store.
However, the Sooner phone was ugly. It looked like a BlackBerry, with a traditional keyboard and a small screen that wasn’t touch-enabled. Rubin and his team, along with partners HTC and T-Mobile, believed consumers would care more about the great software it contained than its looks. This was conventional wisdom back then. Revolutionary phone designs rarely succeeded. The Nokia N-Gage, which in 2003 tried to combine a gaming system with a phone and email device, often gets mentioned here. RIM had become one of the dominant smartphone makers on the planet by making BlackBerry’s unadorned functionality one of its main selling points: you got a phone, an incredible keyboard, secure email, all in one indestructible package.
The iPhone, in contrast, was not only cool looking, but it used those cool looks to create entirely new ways to interact with a phone—ways that Android engineers either hadn’t thought possible or had considered too risky. By using a virtual keyboard and replacing most real buttons with software-generated buttons on a big touchscreen, every application could now have its own unique set of controls. Play, Pause, and Stop buttons only appeared if you were listening to music or watching video. When you went to type a web address into the browser, the keyboard appeared, but it disappeared when you hit Enter. Without the physical keyboard taking up half the phone, the iPhone had a screen twice the size of virtually every other phone on the market. It all worked the same way whether the user held the phone in portrait or landscape mode. Apple had installed an accelerometer to use gravity to tell the phone how to orient the screen.
A lot was wrong with the first iPhone too. Rubin and the Android team—along with many others—did not think users would take to typing on a screen without the tactile feedback of a physical keyboard. That is why the first Android phone—the T-Mobile G1 from HTC, nearly two years later—had a slide-out keyboard. But what was also undeniable to the Android team was that they had underestimated Jobs. At the very least, Jobs had come up with a new way of interacting with a device—with a finger instead of a stylus or dedicated buttons—and likely a lot more. “We knew that Apple was going to announce a phone. Everyone knew that. We just didn’t think it would be that good,” said Ethan Beard, one of Android’s early business development executives.
Within weeks the Android team had completely reconfigured its objectives. A phone with a touchscreen, code-named Dream, that had been in the early stages of development, became the focus. Its launch was pushed out a year until fall 2008. Engineers started drilling into it all the things the iPhone didn’t do to differentiate their phone when launch day did occur. Erick Tseng, then Android’s project manager, remembers suddenly feeling the nervous excitement of a pending public performance. Tseng had joined Google the year before out of Stanford business school after Eric Schmidt, himself, sold him on the promise of Android. “I never got the feeling that we should scrap what we were doing—that the iPhone meant game over. But a bar had been set, and whatever we decided to launch, we wanted to make sure that it cleared the bar.”
In many ways the Android project is the perfect reflection of Google’s zany and chaotic culture. At most companies, outlandish ideas are discouraged in favor of ideas that are doable. At Google, especially back then, the reverse was true. The easiest way
to get on cofounder and now CEO Larry Page’s bad side was not to think big enough and to clutter a pitch with how much money an idea could make. Back in 2006 Page famously gave Sheryl Sandberg praise for making a mistake that cost Google several million dollars. That was when Sandberg was a Google vice president in charge of its automated ad system, not the chief operating officer of Facebook. “God, I feel really bad about this,” Sandberg told Page, according to Fortune magazine. But instead of hammering her for the error, Page said, “I’m so glad you made this mistake because I want to run a company where we are moving too quickly and doing too much, not being too cautious and doing too little. If we don’t have any of these mistakes, we’re just not taking enough risk.”
The cell phone industry in 2005 was a perfect example of a hairy Google-size problem. The software industry for mobile phones was one of the most dysfunctional in all technology. There wasn’t enough wireless bandwidth for users to surf the Internet on a phone without frustration. Phones weren’t powerful enough to run anything but rudimentary software. But the biggest problem, as Jobs had learned, was that the industry was ruled by an oligopoly: Few companies besides the carriers and the phone makers were writing software for phones, and what existed was terrible. Wireless bandwidth would improve and phone chips would get more powerful; but back then it looked as if the carriers and phone makers would control it all. “We had done a deal with Vodafone [the big European carrier] to try to get Google search on their phones,” said one top Google executive who would not give his name. “But the search they offered us was that we could put some results on, but that they would control most of them, and that our results would be at the bottom of every query. They didn’t have a good mobile browser. Ringtones [that they were selling] sometimes got prioritized in search results. All the carriers were doing this. They thought they could provide all the services inside a walled garden [as AOL had in the 1990s], and that this control was the best way to make money.”
The reason few developers built software for mobile phones was because anytime they tried, they lost money. There was no standardization in the industry. Virtually every phone ran its own software and set of applications, meaning software written for a Samsung phone often wouldn’t run on a Motorola phone, which wouldn’t run on a Nokia. Software platforms were incompatible even within companies. For example, there were a handful of different versions of Symbian. Put simply, the mobile industry screamed “money pit” to any enterprising developer. Most stayed away. The most lucrative business was not writing apps for phones. It was owning a testing company that would make sure your apps worked on all the phones in the market. Larry Page has never been shy
talking about how frustrating those days were for him and Google. “We had a closet full of over 100 phones [that we were developing software for], and we were building our software pretty much one device at a time,” he said in his 2012 report to shareholders. In various remarks over the years he has described the experience as both “awful” and “incredibly painful.”
But Page and the rest of Google’s executives knew that someone would figure out the mobile business eventually, and they were particularly concerned that that company would be Microsoft. Back then, Microsoft was still the richest and most powerful technology company in the world, and it was finally getting traction with its Windows CE mobile phones and software. Windows CE smartphones were still a niche market, but if consumers took to the platform en masse as they did later with the iPhone, Google’s entire business could be in jeopardy.
This wasn’t an exaggeration
. Back then, Microsoft and Google were in the midst of a nasty battle of their own for dominance in search, and for top dog in the tech world. After two decades of being the first-choice workplace of top engineering talent, Microsoft was now losing many of those battles to Google. Chairman Bill Gates and CEO Steve Ballmer had made it clear they took Google’s challenge personally. Gates seemed particularly affected by it. Once or twice he made fun of the way Page and his Google cofounder Sergey Brin dressed. He said their search engine’s popularity was “a fad.” Then, in the same breath, he would issue the ultimate compliment, saying that of all his competitors over the years, Google was the most like Microsoft.
Google executives were convinced that if Windows on mobile devices caught on, Microsoft would interfere with users’ access to Google search on those devices in favor of its own search engine. The government’s successful antitrust trial against Microsoft in the 1990s made it difficult for the company to use its monopoly on desktops and laptops to bully competitors. It could not, for example, make Microsoft’s the default search engine in Windows without giving users a choice between its search engine and those from Google, Yahoo, and others. However, on smartphones, few rules governed how fiercely Microsoft could compete. It didn’t have a monopoly there. Google worried that if Microsoft made it hard enough to use Google search on its mobile devices and easy enough to use Microsoft search, many users would just switch search engines. This was the way Microsoft killed Netscape with Internet Explorer in the 1990s. If users stopped using Google’s search engine and began using a competitor’s such as Microsoft’s, Google’s business would quickly run aground. Google made all its money back then from the search ads that appeared next to its search results. “It’s hard to relate
to that [fear of Microsoft] now, but at the time we were very concerned that Microsoft’s mobile strategy would be successful,” Schmidt said in 2012 during testimony in the Oracle v. Google copyright trial.
All these fears and frustrations
were top of the mind for Page when he agreed to meet with Rubin in early 2005 in the first-floor conference room of Google’s Building 43. Back then, Page’s office was on the second floor overlooking Google’s main courtyard. He and Brin shared it and continued that setup until Page became CEO in 2011. The space looked more like the dorm room of two engineering students than anything you would expect to see in a major corporation. You had to work to see their two desks and computers because the room was so jammed with their latest electronic-gadget passions—cameras typically for Page, along with Brin’s radio-controlled planes and cars and his roller-hockey gear. When Brin and Page were not there, the office was often filled with other programmers, who felt free to take it over. Rubin had reached out to Page because Rubin had started Android the year before and had enough software written to show potential customers such as carriers. He thought some kind of sign from Google—such as an email from Page saying that Android was doing interesting work—would help Rubin raise more money to keep going and give his sales pitch more zing.
Few people can just email Larry Page directly and successfully ask for a meeting, but back then Rubin was one of them. Three years earlier, when Google was still scrabbling for users, attention, and revenue, Rubin had made Google the default search engine on the T-Mobile Sidekick, the device Rubin designed and built when he ran Danger. Page remembered the gesture not just because Google had desperately needed search traffic at the time, but also because he thought the Sidekick was one of best-engineered mobile devices he’d ever seen.
The Sidekick was odd looking—shaped like a bar of soap with a screen in the middle. To operate it, one flipped up the screen, rotating it 180 degrees, and typed on the keyboard underneath. Its nonstandard looks and a nonexistent marketing budget kept it from being a hit product. But it had a cult following among two groups: savvy high school and college students and Silicon Valley engineers. Students liked that it was the first mobile device to have instant-messaging software built in. Engineers such as Page loved that it was the first mobile device to allow users to surf the Internet the same way as on their office computers. BlackBerry had mobile email down to a science, and everyone at Google had a BlackBerry. But the Internet browsers on it and other mobile devices were terrible. To deal with smaller bandwidth back then, browsers were designed to show only the bare bones of a web page’s content—typically just text. But that also made the browsing experience all but useless for businesses. One of the things that wouldn’t work in these crippled browsers were Google search ads. You couldn’t click on them. Soon Page and Brin were walking around with Sidekicks themselves, enthralling their friends and colleagues with a mobile device that nearly replaced their laptops.
According to Wired, when Page arrived for the meeting, late as usual, Rubin jumped to the whiteboard to begin his pitch: phones with computer capabilities, not laptops or desktops, were the future of technology. It was a huge market, Rubin said. More than 700 million cell phones were sold worldwide every year, compared to 200 million computers, and that gap was widening. But the phone business was stuck in the dark ages. Android would fix that problem by convincing carriers and phone makers that they didn’t need to spend money on their own proprietary software. Frustrated consumers would flock to phones that worked better. Software developers would rush to write software for a platform in such demand. A self-reinforcing software ecosystem would be born.
Page listened gamely
. He looked at the prototype Rubin had brought with him. But Page had pretty much decided what he was going to do before the meeting even started: What if Google just bought Android? he asked. He later told Steven Levy, the author of In the Plex, “We had that vision [about what the future of mobile should look like], and Andy came along and we were like ‘Yeah we should do it. He’s the guy.’” Google bought Android for about $50 million plus incentives, and by July 2005 Rubin and his seven other Android cofounders were sharing their vision of the world with the rest of Google’s management team.
Rubin was surprised and thrilled about Google’s decision to buy his company. “At Danger we had a great niche product [the Sidekick] that everyone loved. But I wanted to get beyond niche and make a mass-market product,” he said. And no company was more mass-market than Google. When reflecting on those days, he likes to tell a before-and-after story about a presentation he gave to phone maker Samsung in Seoul:
I walk into the boardroom with my entire team—me and six people. Then twenty executives walk in and stand on the other side of the table in the boardroom. We’re sitting down because I wasn’t accustomed to Asian culture and whatnot at the time. Their CEO walks in. Everyone sits only after he sits, like a military tribunal. Then I go into pitch mode. I pitch the whole Android vision to them like they are a venture capitalist. And at the end and I am out of breath, with the whole thing laid out … there is silence. Literally silence, like there are crickets in the room. Then I hear whispering in a nonnative language, and one of the lieutenants, having whispered with the CEO, says, “Are you dreaming?” The whole vision that I presented, their response was “You and what army are going to go and create this? You have six people. Are you high?” is basically what they said. They laughed me out of the boardroom. This happened two weeks before Google acquired us. The next day [after the acquisition was announced] a very nervous lieutenant of the CEO calls me up and says, “I demand we meet immediately to discuss your very, very interesting proposal that you gave us [when you were in Seoul].”
Because of Google, Rubin no longer had to worry about running out of money and having potential vendors and customers not return his calls. But after the euphoria of the acquisition wore off, it became clear that even at Google getting Android off the ground was going to be one of the hardest things Rubin had undertaken in his life. Just navigating Google itself was initially a challenge for Rubin and his team. There was no hard-and-fast org chart, as in other companies. Every employee seemed right out of college. And the Google culture, with its famous “Don’t be evil” and “That’s not Googley” sanctimony, seemed weird for someone such as Rubin, who had already been in the workplace twenty years. He couldn’t even drive his car to work because it was too fancy for the Google parking lot. Google was by then filled with millionaires who had gotten rich on the 2004 IPO. But in an effort to preserve Google’s brand as a revolutionary company with a revolutionary product—the anti-Microsoft—all cars fancier than a 3 Series BMW were banned. During this period Brin and Page—now worth more than $5 billion apiece—famously drove Priuses to work. That meant Rubin’s Ferrari was not allowed.
Rubin also had to adjust to no longer being the boss. He ran Google’s Android division, but even by the end of 2005 that was only about a dozen people in a corporation with fifty-seven hundred. But Google clearly didn’t treat Android like any of its many other small acquisitions. In those the founders rarely stayed, quickly discovering that actually working at Google was frustrating. Google often bought companies just to test out a new technology and/or hire talented engineers, but without a clear game plan. Page didn’t want Rubin to become frustrated like that, and he specifically tasked executives such as Alan Eustace—who helped Page negotiate the purchase of Android—to make sure Rubin felt that he had the access to the people and resources he needed. Google immediately opened its wallet to the tune of $10 million to help Rubin buy necessary software licenses. Schmidt personally helped negotiate some of them. To ensure the secrecy of their project, the Android team was allowed to keep its software code separate from the rest of Google, and inaccessible to anyone without Rubin’s permission. Page gave Rubin the rare privilege of being able to hire his own staff, instead of going through Google’s famously rigorous and lengthy hiring process.
But all this attention didn’t spare Rubin from having to navigate Google’s wacky politics. For starters, it wasn’t clear to him for a while who Google’s ultimate boss was. Eric Schmidt was the CEO and played a critical role in helping Google deal with its hypergrowth back then. He was also the public face of the company, which he did well and which Page and Brin had much less interest in doing. He had been a CEO before—at Novell—and an executive at Sun Microsystems for fourteen years before that. But Schmidt, who joined Google in 2001, was not a founder as were Page and Brin, which made his true role slightly murkier.
Officially, the three
ran Google as a triumvirate, but Google employees debated about how much power Schmidt actually had—whether Brin and Page called the shots, with Schmidt filling a largely ceremonial role, providing “adult supervision” in Silicon Valley parlance. Schmidt didn’t help with this confusion by describing his job the way a chief operating officer would, not a CEO. In an interview with me in 2004 he said,
My primary responsibility is making the trains run on time, so I try to make sure that the meetings happen, that all of the functions of a properly running company are in place and people are paying attention. Larry and Sergey have driven the top-level strategy and much of the technology strategy. I contribute by organizing the strategy process, but it’s really their strategy and their technology strategy. And if there is a disagreement among the three of us … we’ll have a significant conversation, and somebody will eventually say yes. A few months later somebody, one of the three, will say, ‘Well, maybe the other guy was actually right.’ So there’s a very healthy respect now between the three of us and it’s a wonderful thing. We’re best friends and we’re very good colleagues.
Rubin also noted to colleagues that it seemed to him as if Page and Schmidt didn’t completely agree on what Android should become. Schmidt wanted Android to be software only, and for a while he wondered if it should just be low-level software, without fancy graphics or animations. This was Rubin’s original vision: give phone makers and carriers code that runs all phones and applications the same way, but allows them to decide things such as what the opening screen would look like, and what kinds of graphic flourishes each phone would have. Page, however, was more interested in having Google build a phone. “I remember talking to Andy about this,” one Android executive told me. “He said he always made sure never to demonstrate an Android feature to Page without a prototype of the actual hardware it would run on.”
Then there were legal issues
. Most of Android was open-source software, meaning no one owned it, and the code could be modified by anyone in any way. But not all of it was open source, and Google negotiated licenses for those portions for tens of millions of dollars. Rubin hoped a big chunk of licensed code would come from Sun Microsystems, makers of Java. Sun had spent ten years building Java as an alternative to Microsoft’s Windows. It typically gave the software away for free, on the condition the user didn’t modify it in a major way. Rubin used it for the operating system on the Sidekick, and it was, back then, a widely used language by engineers coming out of top universities. But Android wanted to modify Java more than Sun would allow. No amount of money seemed able to move Sun from this view. Payments as high as $35 million were discussed. This created two problems for Rubin: Without the Java code, Rubin had to spend months of extra time creating a work-around. Second, it infuriated Sun, which believed Google had copied portions of Java to build the work-around. It ultimately became the focus of a messy lawsuit that went to trial in 2012. Google was not held liable, but Sun, now owned by Oracle, is appealing that decision.
Finally, Rubin had the enormous task of just doing what he’d promised to do: build a mobile phone operating system that carriers and manufacturers would want to use and that software developers in addition to Google would want to write programs for. There certainly was precedent for it. It’s what Bill Gates did to transform the PC industry and become the world’s richest man. Most of us now just assume that any PC we buy will run Microsoft Windows or Apple OS X, and that it will have an Intel processor running on a certain kind of circuit board that connects to every printer, mouse, keyboard, monitor, and almost every other electronic device. But in the 1980s, the PC industry was just like the mobile industry in 2005. Not until Gates came along and used MS-DOS and Windows to create a platform for developers to write to did the PC application business take off. “I remember at the time telling Andy, ‘This is going to be really hard, really, really difficult. I don’t want you to get discouraged, but I think the chances are low on this,’” said Alan Eustace, Google’s head of engineering and Rubin’s boss at the time. “And then he and I would laugh about that because he was a true believer. It wasn’t that I was a skeptic. I supported the project all the time. It’s just that we both knew it was going to be hard.”
Some of the issues in building Android were similar to the ones Apple faced. Few people had put an operating system as sophisticated as Android on a phone chip. Meanwhile, all the testing had to be done on simulators because the actual chips and displays Rubin wanted to put on the Dream phone weren’t going to be manufactured for another year. But Google was in an even worse position than Apple to take on these challenges. At Apple the iPhone had nearly brought the company to its knees, but at least Apple was used to building things that consumers wanted to buy. Google had no such experience. Google made money selling advertising. Everything else it built—web software—it gave away for free. It had no fancy industrial-design division comparable to Apple’s. Indeed, the idea of a finished product of any sort was anathema to Googlers. To them the beauty of building web software was that it was never finished. When a feature was mostly done, Google would release it, then refine it over time based on consumer usage with updates to their servers.
Google also viewed marketing with the kind of contempt only an engineer could muster. If a product was good, word of mouth on the web would get people to use it. If it was not good, people would not use it. The idea that Google might be selling more than just a cool phone, but amorphous feelings of satisfaction and self-confidence—the way Jobs sold Apple’s devices—seemed silly. This thinking was firmly rooted
in Google’s DNA as a corporation. In Google’s early years executives had hired the famed consultant Sergio Zyman—the former head of marketing for Coca-Cola—to draw up a plan to get the world excited about their new company. After he spent months working on a plan, the founders rejected the whole marketing concept and did not renew Zyman’s contract. They believed—correctly—that Google’s search engine would sell itself. Google didn’t even have a director-of-marketing position until 2001.
Rubin and the Android team believed they could compensate for these deficits by partnering with wireless carriers and phone makers. That was the whole point of Android, after all: everyone would do what they did best. Google would write software, manufacturers would make phones, and carriers would supply bandwidth and sales and marketing heft. HTC and T-Mobile were committed to the project. They had helped Rubin build the Sidekick when he was at Danger.
Rubin’s problem was that T-Mobile wasn’t a big enough carrier in the United States to get Android on enough phones, and the two other big US wireless carriers, AT&T and Verizon, were deeply suspicious of anyone from Google interested in a business deal. For all Android’s promise and Rubin’s ability to sell that promise, by the end of 2006 the rest of Google was starting to scare people, telecom companies in particular. Google had clearly created
a new and incredibly profitable form of advertising, and it was recording profits and amassing cash at astonishing rates. In 2003 it had seemed like a friendly, plucky start-up. By the end of 2006 it was a colossus with nearly eleven thousand employees, $3 billion in profits, and more than 60 percent market share in search advertising. Would Google soon replace Microsoft as the big bad monopoly in tech? some started to ask.
Executives at companies
such as Verizon had experienced Microsoft’s aggressive behavior firsthand in the 1990s as Gates started trying to leverage his desktop monopoly into adjacent industries. Convinced that Windows would soon become the hub for the convergence of our PCs and TVs, Microsoft invested $1 billion in Comcast, $5 billion in AT&T, and another $500 million in smaller cable and telephone companies. Carriers worried that Gates didn’t just want to speed the adoption of broadband Internet and install Windows on every cable set-top box. They believed he wanted to make phone companies irrelevant.
Google, if anything, made the telecom industry more jumpy than Microsoft. For years Schmidt, Page, and Brin had had a team of engineers doing nothing but experimenting with ways to route around the telecom industry. As Google quickly became the most powerful company on the web, powerful enough to control the search-advertising business and spend $1.65 billion to buy YouTube in 2006, the telecom companies worried that Google might soon announce that it was becoming a carrier itself. By the spring of 2007, when Google announced it was buying online ad firm DoubleClick, these worries had crept into executive suites worldwide as well as into the halls of antitrust regulators in Washington and the European Union. “Google’s vision of Android
is Microsoft’s vision of owning the operating system of every PC,” a platform monopoly, former Verizon CEO Ivan Seidenberg told author Ken Auletta. “Guys like me want to make sure that there is a distribution of platforms and devices. Is it in Google’s interest to disintermediate us? Yeah.”
When Rubin and the Android team were done dealing with the initial shock of how good the iPhone was, little drama surrounded what needed to be done.
Rubin is at his core a start-up CEO—messianically convinced that his path is the best one regardless of whether people and circumstance agree with him. He was used to setbacks. The iPhone was good, but what he was doing was going to be different—and better. It would be technically superior to the iPhone and more widely distributed. Rubin believed that
all the software engineers at carriers and phone makers added 20 percent to the cost of a phone. With Android, they wouldn’t need that infrastructure and would be able to sell their phones for less. And the iPhone would help focus Google’s attention on the Android project. When the iPhone was announced, Rubin had about four dozen people. Two years later he’d have more than a hundred.
In retrospect, having the iPhone beat the first Android phones to market was arguably a good thing, some at Google have told me. Apple spent tens of millions of dollars educating consumers about how to use these new devices with a touchscreen. By the time Android phones started to arrive two years later, the iPhone had become hugely popular. That meant that those carriers who didn’t have the iPhone—which was everyone but AT&T at the time—were looking for an alternative. This wasn’t a short-term problem. AT&T’s contract with Apple gave them exclusive rights in the United States for four years. “They [the carriers and manufacturers] saw the writing on the wall, and that definitively helped Android. It helped cause people to sit up and take notice and take Android seriously,” Eustace said.
For Rubin and the Android team, the more complicated issue to emerge from the iPhone’s unveiling was their own company’s involvement in the iPhone’s project. Google, they learned, was Apple’s key partner in the venture. Indeed, Jobs had made the inclusion of Google software one of the iPhone’s selling points during his unveiling. He said the iPhone was
the “Internet in your pocket for the first time ever” and “You can’t think about the Internet without thinking about Google.” Google CEO Eric Schmidt had joined Jobs onstage during the unveiling to reinforce the depth of their partnership. “Steve, my congratulations to you. This product is going to be hot,” Schmidt said during three minutes of remarks.
The Android team knew Schmidt was on the Apple board. What they didn’t know was how tight the companies had become. While they were developing Android, a handful of engineers in another building a few hundred yards away had become privy to the Apple operation, possessing some of the Apple employees’ knowledge of the iPhone project. Inside Apple, Jobs strictly controlled and siloed access to the various portions of the iPhone project, and Schmidt made efforts to avoid conflicts of interest issues with Android and iPhone because of his position on the Apple board. And yet, some members of the Google team working on apps for the iPhone had seen the iPhone’s software and hardware development. “Apple particularly wanted the Google Maps product,” said one of the engineers. “Steve, I think, personally liked it a lot and wanted to make sure it was integrated into the iPhone. So we knew the iPhone was coming.”
Having two product teams seemingly in competition with each other wasn’t a new thing at Google. Many of Google’s best creations, such as Google News and Gmail, grew out of that philosophy. But the engineers at Android had also come to believe that maybe they were different. Cofounder Larry Page was their patron. They had privileges and perks that few other teams of their size at Google had. And they felt justified in having them. To them, it wasn’t just that Rubin had started Android or built the Sidekick, it was that he probably knew more about the mobile phone business than anyone else at Google, maybe all of Silicon Valley.
Then forty-four, he’d been building cutting-edge mobile products in Silicon Valley since the early 1990s. It was his vocation and his avocation. People describe his home as something akin to Tony Stark’s basement laboratory in Iron Man—a space jammed with robotic arms, the latest computers and electronics, and prototypes of various projects. Like many electronics whizzes in Silicon Valley, he had Tony Stark’s respect for authority too.
At Apple in the late 1980s
he got in trouble for reprogramming the corporate phone system to make it seem as if CEO John Sculley were leaving his colleagues messages about stock grants, according to John Markoff’s 2007 profile in The New York Times. At General Magic, an Apple spin-off that wrote some of the first software for handheld computers, he and some colleagues built lofts above their cubicles so they could more efficiently work around the clock. After Microsoft bought his next employer, WebTV, in the mid-1990s, he outfitted a mobile robot with a web camera and microphone and sent it wandering around the company, without mentioning to anyone that it was connected to the Internet. The sights and sounds it recorded were beamed worldwide until Microsoft security, which was not amused, discovered the problem and turned it off. Danger, the company that made the Sidekick, got its name from what the robot in the 1960s TV show Lost in Space barked whenever it sensed, well, danger.
This loyalty to Rubin made his team worry about Google’s potential conflict of interest. Why should they even continue working on Android? Apple was now clearly light-years ahead of them, and Google’s top management was clearly behind that effort. Trying to compete with both Apple and their own company with a project that then seemed so inferior seemed like a waste of time.
“Frankly, the iPhone created a morale problem,” said one of the senior engineers. “Some of the engineers actually said, ‘Oh my God, we’re doomed. This is Apple. This is the Second Coming. What are we going to do now?’”
Rubin and those on down had the additional frustration of watching Jobs, in their view, wrongly take credit for innovations that were not his or Apple’s. Jobs was an amazing innovator who had an unparalleled sense for when to release a product, how to design the hardware and
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Fred Vogelstein
The deathmatch between Apple and Google is not just a story of corporate competition – it’s a dramatic saga of a friendship gone sour, of trust and agreements betrayed, of visionaries Steve Jobs and his successor Tim Cook versus Larry Page, Sergey Brin, and Eric Schmidt. This is a story of bickering, backstabbing, poaching and paranoia, of hardware versus software and patents versus products.After more than a decade of reporting on this rivalry, Fred Vogelstein has incredible access to the boardroom conversations, unofficial reactions, outbursts, personalities, deals, lawsuits and allegations that have shaped how we use these products.
BATTLE OF THE TITANS
Fred Vogelstein
Copyright (#ulink_6f113110-da05-5a79-a19e-539383446de1)
William Collins
An imprint of HarperCollinsPublishers 77–85 Fulham Palace Road, Hammersmith, London W6 8JB
WilliamCollinsBooks.com (http://WilliamCollinsBooks.com)
First published as Dogfight: How Apple and Google Went to War and Started a Revolution in Great Britain by William Collins in 2013
First published in the United States by Farrar, Straus and Giroux in 2013
Copyright © Fred Vogelstein 2013
Fred Vogelstein asserts the moral right to be identified as the author of this work.
A catalogue record for this book is available from the British Library.
All rights reserved under International and Pan-American Copyright Conventions. By payment of the required fees, you have been granted the non-exclusive, non-transferable right to access and read the text of this e-book on-screen. No part of this text may be reproduced, transmitted, down-loaded, decompiled, reverse engineered, or stored in or introduced into any information storage and retrieval system, in any form or by any means, whether electronic or mechanical, now known or hereinafter invented, without the express written permission of HarperCollins
Source ISBN: 9780007448401
Ebook Edition © 2013 ISBN: 9780007448418
Version: 2014-10-01
Dedication (#ulink_154cd3bb-68e2-59db-9f76-9c2d89876c92)
For Evelyn, Sam, and Beatrice
Contents
Cover (#uc243080b-2c74-5ce3-8b79-273e9ae57d8d)
Title Page (#u6fb28459-7f30-533e-9ee6-cd342e43e68b)
Copyright (#u4f31facd-7d4d-5c18-8711-565b47d68c28)
Dedication (#ub4612826-5ad6-5df7-bf1a-3a67f73ee845)
Introduction (#ue2568732-d1d6-5fbf-8120-dd4443bbfaab)
1. The Moon Mission (#ue01ed341-1083-55a9-8d34-a881852ed2db)
2. The iPhone Is Good. Android Will Be Better. (#u8f2b7074-015b-5f3d-823c-d1cda2315de7)
3. Twenty-Four Weeks, Three Days, and Three Hours Until Launch (#litres_trial_promo)
4. I Thought We Were Friends (#litres_trial_promo)
5. The Consequences of Betrayal (#litres_trial_promo)
6. Android Everywhere (#litres_trial_promo)
7. The iPad Changes Everything—Again (#litres_trial_promo)
8. “Mr. Quinn, Please, Don’t Make Me Sanction You.” (#litres_trial_promo)
9. Remember Convergence? It’s Happening (#litres_trial_promo)
10. Changing the World One Screen at a Time (#litres_trial_promo)
A Note on My Reporting (#litres_trial_promo)
Notes (#litres_trial_promo)
Index (#litres_trial_promo)
Acknowledgments (#litres_trial_promo)
About the Author (#litres_trial_promo)
About the Publisher (#litres_trial_promo)
Introduction (#ulink_2a7722be-4321-5497-9957-5e4c81ae636a)
When Steve Jobs stood before the world at the beginning of 2007 and said he was going to reinvent the cell phone, the expectations were modest—at best. Jobs had upended the music business with the iPod and iTunes. But taking on the cell phone industry? That seemed unlikely. The wireless carriers, who controlled the market, had been foiling cell phone innovators for years. And the iPhone, while cool looking, seemed no match for their iron grip on the industry. It was more expensive than most phones out there. And it was arguably less capable. It ran on a slower cell/data network. And it required users to type on a virtual, not a physical, keyboard. To some critics, that meant the iPhone was dead on arrival.
If anything, Jobs undersold the iPhone that day. It truly was a breakthrough. The iPhone wasn’t really a phone, but the first mainstream pocket computer that made calls. With its touchscreen, it did so many things that other phones could never do that consumers overlooked its shortcomings. Consumers got used to the virtual keyboard, and Apple continued to make it better and better. It cut the price to equal that of other phones. It quickly upgraded the slower cell/data radios to make its technology competitive. It developed displays with unheard-of resolutions. It bought a chip design company to make sure the iPhone was always the fastest device out there. It rolled out a completely new version of the iPhone software every year. And it designed iconic television ads—as it had done for the iPod—that made consumers feel special about owning one.
The subsequent frenzy of demand gave Apple and Jobs the leverage to turn the tables on the wireless carriers and start telling them what to do. More important, it ignited a technology revolution that today touches almost every corner of civilization. The iPhone has become
one of the most popular cell phones of all time, selling more than 135 million units in 2012 alone. It has become the platform for a new and hugely profitable software industry—phone apps—that has generated more than $10 billion in total revenues since starting five years ago, in 2008. And the iPhone has become the source of an entire rethink of how humans interact with machines—with their fingers instead of buttons or a mouse. The iPhone and its progeny—the iPod Touch and the iPad—haven’t just changed the way the world thinks about cell phones, they have changed the way the world thinks about computers for the first time in a generation, arguably since the advent of the Macintosh in 1984.
Since 2010, when Jobs followed the iPhone with the iPad, the questioning has grown frenzied. Who said our computer had to sit under our desk or on our lap? Can’t it just be a screen that fits in our pocket or purse, or something we leave lying around the house? Indeed, if you compare iPad sales to sales of desktops and laptops, Apple is now the largest
PC maker in the world. It now sells more iPads per quarter than Dell or HP sells laptops and desktops. Apple’s total sales of iPhones, iPads, and iPod Touches now exceed 200 million devices a year. That’s about the same number of TVs sold by all manufacturers every year and about four times the number of cars sold worldwide. All of this has turned Apple, the corporation, into a colossus larger than even Jobs’s enormous ambitions. Once on the precipice of bankruptcy, in 1997, Apple today is one of the most valuable and profitable companies anywhere.
And yet Apple behaves like a corporation under siege—because despite all this success, it is. From the moment in late 2007 that Google unveiled Android—and its own plan to dominate the world of mobile phones and other mobile devices—Google hasn’t just tried to compete with the iPhone, it has succeeded in competing with the iPhone. Android took hold in 2010, and it has exploded in popularity since. To Apple’s astonishment
, there are now more smartphones and tablets running Android software than there are iPhones, iPads, and iPod Touches running Apple’s software, known as iOS. In 2012 there was even debate about whether the iPhone was the most popular smartphone anymore. During the third quarter of 2012
, some surveys said, Samsung sold more Android-powered Galaxys than Apple sold iPhones.
Apple ended the “who has the most popular smartphone” discussion at the end of 2012, when it unveiled the iPhone 5. But more and more wonder whether this is even relevant anymore. The differences between the two platforms are narrowing by the day. Sure, they are different structurally. Apple makes every inch of the iPhone—the hardware and the software (though the devices are assembled in China). Google just makes the software for Android phones. It allows phone manufacturers such as Samsung to make the hardware. But both platforms now have an equivalent number of pluses and minuses: Apple’s platform is a little easier to use, but it only offers three products—the iPhone, the iPad, and the iPod Touch. Google’s platform offers many more phone choices, and often has the latest phone features ahead of Apple, but it lacks the polish of Apple’s interface. Still, both platforms are now equally available among large carriers worldwide, and, with the exception of Apple stores, they are available for purchase in the same places.
Seeing Apple’s market dominance challenged so swiftly and broadly was uniquely painful for Jobs and remains that way for the company’s other executives. Jobs thought, and Apple executives still think, that Google and the Android community cheated to create their success. They think that Google executives stole Apple’s software to build Android, and that Android’s largest phone maker, Samsung, copied Apple’s designs to build its supersuccessful Galaxy phones. They feel betrayed. Apple and Google weren’t just business partners when the iPhone was unveiled in early 2007. They were spiritual allies—the yin and yang of the technology revolution. This was one of the closest alliances in American business. Apple made great devices. Google made great software. Google’s founders considered Jobs to be a mentor. Google’s then CEO, Eric Schmidt, sat on Apple’s board of directors. They had a common enemy: Microsoft. Together they planned for a long and prosperous marriage.
Then, as can happen in a marriage, the relationship frayed. Secrets were kept. Promises were broken. And the two went to war. When Jobs died in October 2011, there was hope that the dogfight would feel less like personal betrayal and quiet down—that Apple’s new CEO, Tim Cook, would take the emotion out of the battle and find a way to settle it. But if anything, Apple has gotten more aggressive and nasty toward Google since then. It still has dozens of patent lawsuits in at least seven countries pending against the Android community—mostly against Samsung and Motorola (owned by Google). In the summer of 2012, it took the unheard-of step of having its fight with Samsung, Google’s top distributor of Android phones, tried in front of a jury in San Jose. It won a $1 billion judgment, though the damages were subsequently reduced by nearly half on appeal. In September 2012 Apple stopped selling the iPhone preloaded with Google Maps. It replaced the app with one of its own, despite wide consumer complaints that the app was inferior. Apple is believed to be working on a video service to compete with YouTube, which Google owns.
Apple has even begun replacing
some Google search technology in the iPhone with search technology from its old enemy, Microsoft. Now when you use Siri, the iPhone’s voice recognition feature, Apple’s newest software no longer uses Google search. Instead, she queries Microsoft’s Bing search engine, which has been clawing at Google for a decade over search market share. To get Siri to use Google’s search, you have to specifically ask her to “search Google” before each request. Google is still the default search engine inside the iPhone’s web browser. But for those with long memories, the idea that Apple would dump any Google technology for Microsoft’s—when Microsoft was the bitter enemy of both for so long—is an astonishing development.
Google’s public posture in its fight with Apple has consistently been “Who, us? We’re just a bunch of geeks out to change the world.” But in its quiet, nerdy way Google has fought back ferociously. It defied Apple’s demands that it remove software from Android phones or face patent lawsuits. It bought the cell phone maker Motorola for $12.5 billion in 2012, its largest acquisition by far. It said the only purpose of the purchase was to buy Motorola’s patents. It said it would be easier to fight a litigious opponent like Apple if it owned the company that invented the modern cell phone and all the patents associated with that. That’s true, but the claim hid another equally powerful reason: the acquisition means that Google will always be able to make phones to compete with Apple no matter how successful Apple is with its lawsuits against other phone and tablet manufacturers. The purchase also gives Google leverage in case new challengers emerge.
Last, Google now finds itself doing something most thought it would never do: it is making its own consumer electronics from scratch to compete with Apple devices in the living room. Google has all the pieces not only to hook users on cell phones running its Android software, but to reach them wherever they go, inside or outside their homes.
Usually, the story of two companies and their powerful leaders going at it makes a great magazine piece and little more. Company X attacks company Y. Company Y fights back. One wins. One loses. But this is a much bigger tale than that. It’s hard to imagine a more revolutionary object than the object the two companies started fighting over: the smartphone. The smartphone has fundamentally changed the way humans get and process information, and that is changing the world in ways that are almost too large to imagine. Ponder the individual impacts of the book, the newspaper, the telephone, the radio, the tape recorder, the camera, the video camera, the compass, the television, the VCR and the DVD, the personal computer, the cell phone, the video game, and the iPod. The smartphone is all those things in one device that fits in your pocket. It is radically changing the way we learn in school, the way doctors treat patients, the way we travel and explore. Entertainment and all media are accessed in entirely new ways. That sounds like something Jobs might have said at one of his famous product launches. But it is not an exaggeration.
What this means is that Apple versus Google isn’t just a run-of-the-mill spat between two rich companies. It is the defining business battle of a generation. It is an inflection point, such as the moment when the PC was invented, when the Internet browser took hold, when Google reinvented web search, and when Facebook created the social network. In this massive reexamination of how technology, media, and communications intersect, two of the most powerful companies in the world to dominate that new landscape are in open warfare.
Yes, invariably this reminds you of previous fights among entrepreneurs in Silicon Valley, such as Apple versus Microsoft in the 1980s or Microsoft versus Netscape in the 1990s. But the stakes are infinitely higher now. In the 1980s personal computing was a nascent market, and both Apple and Microsoft were new companies. In the 1990s people saw the potential of the Internet, especially in a device that fit in your pocket. But wireless bandwidth was still too slow and expensive. Today, 1.8 billion cell phones
are sold worldwide every year, and in five to ten years most of them are going to be smartphones. No one knows how big the tablet market is going to be yet, but the tablet is already becoming an important new technology for people to read books, newspapers, and magazines, not to mention watch TV or play video games. In other words, the stakes of this battle are infinitely higher than any earlier struggles.
It’s not just that there is a lot more money to be made and lost in the Apple/Google fight than in previous Silicon Valley battles. It’s that the fight feels—to the players, at least—like a winner-take-all situation. Why? Because they’re not just fighting over which side has the hottest devices, they’re battling for control of the online stores and communities these devices connect to—the so-called cloud. A lot of what we buy via Apple’s iTunes store—apps, music, movies, TV shows, books, etc.—doesn’t work easily on Android devices or at all, and vice versa. And both companies know that the more money each of us spends on apps and other media from one store, the less likely we are to switch to the other. They know we will ask, “Why rebuy all that content just to buy an Android phone instead of an iPhone?” Many companies have free apps that work on both platforms, but even having to redownload them, and re-set them up, is enough to keep many users from switching. In Silicon Valley parlance, it’s a platform war. Whether your example is Microsoft with Windows and Office, eBay with auctions, Apple with the iPod, Amazon with books, Google with search, or Facebook with social media, history suggests that the winner in fights like this gets more than 75 percent of the market share, while the loser struggles to stay in that business.
This is a big deal. In the coming years most of what we consider information—news, entertainment, communications—will get funneled through either Apple’s or Google’s platform. Doubt me? It’s already happening. We now spend as much time connected to the Internet as we do watching television, and more and more of our access to the Internet comes through smartphones and tablets. Think about how much time you spend staring at your phone or tablet now—not just responding to email, reading the news, tweeting, facebooking, watching a video, playing games, or surfing the web. Include the seconds you spend in elevators, standing in line, at stoplights, in the restroom too. Now ask yourself this question: Who controls what you see on your television? Your cable company. Who controls what you see on your smartphone? Ultimately, it is Apple and Google.
I remember when, as a contributing editor for Wired, I first started thinking about the mobile revolution. At that time the top-selling phones worldwide came from Nokia, RIM (which makes the BlackBerry), Sony Ericsson, and Motorola. Then the iPhone was announced. It quickly seemed inevitable that Apple and Google would end up fighting. Few agreed with me. An editor friend of mine said the idea seemed preposterous. How could Apple and Google compete when they were in entirely different businesses? he asked. Technically he was right. Apple makes money selling the devices it creates. Google makes money selling online advertising. What he and many missed is that those are now only means to a much bigger end. Both companies see themselves as becoming new kinds of content distribution engines—twenty-first-century TV networks, if you will. They won’t make content as the TV networks do today; but their control of huge global audiences, and their enormous balance sheets, will enable them to have a big impact on what gets made and who sees it.
This may seem counterintuitive. It’s hard to imagine the geeks at Apple or Google producing Mad Men. But makers of movies and TV shows essentially care about only two things: How much is their project going to cost? And how many people are going to see it? No two companies have more reach than Apple and Google. Fewer still have more money. Together they controlled $200 billion in cash alone by mid-2013. That’s not only enough to buy and/or finance an unlimited amount of content for their audience; it’s actually enough to buy most of Hollywood. The market capitalizations of News Corp., Time Warner, Viacom, and CBS total that much combined. Although most people don’t think
of Apple and Google as entertainment giants, Apple through iTunes controls roughly 25 percent of all music purchased and 6 to 10 percent of the $18 billion home video market. Meanwhile, Google is investing millions of dollars in original programming for YouTube, which is already a video destination for tens of millions of consumers around the world.
This isn’t to suggest that there won’t be enormous room for new and old companies to build substantial businesses of their own in this new world. In early 2013 Netflix boasted 30 million subscribers, as many as HBO. Two years ago it looked to be a company that might not make it. Studios jacked up the price of their content to unaffordable levels. Movie and TV-show selection fell and customers started to leave. So Netflix—a technology company based in Los Gatos, not a Hollywood studio—started financing its own programming. Its first stab at this, the series House of Cards, with Kevin Spacey, has been an enormous hit. Amazon and Microsoft are getting production facilities up and running too. Meanwhile, Facebook, with more than 1 billion members—half the Internet—has become a favorite stop for Hollywood agents looking to use this giant global audience as another way to finance and distribute their clients’ work.
But despite the power of Facebook, Amazon, Netflix, and Microsoft, at the moment they all still have to largely go through two companies—Apple and Google—to get to the increasingly massive audiences using smartphones and tablets for their news, entertainment, and communications. What this means is that the Apple/Google fight is not just a story about the future of Silicon Valley. It is about the future of media and communications in New York and Hollywood as well. Hundreds of billions of dollars in revenue are at stake, and for at least the next two years, and probably the next five, these companies, their allies, and their hangers-on will be going at it full bore.
In many ways what is happening now is what media, communications, and software moguls have been predicting for a generation: The fruits of Silicon Valley’s labor and those of New York and Hollywood are converging. This is as close to tragic irony in business as one ever gets. For two decades—the 1980s and 1990s—a procession of celebrated media executives marshaled the best technology they could assemble to position themselves for the new world they saw coming. They spent hundreds of billions of dollars buying one another to bulk up. But their timing was so off, their innovations were so bad, and their mergers were so disastrous—such as AOL’s purchase of Time Warner in 2001—that by 2005 convergence had become a discredited idea, and few dared to mention the word.
Where did all these very smart and very wealthy people go wrong? They had the wrong devices in mind. The media and communications tycoons all predicted that the convergence would happen on the personal computer—that their equipment supplying television programming, such as set-top boxes, would ultimately control our personal computers too. The software tycoons—largely Microsoft and Bill Gates—predicted that it would be personal computers that would take over our television sets. Instead, the touchscreen smartphone and touchscreen tablet are driving all the changes—two devices that hadn’t been invented until recently. The problem with the television is that it is a lousy device to do any kind of work on. The problem with the PC is that it is a lousy device to consume entertainment on. The smartphones and tablets, because they are portable and so easy to use, are turning out to be the perfect blend of both. You’d never pull out a laptop to play a game or watch a movie when you’re standing in line or sitting in the back of a cab. But we do that with our smartphones and tablets all the time. We accept the trade-off of screen size for portability because, unlike with previous portable devices, there are no other compromises we need to make. Their screens, while small, are actually sharper than those of most televisions. Their batteries last all day. They turn on immediately. They are connected to wireless networks that are fast enough to stream movies. And they are powerful enough to effectively run the same applications as every other machine we have.
By the end of this book you’ll have a good idea who I think is winning the Apple/Google fight. But you’ll also develop enough respect for what each side has had to go through just to stay in the game that you might feel bad rooting for either side. One of the things that I didn’t expect when I took on this project was how hard it is to conceive and build the products that Steve Jobs liked to casually pull out of his pocket onstage. Whether you are an Apple engineer, a Google engineer, or any engineer, building products that change the world isn’t just work. It’s a quest. It leaves its participants not only tired the way all jobs sometimes do but mentally and physically exhausted—even traumatized—at the end. Part of Jobs’s appeal as a leader and a celebrity was that he successfully hid all this from public view. He made innovation look easy. Now he is gone. And, as you’ll see in the following pages, there are many engineers at both companies who want the rest of the world to know what changing the world really has been like. Before there could be the smartphones and tablets we all now buy and take for granted, there was yelling, screaming, backstabbing, dejection, panic, and fear over what it would take to get those projects off the ground and into consumers’ hands. They want you to understand what the iPhone and Android projects were like at the beginning—and so that is where this book will start.
1 (#ulink_0d75fcb4-92fd-5897-9519-470e0039f3f7)
The Moon Mission (#ulink_0d75fcb4-92fd-5897-9519-470e0039f3f7)
The fifty-five miles from Campbell to San Francisco is one of the nicest commutes anywhere. The journey mostly zips along the Junipero Serra Freeway, a grand and remarkably empty highway that abuts the east side of the Santa Cruz Mountains. Known as 280 to locals, it is one of the best places in Silicon Valley to spot a start-up tycoon speed-testing his Ferrari and one of the worst places for cell phone reception. For Andy Grignon in his Porsche Carrera, therefore, it was the perfect place for him to be alone with his thoughts early on January 8, 2007.
This wasn’t Grignon’s typical route to work. He was a senior engineer at Apple in Cupertino, the town just west of Campbell. His morning drive typically covered seven miles and took exactly fifteen minutes. But today was different. He was going to watch his boss, Steve Jobs, make history at the Macworld trade show in San Francisco. Apple fans had for years begged Jobs to put a cell phone inside their iPods so they could stop carrying two devices in their pockets. Jobs was about to fulfill that wish. Grignon and some colleagues would spend the night at a nearby hotel, and at 10:00 a.m. the following day they—along with the rest of the world—would watch Jobs unveil the first iPhone.
Getting invited to one of Jobs’s famous product announcements was supposed to be a great honor. It anointed you as a player. Only a few dozen Apple employees, including top executives, got an invite. The rest of the spots were reserved for Apple’s board of directors, CEOs of partners—such as Eric Schmidt of Google and Stan Sigman at AT&T—and journalists from around the world. Grignon got an invite because he was the senior engineer for all the radios in the iPhone. This is a big job. Cell phones do innumerable useful things for us today, but at their most basic they are fancy two-way radios. Grignon was in charge of the equipment that allowed the phone to be a phone. If the phone didn’t make calls, connect with Bluetooth headsets, or connect to Wi-Fi setups, Grignon had to answer for it. As one of the iPhone’s earliest engineers, he’d dedicated two and a half years of his life—often seven days a week—to the project. Few deserved to be there more than he did.
But as Grignon drove north, he didn’t feel excited. He felt terrified. Most onstage product demonstrations in Silicon Valley are canned. The thinking goes, why let bad Internet or cell phone connections ruin an otherwise good presentation? Jobs’s presentations were live, however. It was one of the things that made his shows so captivating. But for those in the background, such as Grignon, few parts of the job caused more stress. Grignon couldn’t remember the last time a Jobs show of this magnitude had gone sideways. Part of what made Steve Jobs such a legend was that noticeable product-demo glitches almost never happened. But Grignon found it hard to recall the last time Jobs was so unprepared going into a show.
Grignon had been part of the iPhone launch-preparation team at Apple and later at the presentation site in San Francisco’s Moscone Center. But he had rarely seen Jobs make it all the way through his ninety-minute show without a glitch. Jobs had been rehearsing for five days, yet even on the last day of rehearsals the iPhone was still randomly dropping calls, losing the Internet connection, freezing, or just shutting down.
“At first it was just really cool to be at rehearsals at all—kind of like a cred badge. ‘Fuck yeah, I get to hang out with Steve,’” Grignon said. Like everything else that surrounded Jobs, the preparations were as secret as a U.S. missile attack on Afghanistan. Those who were truly in felt as if they were at the center of the universe. From Thursday through the end of the following week, Apple completely took over Moscone. Backstage it built an eight-by-eight-foot electronics lab to house and test the iPhones. Next to that it built a greenroom with a sofa for Jobs. Then it posted more than a dozen security guards twenty-four hours a day in front of those rooms and at doors throughout the building. No one got in or out without having his or her ID electronically checked and compared with a master list that Jobs had personally approved. More security checkpoints needed to be cleared once visitors got inside. The auditorium where Jobs was rehearsing was off-limits to all but a small group of executives. Jobs was so obsessed with leaks that he tried to have all the contractors Apple had hired for the announcement—from people manning booths and doing demos to those responsible for lighting and sound—sleep in the building the night before his presentation. Aides talked him out of it.
“It quickly got really uncomfortable,” Grignon said. “Very rarely did I see him become completely unglued. It happened. But mostly he just looked at you and very directly said in a very loud and stern voice, ‘You are fucking up my company,’ or, ‘If we fail, it will be because of you.’ He was just very intense. And you would always feel an inch tall [when he was done chewing you out].” Grignon said that you would always ask yourself two questions during one of these lectures: “‘Is it my shit that broke this time?’ and ‘Is it the nth time it broke or the first time?’—because that actually mattered. The nth time would frustrate him, but by then he might have figured out a way around it. But if it was the first time, it added a whole new level of instability to the program.” Grignon, like everyone else at rehearsals, knew that if those glitches showed up during the real presentation, Jobs would not be blaming himself for the problems, he would come after people like Grignon. “It felt like we’d gone through the demo a hundred times and that each time something went wrong,” Grignon said. “It wasn’t a good feeling.”
The iPhone didn’t work right for a good reason; it wasn’t close to being finished. Jobs was showing off a prototype. He just didn’t want the public to know that. But the list of things that still needed to be done before the iPhone could be sold was enormous. A production line had yet to be set up. Only about a hundred iPhones even existed, all of them of varying degrees of quality. Some had noticeable gaps between the screen and the plastic edge, others had scuff marks on the screen. Thus no one in the public was allowed to touch an iPhone after Jobs unveiled it, despite a day of press briefings and a whole exhibit set up for them in the convention center. The worry was that even the best prototypes wouldn’t stand close scrutiny, Grignon said. They’d look fine at a distance and for Jobs’s demo, but if you held one in your hand, “You would laugh and say, ‘Wow, this thing really looks unfinished.’”
The phone’s software was in even worse shape. A big chunk of the previous four months had been consumed figuring out why the iPhone’s processor and its cell radio wouldn’t reliably communicate. This huge problem was akin to a car with an engine that occasionally doesn’t respond to the accelerator, or wheels that occasionally don’t respond to the brake pedal. “It almost brought the iPhone program to a halt,” Grignon said. “We had never seen a problem this complicated.” This was ordinarily not a problem for phone makers, but Apple’s obsession with secrecy had kept Samsung, the manufacturer of the phone’s processor, and Infineon, the maker of the phone’s cell radio, from working together until Apple, in desperation, flew teams of engineers from each company to Cupertino to help fix the problem.
Jobs rarely backed himself into corners like this. He was well-known as a master taskmaster, seeming to always know just how hard he could push his staff so that they delivered the impossible. But he always had a backup, a Plan B, that he could go to if his timetable was off. Six months prior he’d shown off Apple’s upcoming operating system, Leopard. But that was after letting the date for the final unveiling slip.
But Jobs had no choice
but to show off the iPhone. He had given this opening keynote at every Macworld since he’d returned as Apple’s CEO in 1997, and because he gave public presentations only once or twice a year, he had conditioned Apple fans to expect big things from them. He’d introduced iTunes here, the iMac that looked like a fancy desk lamp, the Safari web browser, the Mac mini, and the iPod shuffle.
It wasn’t just his own
company that Jobs had to worry about disappointing this time. AT&T was expecting Jobs to unveil the iPhone at Macworld too. In exchange for being the exclusive carrier of the iPhone in the United States, AT&T had given Jobs total control of the design, manufacture, and marketing of the iPhone. It had never done anything like this before. If Jobs didn’t launch on time, AT&T could back out of its deal. It’s not hard to explain that a product called the iPhone that couldn’t make calls would sell poorly. Days before, Jobs had flown to Las Vegas to give AT&T’s top mobile executives a limited demo of the iPhone. But they were expecting a full show at Macworld.
Lastly, the iPhone was truly the only cool new thing Apple was working on. The iPhone had been such an all-encompassing project at Apple that this time there was no backup plan. “It was Apple TV or the iPhone,” Grignon said. “And if he had gone to Macworld with just Apple TV [an experimental product back then], the world would have said, ‘What the hell was that?’”
The iPhone’s problems were manifest. It could play a section of a song or a video, but it couldn’t play an entire clip without crashing. It worked fine if you sent an email and then surfed the web. If you did those things in reverse, however, it did not. Hours of trial and error had helped the iPhone team develop what engineers called “the golden path,” a specific set of tasks, performed in a specific way and in a specific order, that made the phone look as if it worked.
But even when Jobs stayed on the golden path, it required all manner of last-minute work-arounds to make the iPhone functional. On announcement day the software that ran Grignon’s radios still had bugs. So too did the software that managed the iPhone’s memory. And no one knew whether the extra electronics Jobs had required to be added to the demo units would make these problems worse.
Jobs had required the demo phones he would use onstage to have their screens mirrored on the big screen behind him. To show a gadget on a big screen, most companies just point a video camera connected to a projector at the gadget. That was unacceptable to Jobs. The audience would see his finger on the iPhone screen, which would mar the look of his presentation. Instead, he had Apple engineers spend weeks fitting extra circuit boards attached to video cables onto the backs of the iPhones he would have onstage. The video cables then connected to the projector showing the iPhone image on the screen. When Jobs touched the iPhone’s calendar app icon, for example, his finger wouldn’t appear, but the image on the big screen would respond. The effect was magical. People in the audience felt as if they were holding an iPhone in their own hands. But making the setup work flawlessly given the iPhone’s other major problems seemed hard to justify at the time. “It was all just so monkey-patched together with some of the ugliest hacks you could imagine,” Grignon said.
The software in the iPhone’s Wi-Fi radio was so unstable that Grignon and his team ultimately soldered antenna wires to the demo phones and ran them offstage along the wires to the projection setup. The iPhone would still connect wirelessly to the network, but the signal wouldn’t have to travel as far. Even then, Grignon and his team needed to make sure no one in the audience could get on the frequency they were using. “Even if the base station’s ID was hidden [and therefore not showing up when laptops scanned for Wi-Fi signals], you had five thousand nerds in the audience. They would have figured out how to hack into the signal.” The solution, Grignon said, was simply to tweak the AirPort software to think it was operating in Japan instead of the United States. Japanese Wi-Fi uses some frequencies that are not permitted in the U.S.
There was even less they could do to make sure the phone call Jobs planned to make from the stage went through. All Grignon and his team could do was make sure the signal was good and pray. They had AT&T bring in a portable cell tower so they knew reception would be strong. Then, with Jobs’s support, they preprogrammed the phone’s display to always show five bars of signal strength regardless of the true signal. The chances of the radio’s crashing during the few minutes that Jobs would use it to make a call were small, but the chances of its crashing at some point during the ninety-minute presentation were high. “If the radio crashed and restarted, as we suspected it might, we didn’t want people in the audience to see that. So we just hard-coded it to always show five bars,” Grignon said.
None of these kluges fixed the iPhone’s biggest problem: it often ran out of memory and had to be restarted if asked to do more than a handful of tasks at a time. Jobs had a number of demo units onstage with him to manage this problem. If memory ran low on one, he’d switch to another while the first was restarted. But given how many demos Jobs planned, Grignon worried that there were far too many potential points of failure. If disaster didn’t strike during one of the dozen demos, it was sure to happen during Jobs’s grand finale, when Jobs planned to show all the iPhone’s top features operating at the same time on the same phone. He’d play some music, take a call, put it on hold and take another call, find and email a photo to the second caller, look up something on the Internet for the first caller, and then return to his music. “Me and my guys were all so nervous about this. We only had 120 megabytes of memory in those phones, and because they weren’t finished, all these apps were still big and bloated,” Grignon said.
The idea that one of the biggest moments of his career might implode made Grignon’s stomach hurt. At forty, Grignon looks like the kind of guy you’d want to drink with—and he is. When he moved from Campbell to Half Moon Bay in 2010, he quickly became friendly with the sommelier at the Ritz-Carlton Hotel. He even had a wine fridge in his office. But behind that gregarious exterior is a fierce intellect and an ultracompetitive streak. Once when trying to get to the bottom of a slew of software bugs in an iPhone subcontractor’s equipment, he turned the AC on high in the conference room he used to make the subcontractors uncomfortably cold. When that didn’t get them moving fast enough, he tried a more aggressive approach: he accused them of holding out on him and threw his laptop against the wall.
By 2007 he’d spent virtually his entire fifteen-year career at Apple or companies affiliated with it. While at the University of Iowa in 1993, he and his friend Jeremy Wyld—now cofounder with Grignon of Quake Labs—reprogrammed the Newton MessagePad to wirelessly connect to the Internet. That was quite a feat back then, and it helped them both get jobs at Apple right out of school. Wyld actually worked on the Newton team, and Grignon worked in Apple’s famous R & D lab—the Advanced Technology Group—on video conferencing technology. Even though the Newton did not succeed as a product, many still think of it as the first mainstream handheld computer. But by 2000 Grignon had found his way to Pixo, a company spun out of Apple that was building operating systems for cell phones and other small devices. When Pixo’s software found its way into the first iPod in 2002, Grignon found himself back at Apple again.
By then, thanks to his work at Pixo, he’d become well known for two other areas of expertise besides building video conferencing technology: computer radio transmitters (what we now call wireless) and the workings of software inside small handheld devices such as cell phones. Grignon works in an entirely different world from that inhabited by most software engineers in the Valley. Most rarely have to think about whether their code takes up too much space on a hard drive or overloads a chip’s abilities. Hardware on desktop and laptop computers is both powerful, modifiable, and cheap. Memory, hard drives, even processors, can be upgraded inexpensively, and computers are either connected to electric outlets or giant batteries. In Grignon’s world of embedded software, the hardware is fixed. Code that is too big won’t run. Meanwhile, a tiny battery—which might power a laptop for a couple of minutes—needs enough juice to last all day. When Jobs decided to build the iPhone at the end of 2004, Grignon had a perfect set of skills to become one of the early engineers on the project.
Now, in 2007, he was emotionally exhausted. He’d gained fifty pounds. He’d stressed his marriage. It had been a grueling two years. Apple had never built a phone before, and the iPhone team quickly discovered the process didn’t resemble building computers or iPods at all. “It was very dramatic,” Grignon said. “It had been drilled into everyone’s head that this was the next big thing to come out of Apple. So you put all these supersmart people with huge egos into very tight, confined quarters, with that kind of pressure, and crazy stuff starts to happen.”
The iPhone didn’t start out as Apple’s “next big thing.” Jobs had to be talked into building a phone. It had been a topic of conversation among his inner circle almost from the moment Apple launched the iPod in 2001. The conceptual reasoning was obvious: Why would consumers carry two or three devices for email, phone calls, and music when they could carry one?
But every time Jobs and his executives examined the idea in detail, it seemed like a suicide mission. Phone chips and bandwidth were too slow for anyone to want to surf the Internet and download music or video over a cell phone connection. Email was a fine function to add to a phone. But Apple couldn’t leverage all the work it had put into building a music player such as the iPod to do that. Research in Motion’s BlackBerry was fast locking up that market, anyway. Apple even considerd buying Motorola in 2003, but executives quickly concluded it would be too big an acquisition for the company then.
Worst of all
, if Apple wanted to make and sell a phone in the United States, it would be at the beck and call of the U.S. wireless carriers. Back then, phone manufacturers such as Motorola were the serfs of high tech in the United States. They depended on carriers’ marketing dollars to get consumers into stores, and then they depended on carriers to make the phones affordable by subsidizing their purchase price. That made manufacturers powerless to resist carriers’ meddling in how each phone should be built. Manufacturers occasionally pushed back against this dominance and were always met with the same response from the carriers: “You can build the phone your way, but we might not subsidize it, market it, or allow it on our network.” Manufacturers always caved in the face of this threat.
Jobs was personally offended
by this way of doing business and wanted no part of it. “We’re not the greatest at selling to the Fortune 500, and there are five hundred of them—five hundred CIOs [chief information officers] that are orifices you have to go through to get” that business. “In the cell phone business there are five. We don’t even like dealing with five hundred companies. We’d rather run an ad for millions and let everyone make up their own mind. You can imagine what we thought about dealing with five,” he said during an onstage interview at the All Things D conference in May 2003. Translation: I am not about to spend hundreds of millions of dollars to have a bunch of suits tell me how to build and sell my phone.
That sounded tough and principled. But by the end of 2003, as the iPod became Apple’s most important product since the Macintosh, it was also starting to look misguided. Cell phone makers were putting music-listening applications in their phones. And companies such as Amazon, Walmart, and Yahoo! were beginning to sell downloadable music. Executives such as iPod boss Tony Fadell worried that if consumers suddenly gave up their iPods for music phones, Apple’s business—only five years removed from its flirt with bankruptcy—would be crushed. “We didn’t really have a hit on our hands [with the iPod] until late 2003, early 2004, so we were saying maybe we don’t have the market domination—the retail channels—to expand the iPod’s business properly,” Fadell said.
It’s hard to imagine
a time when the iPod wasn’t an iconic product, selling more than 50 million units a year; but back then Apple had sold only 1.3 million devices in two years and was still having trouble getting retailers such as Best Buy to carry it. “So we were thinking, ‘How do we get above the noise? How do we make sure that we are at least competitive so that anyone who is carrying a cell phone can get iTunes music?’ Because if we lost iTunes, we would have lost the whole formula,” Fadell said.
Publicly, Jobs continued his
harangue against the carriers. At the D conference in 2004, Stewart Alsop, Jr., the venture capitalist and former journalist, actually begged Jobs to make a smartphone that would improve on the popular Treo. “Is there any way you can get over your feelings about the carriers?” Alsop asked, offering to connect Jobs with Verizon CEO Ivan Seidenberg, who was also in the audience. Not a chance, Jobs said. “We’ve visited with the handset manufacturers and even talked to the Treo guys. They tell us horror stories.” But privately, Jobs was thinking hard about the content of Alsop’s pitch.
Jobs’s first answer to the growing competition wasn’t the iPhone, but something much more modest—a music phone called the Rokr, to be built in partnership with Motorola and Cingular, the big wireless carrier that would, via two mergers, become AT&T. The deal, agreed to in early 2004, seemed like the best of all worlds for Apple. It would license its iTunes software to Motorola to be put on Motorola’s supersuccessful Razr cell phone, and Motorola would handle the rest. Apple would get a license fee for letting Motorola use the software, and Jobs wouldn’t have to deal with the wireless carriers. iTunes would help Motorola sell more phones, get Cingular more wireless customers, and enable Apple to compete with the music phones it feared. “We thought that if consumers chose to get a music phone instead of an iPod, at least they would be using iTunes,” Fadell said.
Instead, the Rokr was an embarrassment. When Jobs unveiled it nearly eighteen months later in September 2005, it was not capable of over-the-air music downloads, the device’s main selling point. It was big and chunky—nothing like the sleek Razr that Motorola had made famous. And its music capacity was artificially limited to a hundred songs.
The tension between the partners
, especially Apple and Motorola, was obvious quickly after Jobs was done demoing the device onstage at Moscone Center in San Francisco. Jobs had released the first iPod nano at the same time, and when a reporter asked Motorola CEO Ed Zander a few weeks later if he felt upstaged by the other products Jobs had unveiled, his answer was succinct: “Screw the nano.” Wired magazine soon put a story of the fiasco on its cover under the headline YOU CALL THIS THE PHONE OF THE FUTURE?
Jobs successfully pinned the Rokr screwup
on Motorola, but the fiasco was mostly Apple’s fault. Yes, Motorola had produced an ugly phone, and it continued to produce phones that didn’t sell well for the next four years until Zander resigned. But the Rokr project’s real problem was that Jobs’s reason for the deal evaporated almost as soon as it was signed, Fadell said. The deal was designed as a defensive maneuver, a hedge against companies’ trying to build music phones without having to deal with the carriers themselves. But with each passing month in 2004 it became clearer that the last thing Apple needed to do with iTunes and the iPod was to play defense. It didn’t need the Rokr to help it more broadly distribute iTunes. It just needed to hang on as iPod sales took off like a rocket ship. In the summer 2003 Apple was selling only about three hundred thousand iPods a quarter. At the beginning of 2004 it was selling only eight hundred thousand a quarter. But by summer 2004 sales exploded. It sold 2 million during the quarter that ended September 30, 2004, and another 4.5 million in the final quarter of the year. By the time ugly Rokr prototypes showed up in the fall of 2004, many Apple executives saw clearly that they were on the wrong path, and by year-end Jobs had all but abandoned the project. He was still driving the iTunes team to deliver the software that would go in the Rokr, but he was listening more carefully to executives who thought the Rokr project had been folly from the start.
It wasn’t just the iPod’s success in 2004 that diluted Apple’s enthusiasm for the Rokr. By the end of the year, building its own phone no longer seemed like such a bad idea. By then it looked like most homes and cell phones would soon have Wi-Fi, which would provide high, reliable bandwidth over the homeowner’s DSL or cable connection. And outside-the-home cell phone bandwidth looked like it would soon be fast enough to stream video and run a fully functioning Internet browser. Phone processor chips were finally fast enough to run cool-looking phone software. Most important, doing business with the carriers was starting to seem less onerous. By the fall of 2004, Sprint was beginning to sell its wireless bandwidth wholesale. That meant that by buying and reselling Sprint bandwidth, Apple could become its own wireless carrier—an MVNO, short for “mobile virtual network operator.” Now Apple could build a phone and barely have to deal with the carriers at all. Disney, on whose board
Jobs sat, was already in discussions with Sprint about just such a deal to provide its own wireless service. Jobs was asking a lot of questions about whether Apple should pursue one as well.
Cingular executives involved in the Rokr project such as Jim Ryan watched Jobs’s interest in an MVNO with Sprint grow, and it terrified them. They worried that if Apple became a wireless carrier, it would cut prices to win customers and crush profits in the industry as other carriers cut prices to compete. So while they had access to Jobs and his team, they gently lobbied him to cut a deal with them instead. If Jobs would agree to an exclusive deal with Cingular, they said, they would be willing to throw out the rule book on carrier–manufacturer relations and give Jobs the control he needed to build a revolutionary device.
Ryan, who has never talked publicly about those days until now, said the experience taxed every ounce of his negotiating skills. He’d been assembling complex carrier deals for nearly a decade and was known in the industry as one of the early thinkers about the future of wireless. He’d grown Cingular’s wireless data business from almost nothing to $4 billion in revenue in three years. But Apple and Jobs had little experience negotiating with carriers, making it much harder for Ryan to predict how they would respond to his various offers. “Jobs hated the idea of a deal with us at first. Hated it,” Ryan said. “He was thinking that he didn’t want a carrier like us anywhere near his brand. What he hadn’t thought through was the reality of just how damn hard it is to deliver mobile service.” Throughout 2004, during the dozens of hours he and his team spent in meetings with Apple executives in Cupertino, Ryan kept reminding Jobs and other Apple executives that if Apple became a carrier itself, it would get stuck with all the hassles of running an inherently unpredictable asset—a cell phone network. A deal with Cingular would insulate Apple from all that. “Funny as it sounds, that was one of our big selling points to them,” Ryan said. “Every time the phone drops a call, you blame the carrier. Every time something good happens, you thank Apple.”
Cingular wasn’t just playing defense
. Executives such as Ryan thought partnering with the inventor of the iPod would transform the way customers thought about their own company. Apple’s explosive success with the iPod in 2004 and 2005—it sold 8.2 million iPods in 2004 and another 32 million in 2005—had taken Jobs’s status as a business and cultural icon to unparalleled heights. The likely torrent of new customers who would come to Cingular if it were the carrier for a phone as revolutionary as the iPod had been made them salivate.
Another Cingular executive who worked on the deal but who would not be named put it this way to me when I was working on a story for Wired in 2008: “Jobs was cool. He was hip. There were studies done in colleges that asked, ‘What is the one thing you can’t live without?’ For twenty years it was beer. Now it was the iPod. Things like that made us say this guy has got something. That probably gave us that much more energy to make sure this deal happened.”
While Cingular was lobbying Jobs from the outside, a handful of Apple executives, such as Mike Bell and Steve Sakoman, were pushing Jobs to sign off on building a phone from the inside. “We were spending all this time putting iPod features in Motorola phones. That just seemed ass-backwards to me,” said Bell, who now is cohead of Intel’s mobile-device effort. He told Jobs that the cell phone itself was on the verge of becoming the most important consumer electronics device of all time, that no one was good at making them, and that, therefore, “if we [Apple] just took the iPod-user experience and some of the other stuff we were working on, we could own the market.”
Bell was a perfect executive to be making this pitch. He’d been at Apple fifteen years and had helped build some of the products, such as the iMac, that enabled Apple to avoid bankruptcy in 1997. Most important, because he ran not only a chunk of the Mac software division but the software group responsible for Apple’s AirPort Wi-Fi devices, he knew more about the wireless industry than most other senior executives inside Apple. He doesn’t claim credit for being the father of the iPhone. He ultimately didn’t run or even work on the project. Fadell ran it, before Scott Forstall took it over. But even today most say Bell was an important catalyst.
“So I argued with Steve for a couple of months and finally sent him an email on November seventh, 2004,” Bell said. “I said, ‘Steve, I know you don’t want to do a phone, but here’s why we should do it: [Design director Jony Ive] has some really cool designs for future iPods that no one has seen. We ought to take one of those, put some Apple software around it, and make a phone out of it ourselves instead of putting our stuff on other people’s phones.’ He calls me back about an hour later and we talk for two hours, and he finally says, ‘Okay, I think we should go do it.’ So Steve and I and Jony [Ive] and Sakoman had lunch three or four days later and kicked off the iPhone project.”
It wasn’t just Bell’s persistence and Ive’s designs that helped convince Jobs. Sakoman came to lunch having already done some early engineering work about what it might take to build a phone. He’d been at Palm until 2003, where, among other things, he helped build the software that went inside Treo smartphones. And as vice president of software technology at Apple, he had become the executive most familiar with the software inside the iPod. If Apple was going to make a smartphone, the iPod was a logical place to start. That’s what consumers were expecting Apple to do. So by the time Sakoman arrived for lunch, he and his team had already figured out a way to put a Wi-Fi chip inside an iPod and get it to connect to the Internet.
They’d even begun working on new software for the music player—a version of Linux—so that it could handle the increased demands of being a phone and an Internet browser. Linux, the open-source software made famous by Linus Torvalds in the 1990s, had not supplanted Microsoft Windows as many geeks predicted it would. But by then it had become the software of choice for less powerful and sophisticated electronics. Sakoman briefed Jobs on his team’s progress and later that afternoon told his team, “You better start figuring this out because this [phone project] is going ahead.”
Bell says one reason why he remembers the meeting is that he’d never seen anyone eat the way Jobs did that day. “You know how you remember certain things because of their bizarreness? So we’re meeting outside at the Apple cafeteria, and when Steve walks out, on his tray is a glass bowl full of avocado halves. Not one or two, but, like, fifteen covered in salad dressing. So I remember sitting there with Jony and Sakoman and watching Steve mow through a mound of avocados. I guess, having read Walter Isaacson’s biography [of Jobs], it was one of those food phases he was in to cure his cancer, but at the time I had no idea what was up.”
The final deal between Apple and AT&T, which acquired Cingular in 2006, took more than a year to hammer out. But it would prove easy compared to what Apple went through just to build the device. Many executives and engineers, riding high from their success with the iPod, assumed it would be just like building a small Macintosh. Instead, Apple designed and built not one iPhone but three entirely different devices in those two years. One executive on the project thinks Apple made six fully working prototypes just of the device it ultimately sold—each with its own set of hardware, software, and design tweaks. Many on the team were so burned-out, they left the company shortly after the first phone hit store shelves. “It was like the first moon mission,” said Fadell, who was one of the key executives on the project, and who left Apple to start his own company, Nest, in 2010. “I’m used to a certain level of unknowns in a project, but there were so many new things here that it was just staggering.”
Jobs wanted the iPhone to run a modified version of OS X, the software that comes with every Mac. But no one had ever put
a gigantic program like OS X on a phone chip before. The software would have to be a tenth the size, and even then there wasn’t a phone chip being made in 2005 that could run it fast enough and with a long enough battery life. The chips that run Apple laptops were never considered because they generated too much heat and would suck a phone battery dry in minutes. Millions of lines of code would have to be stripped out or rewritten, and until 2006 engineers would have to simulate chip speed and battery drain because actual chips weren’t available until then. “Initially we just worked on Gumstix boards [cheap circuit boards hobbyists buy],” said Nitin Ganatra, one of the early software engineers. “We started with the Mac address book—a list of names—and to see if we could make it scroll [on a screen] at between thirty to sixty frames a second. We just wanted to figure out if there was any way to make this [OS X on a phone chip] work—whether we were even in the right ballpark. We wanted to know if we could push bits fast enough to get that iPhone look and feel. If we couldn’t get it to work on a Gumstix board, we knew we might have a problem.”
No one had ever put a capacitive multitouch screen in a mainstream consumer product before either. Capacitive touch technology—which creates “a touch” when a finger or other conductive item completes a circuit on the device—had been around since the 1960s. Elevator buttons in office buildings and screens on ATMs often used it. And research into multitouch technologies had been around since the 1980s. Trackpads on laptops were probably the most sophisticated use of this technology because they could recognize the difference between one- and two-finger inputs. But it was also well known that to build the multitouch screen Apple put on the iPhone and produce it in volume was a challenge few had the money or guts to take on. The next steps—to embed the technology invisibly in a piece of glass, to make it smart enough to display a virtual keyboard with auto-correct, and to make it sophisticated enough to reliably manipulate content such as photos or web pages on that screen—made it hugely expensive even to produce a working prototype. Few production lines even had experience manufacturing multitouch screens. There were touchscreens in consumer electronics, but over the years these had typically been pressure-sensitive touchscreen devices on which users pushed on-screen buttons with a finger or a stylus. The PalmPilot and its successors such as the Palm Treo were popular implementations of this technology. Even if multitouch iPhone screens had been easy to make, it wasn’t at all clear to Apple’s executive team that the features they enabled, such as onscreen keyboards and “tap to zoom,” were enhancements that consumers wanted.
As early as 2003 a handful of Apple engineers, who had done cutting-edge academic work with touch interfaces, had figured out how to put multitouch technology in a tablet. But the project was mothballed. “The story was that Steve wanted a device that he could use to read email while on the toilet. That was the extent of the product spec,” said Josh Strickon, one of the earliest engineers on that project. “But you couldn’t build a device with enough battery life to take out of the house, and you couldn’t get a chip with enough graphics capability to make it useful. We spent a lot of time trying to figure out just what to do.” Before joining Apple in 2003, Strickon had been a student at MIT for a decade, getting his B.A., master’s, and Ph.D. in engineering. He was a huge proponent of touchscreen technology, having built a multitouch device for his master’s thesis. But he said given the lack of consensus at Apple about what to do with the prototypes he and his fellow engineers developed, he left the company in 2004 thinking it wasn’t going to do anything with multitouch.
Tim Bucher, one of Apple’s top executives at the time and the company’s biggest multitouch proponent, said part of the problem was that the prototypes they were building used software, OS X, that was designed to be used with a mouse, not a finger. “We were using ten- or twelve-inch screens with Mac mini–like guts … and then you would launch these demos that would do the different multitouch gestures. One demo was a keyboard application that would rise from the bottom—very much what ended up shipping in the iPhone two years later. But it wasn’t very pretty. It was very much wires, chewing gum, and bailing wire. It left too much to the imagination.” Bucher, who has never before talked publicly about his work at Apple, had hoped to keep pushing the effort forward, but he lost a political battle with other top executives and left Apple in early 2005.
Few even thought about making touchscreen technology the centerpiece of a new kind of phone until Jobs started pushing the idea in mid-2005. “He said, ‘Tony, come over here. Here’s something we’re working on. What do you think? Do you think we could make a phone out of this?’” Fadell said. “So we sat there and played with the demo (he was showing me) for a while. It was huge. It filled the room. There was a projector mounted on the ceiling and it would project the Mac screen onto this surface that was maybe three or four feet square. Then you could touch the Mac screen and move things around and draw on it. I knew about it [the touchscreen prototype], but I didn’t know about it in detail because it was a Mac thing [Fadell ran the iPod division]. So we all sat down and had a serious discussion about it—about what could be done.”
Fadell had serious doubts about whether such an enormous prototype could be shrunk so much. But he also knew better than to answer no to Steve Jobs. He was one of Apple’s superstars, and he didn’t get there by being timid about thorny technological problems. He’d joined Apple in 2001 as a consultant to help build the first iPod. By 2005, with iPod sales exploding, he had become, at thirty-six, arguably the single most important line executive at the company.
“I understood how it could be done,” Fadell said. “But it’s one thing to think that, and another to take a room full of special, one-off gear and make a million phone-sized versions of that in a cost-effective, reliable manner.” The to-do list was exhausting just to think about. “You had to go to LCD vendors [companies that make the screens that go in computer monitors and TVs] who knew how to embed technology like this in glass; you had to find time on their line; and then you had to come up with compensation and calibrating algorithms to keep the pixel electronics [in the LCD] from generating all kinds of noise in the touchscreen [sitting on top of it.] It was a whole project just to make the touchscreen device. We tried two or three ways of actually making the touchscreen until we could make one in enough volume that would work.”
Shrinking OS X and building a multitouch screen, while innovative and difficult, were at least within the skills Apple had already mastered as a corporation. No one was better equipped to rethink OS X’s design. Apple knew LCD manufacturers because it put an LCD in every laptop and iPod. The peculiarities of mobile phone physics, on the other hand, were an entirely new field, and it took those working on the iPhone into 2006 to realize how little they knew.
To ensure the iPhone’s
tiny antenna could do its job effectively, Apple spent millions buying and assembling special robot-equipped testing rooms. To make sure the iPhone didn’t generate too much radiation, Apple built models of human heads—complete with goo to simulate brain density—and measured the effects. To predict the iPhone’s performance on a network, Apple engineers bought nearly a dozen server-size radio-frequency simulators for millions of dollars apiece. One senior executive believes Apple spent more than $150 million building the first iPhone.
The first iPhone prototype was not ambitious. Jobs hoped that he would be able to develop a touchscreen iPhone running OS X. But in 2005 he had no idea how long that would take. So Apple’s first iPhone looked very much like the joke slide Jobs had put up when introducing the real iPhone—an iPod with an old fashioned rotary dial on it. The prototype was an iPod with a phone radio that used the iPod click wheel as a dialer. It grew out of the work Steve Sakoman had used to pitch Jobs on a phone project in the first place. “It was an easy way to get to market, but it was not cool like the devices we have today,” Grignon said. He worked for Sakoman at the time and is one of the names on the click wheel dialer patent.
The second iPhone prototype in early 2006 was much closer to what Jobs would ultimately unveil. It incorporated a touchscreen and OS X, but it was made entirely of brushed aluminum. Jobs and Ive were exceedingly proud of it. But since neither of them were experts in the physics of radio waves, they hadn’t realized they’d created a beautiful brick. Radio waves don’t travel through metal well. “I and Ruben Caballero [Apple’s antenna expert] had to go up to the boardroom and explain to Steve and Ive that you cannot put radio waves through metal,” said Phil Kearney, one of Bell’s deputies, who left in 2008. “And it was not an easy explanation. Most of the designers are artists. The last science class they took was in eighth grade. But they have a lot of power at Apple. So they ask, ‘Why can’t we just make a little seam for the radio waves to escape through?’ And you have to explain to them why you just can’t.”
Jon Rubinstein, Apple’s top hardware executive then and known to many as the Podfather for driving the creation and development in the iPod, said there were even long discussions about how big the phone would be. “I was actually pushing to do two sizes—to have a regular iPhone and an iPhone mini like we had with the iPod. I thought one could be a smartphone and one could be a dumber phone. But we never got a lot of traction on the small one, and in order to do one of these projects you really need to put all your wood behind one arrow.”
It all made the iPhone
project so complex that it occasionally threatened to derail the entire corporation. Many of the top engineers in the company were being sucked into the project, forcing slowdowns in the timetables of other projects. Had the iPhone been a dud or not gotten off the ground at all, Apple would have had no other big products ready to announce for a long time. Worse, its top engineers, frustrated by the failure, would have left Apple for other jobs, according to 2012 testimony by Scott Forstall, one of Apple’s top executives on the project and Apple’s head of iOS software until October 2012. He testified during the Apple v. Samsung patent trial.
Even Apple’s experience designing screens for iPods didn’t help the company design the iPhone screen. After much debate, Jobs decided the iPhone screen needed to be made of hard Plexiglas. He and his executives thought a glass screen would shatter when dropped—until Jobs saw how scratched a plastic prototype had gotten when he carried it around in his pocket with his keys. “Jobs goes, ‘Look at this. Look at this. What’s with the screen?’” said an executive who witnessed the exchange. “And the guy [a midlevel executive] takes the prototype and says, ‘Well, Steve, we have a glass prototype, but it fails the one-meter drop test one hundred out of one hundred times, and blah blah blah …’ Jobs cuts him off and says, ‘I just want to know if you are going to make the fucking thing work.’”
There was a good reason the executive argued with Jobs. This was September 2006. The iPhone would be unveiled in four months. And Jobs wanted to rethink the phone’s most prominent component.
Through his friend
John Seely Brown, Jobs reached out to Wendell Weeks, the CEO of glassmaker Corning in upstate New York, invited him to Cupertino, and told him he needed the hardest glass ever made for the screen of the iPhone. Weeks told him about a process developed for fighter-jet cockpits in the 1960s. But Weeks said the Defense Department never ended up using the material, known as gorilla glass, so it had never found a market. He said Corning had stopped making it decades ago. Jobs wanted Weeks to start production immediately, convincing Weeks that he could in fact get Jobs the glass he needed in six months. Weeks told Jobs’s biographer Walter Isaacson that he remains amazed at what Jobs convinced him to do. Corning took a factory in Harrodsburg, Kentucky, that had been making LCD displays and converted it, getting Jobs the glass he needed on time. “We produced glass that had never been made. We put our best scientists and engineers on it and we just made it work,” Weeks said.
“I still remember PC Magazine doing a screen durability test once the phone came out in July 2007,” said Bob Borchers, Apple’s then head of iPhone marketing. “They put it in a bag of coins and shook it up. They put keys in the bag and shook it up. They dropped it a few times on a carpet. And then they went out on the street and dropped it on the concrete three times. It survived all of that. We all laughed, looked at each other, and said, ‘Right, we knew that.’”
On top of all that, Jobs’s obsession with secrecy meant that despite being exhausted from working eighty hours a week, the few hundred engineers and designers working on the project couldn’t talk about the project to anyone else. If Apple found out you’d told a friend in a bar, or even your spouse, you could be fired. Before a manager could ask you to join the project, you had to sign a nondisclosure agreement in his office. Then, after he told you what the project was, you had to sign another document confirming that you had indeed signed the NDA and would tell no one. “We put a sign on over the front door of the iPhone building that said FIGHT CLUB because the first rule of fight club is you don’t talk about fight club,” Forstall would explain in his court testimony. “Steve didn’t want
to hire anyone from outside of Apple to work on the software, but he said I could hire anyone in the company I wanted,” Forstall said. “So I’d bring recruits into my office. Sit them down and tell them, ‘You are a superstar at Apple. Whatever you are doing now, you’ll do fine. But I have another project that I want you to consider. I can’t tell you what it is. All I can say is that you will have to give up untold nights and weekends and that you will work harder than you have ever worked in your life.”
“My favorite part,” said one of the early iPhone engineers, “was what all the vendors said the day after the unveiling.” Big companies such as Marvell Electronics, which made the Wi-Fi radio chip, and CSR, which provided the Bluetooth radio chip, hadn’t been told they were going to be in a new phone. They thought they were going to be in a new iPod. “We actually had fake schematics and fake industrial designs,” the engineer said. Grignon said that Apple even went as far as to impersonate employees of another company when they traveled, especially to Cingular (and, later, AT&T) in Texas. “The whole thing was you didn’t want the receptionist or whoever happens to be walking by to see all [preprinted Apple] badges lying out.”
On the other hand, Jobs wanted a handful of the top engineers on the iPhone project to use iPhone prototypes as their permanent phones. “It wasn’t ‘Carry an iPhone—and a Treo,’” Grignon said. “It was ‘Carry an iPhone and live on it,’ because that’s how we found bugs. If you can’t make a phone call because of a bug, you are going to be extra-motivated to start yelling to get that fixed. But it made for some awkward times where, if you were, say, in a club or an airport, you could spot an iPhone user a mile away because they were the person hunched over with their arms around their phone doing something mysterious. Snorting a line of coke—or using an iPhone?”
One of the most obvious manifestations of Jobs’s obsession with secrecy was the growth of lockdown areas all over campus—places that those not working on the iPhone could no longer go. “Each building is split in half, and there is this corridor that runs through the middle of them with common areas, and after one weekend they just put doors around the common areas so that if you were not on the project, and you were used to using that space, it was now off-limits,” Grignon said. “Steve loved this stuff. He loved to set up division. But it was a big ‘fuck you’ to the people who couldn’t get in. Everyone knows who the rock stars are in a company, and when you start to see them all slowly get plucked out of your area and put in a big room behind glass doors that you don’t have access to, it feels bad.”
Even people within the iPhone project itself couldn’t talk to one another. Engineers designing the iPhone’s electronics weren’t allowed to see the software it would run. When they needed software to test the electronics, they were given proxy code, not the real thing. If you were working on the software, you used a simulator to test hardware performance.
And no one outside Jobs’s inner circle was allowed into chief designer Jony Ive’s wing on the first floor of Building 2. The security surrounding Ive’s prototypes was so tight that employees believed the badge reader called security if you tried to badge in and weren’t authorized. “It was weird, because it wasn’t like you could avoid going by it. It was right off the lobby, behind a big metal door. Every now and then you’d see the door open and you’d try to look in and see, but you never tried to do more than that,” said an engineer whose first job out of college was working on the iPhone. Forstall said during his testimony that some labs required you to “badge in” four times.
The four months leading up to announcement day were particularly rough, Grignon said. Screaming matches broke out routinely in the hallways. Engineers, frazzled from all-night coding sessions, quit, only to rejoin days later after catching up on their sleep. Forstall’s chief of staff, Kim Vorath, slammed the door to her office so hard that the handle bent and locked her in; it took colleagues more than an hour and some well-placed whacks with an aluminum bat to free her. “We were all standing there watching it,” Grignon said. “Part of it was funny. But it was also one of those moments where you step back and realize how fucked-up it all is.”
To Grignon’s amazement
and to that of many others in the audience, Jobs’s iPhone demo on January 9, 2007, was flawless. He started the show saying, “This is a day I have been waiting for two and a half years.” Then he regaled the audience with a myriad of tales about why consumers hated their cell phones. Then he solved all their problems—definitively. Virtually everyone in the audience had been expecting Jobs to announce a phone, yet they were still in awe.
He used the iPhone to play some music and watch a movie clip to show off the phone’s beautiful screen. He made a phone call to show off the phone’s reinvented address book and voice mail. He sent an email and a text, showing how easy it was to type on the phone’s touchscreen keyboard. He scrolled through a bunch of photos, showing how simple pinches and spreads of two fingers could make the pictures bigger or smaller. He navigated Amazon’s and The New York Times’ websites to show that the iPhone’s Internet browser was as good as the one on his computer. He found a Starbucks with Google Maps—and called the number from the stage—to show how it was impossible to get lost with an iPhone.
By the end, Grignon wasn’t just happy, he was drunk. He’d brought a flask of Scotch to calm his nerves. “And so there we were in the fifth row or something—engineers, managers, all of us—doing shots of Scotch after every segment of the demo. There were about five or six of us, and after each piece of the demo, the person who was responsible for that portion did a shot. When the finale came—and it worked along with everything before it, we all just drained the flask. It was the best demo any of us had ever seen. And the rest of the day turned out to be just a shit show for the entire iPhone team. We just spent the entire rest of the day drinking in the city. It was just a mess, but it was great.”
2 (#ulink_77f423d7-4293-5da8-87e2-70f6b6556e8d)
The iPhone Is Good. Android Will Be Better. (#ulink_77f423d7-4293-5da8-87e2-70f6b6556e8d)
For all its fame and notoriety, Silicon Valley, as a place, isn’t much of a tourist attraction. There is no sign or Walk of Fame as in Hollywood. There isn’t an address, such as Wall Street, where the New York Stock Exchange has been for 150 years. It is just a slew of office parks sprawling thirty miles southeast from the San Francisco Airport to San Jose.
But a visual encapsulation
of the Valley’s brilliant, driven, and zany gestalt does exist. You just have to know someone at Google to go see it. Located thirty-five miles southeast of San Francisco next to Highway 101 in Mountain View, Google’s sprawling campus resembles few other corporate facilities in the world. The company started in a Stanford University dorm room in 1998 and has in fifteen years grown into one of the most important and powerful companies in the world. Google now controls more than sixty-five buildings in Mountain View and employs a third of its roughly fifty-five thousand workers there. Size hasn’t made Google slow or stuffy. Visual signs of its unconventional approach to problem solving remain everywhere. Googlers on red, green, and blue bicycles and motorized scooters zip from building to building. A fifteen-foot-high replica of a T. rex named Stan presides over the main outdoor lunch patio. A few feet away is a replica of SpaceShipOne, Burt Rutan’s first manned private spaceship in 2004. Many lobbies have pianos and vibrating massage chairs; and many restrooms have heated Japanese toilet seats—an odd experience on a hot day when the person before you has forgotten to turn the heater off. Google uses so many solar panels for power that it ranks as one of the largest corporate solar installations in the world. Meanwhile, an entire fleet of Wi-Fi-enabled commuter buses run to and from San Francisco, Berkeley/Oakland, and San Jose. They not only encourage employees to conserve gas by not driving, but they allow Google to tap into a bigger population of potential employees. Food and drink everywhere on campus are free.
It feels like a college campus, and that’s exactly how it’s supposed to feel. The source of Google’s success has been the quality of the engineers it hires out of top colleges. Rather than make them feel as if they’ve just joined the marines—as other corporations might—Google wants to keep them feeling that they’ve never left school so that they stay creatively wide-eyed. The campus has a swimming pool, gyms, a convenience store, a day-care center, a place to get haircuts, and drop-off dry cleaning. Almost every building has a laundry room. One summer back in 2004 a bunch of summer interns tried to live at Google rather than search for housing. They slept on couches and ran their whole lives out of the Googleplex until they were told they were violating the fire code.
“We made an explicit decision
to keep the buildings crowded,” Google executive chairman and former CEO Eric Schmidt told me back then. “There’s kind of a certain amount of noise that kind of gets everybody to work and gets them excited. It’s really based on how computer-science graduate schools work. If you go to a graduate school, like go to the Stanford Computer Science building, you’ll see two, three, or even four in an office. That model is one which is very familiar to our programmers and for us because we were all in those offices too, and we know it’s a very productive environment.”
Over the years
these perks and oddities have been so widely imitated by other corporations that it is now impossible to explain Silicon Valley without mentioning them. Google’s company bus fleet is arguably driving an entire reconfiguration of work-life patterns in the Bay Area. Most big Silicon Valley companies now offer such buses. The one downside of working in Silicon Valley after college used to be living in suburban Mountain View, Palo Alto, or Sunnyvale. City life in San Francisco wasn’t worth the more than two hours of driving it required to live there. Google’s buses, which all have Wi-Fi, make those commutes not only tolerable but some of the most productive hours of the day. So many high-tech workers now live in San Francisco that some of the newest technology companies have followed them. A decade ago companies such as Zynga and Twitter would have automatically located in Silicon Valley. When they started more than six years ago, they located in San Francisco. Benchmark Capital, a top venture capital firm, just opened its first office in their neighborhood too.
All this has made Google a rigorous yet chaotic place to work. Especially back in 2005 there were often dozens of engineering projects going at the same time. Many of them had conflicting ambitions. And some were so secret that only a handful of top executives knew about them. The most secret and ambitious of these was Google’s own smartphone effort—the Android project. Tucked in a first-floor corner of Google’s Building 44, surrounded by Google ad reps, its four dozen engineers thought that they too were on track to deliver a revolutionary device that would change the mobile phone industry forever. By January 2007, they’d all worked sixty-to-eighty-hour weeks for fifteen months—some for more than two years—writing and testing code, negotiating software licenses, and flying all over the world to find the right parts, suppliers, and manufacturers. They had been working with prototypes for six months and had planned a launch by the end of the year … until Jobs took the stage to unveil the iPhone.
Chris DeSalvo’s reaction to the iPhone was immediate and visceral. “As a consumer I was blown away. I wanted one immediately. But as a Google engineer, I thought, ‘We’re going to have to start over.’”
For most of Silicon Valley—including most of Google—the iPhone’s unveiling was something to celebrate. Jobs had once again done the impossible. Four years before he’d talked an intransigent music industry into letting him put their catalog on iTunes for ninety-nine cents a song. Now he had convinced a wireless carrier to let him build a revolutionary smartphone. But for the Google Android team, the iPhone was a kick in the stomach. “What we had suddenly looked just so … nineties,” DeSalvo said. “It’s just one of those things that are obvious when you see it.”
DeSalvo wasn’t prone to panic. Like many veteran engineers in the Valley, laconic would be a good description of his personality. He’s an expert sailor who had just returned from taking his family on a three-week excursion in Indonesia. He’d been writing software for two decades, first for video-game developers, then for Apple, and by 2000 for a start-up called Danger. There were few software-development issues he hadn’t encountered. After joining Google and the Android team in Mountain View at the end of 2005 and spending a year writing thousands of lines of code out of a utility closet (he likes writing code in silence), he’d moved to Chapel Hill, North Carolina, the week before to help the team integrate a recent acquisition. But as he watched Jobs’s presentation from a run-down office above a T-shirt shop there, he knew his boss, Andy Rubin, would be thinking the same thing he was. He and Rubin had worked together for most of the previous seven years, when DeSalvo had been an engineer at Danger, Rubin’s first start-up. Rubin was one of the most competitive people DeSalvo knew. Rubin was not about to release a product that suddenly looked so dated.
Six hundred miles away in Las Vegas, on his way to a meeting with one of the myriad handset makers and carriers that descend on the city for the Consumer Electronics Show, Rubin reacted exactly as DeSalvo predicted. He was so astonished by what Jobs was unveiling that, on his way to a meeting, he had his driver pull over so that he could finish watching the webcast. “Holy crap,” he said to one of his colleagues in the car. “I guess we’re not going to ship that phone.”
What the Android team had been working on, a phone code-named Sooner, sported software that was arguably more revolutionary than what had just been revealed in the iPhone. In addition to having a full Internet browser, and running all of Google’s great web applications, such as search, Maps, and YouTube, the software was designed not just to run on Sooner, but on any smartphone, tablet, or other portable device not yet conceived. It would never need to be tethered to a laptop or desktop. It would allow multiple applications to run at the same time, and it would easily connect to an online store of other applications that Google would seed and encourage. By contrast, the iPhone needed to connect to iTunes regularly, it wouldn’t run more than one application at a time, and in the beginning it had no plans to allow anything resembling an application store.
However, the Sooner phone was ugly. It looked like a BlackBerry, with a traditional keyboard and a small screen that wasn’t touch-enabled. Rubin and his team, along with partners HTC and T-Mobile, believed consumers would care more about the great software it contained than its looks. This was conventional wisdom back then. Revolutionary phone designs rarely succeeded. The Nokia N-Gage, which in 2003 tried to combine a gaming system with a phone and email device, often gets mentioned here. RIM had become one of the dominant smartphone makers on the planet by making BlackBerry’s unadorned functionality one of its main selling points: you got a phone, an incredible keyboard, secure email, all in one indestructible package.
The iPhone, in contrast, was not only cool looking, but it used those cool looks to create entirely new ways to interact with a phone—ways that Android engineers either hadn’t thought possible or had considered too risky. By using a virtual keyboard and replacing most real buttons with software-generated buttons on a big touchscreen, every application could now have its own unique set of controls. Play, Pause, and Stop buttons only appeared if you were listening to music or watching video. When you went to type a web address into the browser, the keyboard appeared, but it disappeared when you hit Enter. Without the physical keyboard taking up half the phone, the iPhone had a screen twice the size of virtually every other phone on the market. It all worked the same way whether the user held the phone in portrait or landscape mode. Apple had installed an accelerometer to use gravity to tell the phone how to orient the screen.
A lot was wrong with the first iPhone too. Rubin and the Android team—along with many others—did not think users would take to typing on a screen without the tactile feedback of a physical keyboard. That is why the first Android phone—the T-Mobile G1 from HTC, nearly two years later—had a slide-out keyboard. But what was also undeniable to the Android team was that they had underestimated Jobs. At the very least, Jobs had come up with a new way of interacting with a device—with a finger instead of a stylus or dedicated buttons—and likely a lot more. “We knew that Apple was going to announce a phone. Everyone knew that. We just didn’t think it would be that good,” said Ethan Beard, one of Android’s early business development executives.
Within weeks the Android team had completely reconfigured its objectives. A phone with a touchscreen, code-named Dream, that had been in the early stages of development, became the focus. Its launch was pushed out a year until fall 2008. Engineers started drilling into it all the things the iPhone didn’t do to differentiate their phone when launch day did occur. Erick Tseng, then Android’s project manager, remembers suddenly feeling the nervous excitement of a pending public performance. Tseng had joined Google the year before out of Stanford business school after Eric Schmidt, himself, sold him on the promise of Android. “I never got the feeling that we should scrap what we were doing—that the iPhone meant game over. But a bar had been set, and whatever we decided to launch, we wanted to make sure that it cleared the bar.”
In many ways the Android project is the perfect reflection of Google’s zany and chaotic culture. At most companies, outlandish ideas are discouraged in favor of ideas that are doable. At Google, especially back then, the reverse was true. The easiest way
to get on cofounder and now CEO Larry Page’s bad side was not to think big enough and to clutter a pitch with how much money an idea could make. Back in 2006 Page famously gave Sheryl Sandberg praise for making a mistake that cost Google several million dollars. That was when Sandberg was a Google vice president in charge of its automated ad system, not the chief operating officer of Facebook. “God, I feel really bad about this,” Sandberg told Page, according to Fortune magazine. But instead of hammering her for the error, Page said, “I’m so glad you made this mistake because I want to run a company where we are moving too quickly and doing too much, not being too cautious and doing too little. If we don’t have any of these mistakes, we’re just not taking enough risk.”
The cell phone industry in 2005 was a perfect example of a hairy Google-size problem. The software industry for mobile phones was one of the most dysfunctional in all technology. There wasn’t enough wireless bandwidth for users to surf the Internet on a phone without frustration. Phones weren’t powerful enough to run anything but rudimentary software. But the biggest problem, as Jobs had learned, was that the industry was ruled by an oligopoly: Few companies besides the carriers and the phone makers were writing software for phones, and what existed was terrible. Wireless bandwidth would improve and phone chips would get more powerful; but back then it looked as if the carriers and phone makers would control it all. “We had done a deal with Vodafone [the big European carrier] to try to get Google search on their phones,” said one top Google executive who would not give his name. “But the search they offered us was that we could put some results on, but that they would control most of them, and that our results would be at the bottom of every query. They didn’t have a good mobile browser. Ringtones [that they were selling] sometimes got prioritized in search results. All the carriers were doing this. They thought they could provide all the services inside a walled garden [as AOL had in the 1990s], and that this control was the best way to make money.”
The reason few developers built software for mobile phones was because anytime they tried, they lost money. There was no standardization in the industry. Virtually every phone ran its own software and set of applications, meaning software written for a Samsung phone often wouldn’t run on a Motorola phone, which wouldn’t run on a Nokia. Software platforms were incompatible even within companies. For example, there were a handful of different versions of Symbian. Put simply, the mobile industry screamed “money pit” to any enterprising developer. Most stayed away. The most lucrative business was not writing apps for phones. It was owning a testing company that would make sure your apps worked on all the phones in the market. Larry Page has never been shy
talking about how frustrating those days were for him and Google. “We had a closet full of over 100 phones [that we were developing software for], and we were building our software pretty much one device at a time,” he said in his 2012 report to shareholders. In various remarks over the years he has described the experience as both “awful” and “incredibly painful.”
But Page and the rest of Google’s executives knew that someone would figure out the mobile business eventually, and they were particularly concerned that that company would be Microsoft. Back then, Microsoft was still the richest and most powerful technology company in the world, and it was finally getting traction with its Windows CE mobile phones and software. Windows CE smartphones were still a niche market, but if consumers took to the platform en masse as they did later with the iPhone, Google’s entire business could be in jeopardy.
This wasn’t an exaggeration
. Back then, Microsoft and Google were in the midst of a nasty battle of their own for dominance in search, and for top dog in the tech world. After two decades of being the first-choice workplace of top engineering talent, Microsoft was now losing many of those battles to Google. Chairman Bill Gates and CEO Steve Ballmer had made it clear they took Google’s challenge personally. Gates seemed particularly affected by it. Once or twice he made fun of the way Page and his Google cofounder Sergey Brin dressed. He said their search engine’s popularity was “a fad.” Then, in the same breath, he would issue the ultimate compliment, saying that of all his competitors over the years, Google was the most like Microsoft.
Google executives were convinced that if Windows on mobile devices caught on, Microsoft would interfere with users’ access to Google search on those devices in favor of its own search engine. The government’s successful antitrust trial against Microsoft in the 1990s made it difficult for the company to use its monopoly on desktops and laptops to bully competitors. It could not, for example, make Microsoft’s the default search engine in Windows without giving users a choice between its search engine and those from Google, Yahoo, and others. However, on smartphones, few rules governed how fiercely Microsoft could compete. It didn’t have a monopoly there. Google worried that if Microsoft made it hard enough to use Google search on its mobile devices and easy enough to use Microsoft search, many users would just switch search engines. This was the way Microsoft killed Netscape with Internet Explorer in the 1990s. If users stopped using Google’s search engine and began using a competitor’s such as Microsoft’s, Google’s business would quickly run aground. Google made all its money back then from the search ads that appeared next to its search results. “It’s hard to relate
to that [fear of Microsoft] now, but at the time we were very concerned that Microsoft’s mobile strategy would be successful,” Schmidt said in 2012 during testimony in the Oracle v. Google copyright trial.
All these fears and frustrations
were top of the mind for Page when he agreed to meet with Rubin in early 2005 in the first-floor conference room of Google’s Building 43. Back then, Page’s office was on the second floor overlooking Google’s main courtyard. He and Brin shared it and continued that setup until Page became CEO in 2011. The space looked more like the dorm room of two engineering students than anything you would expect to see in a major corporation. You had to work to see their two desks and computers because the room was so jammed with their latest electronic-gadget passions—cameras typically for Page, along with Brin’s radio-controlled planes and cars and his roller-hockey gear. When Brin and Page were not there, the office was often filled with other programmers, who felt free to take it over. Rubin had reached out to Page because Rubin had started Android the year before and had enough software written to show potential customers such as carriers. He thought some kind of sign from Google—such as an email from Page saying that Android was doing interesting work—would help Rubin raise more money to keep going and give his sales pitch more zing.
Few people can just email Larry Page directly and successfully ask for a meeting, but back then Rubin was one of them. Three years earlier, when Google was still scrabbling for users, attention, and revenue, Rubin had made Google the default search engine on the T-Mobile Sidekick, the device Rubin designed and built when he ran Danger. Page remembered the gesture not just because Google had desperately needed search traffic at the time, but also because he thought the Sidekick was one of best-engineered mobile devices he’d ever seen.
The Sidekick was odd looking—shaped like a bar of soap with a screen in the middle. To operate it, one flipped up the screen, rotating it 180 degrees, and typed on the keyboard underneath. Its nonstandard looks and a nonexistent marketing budget kept it from being a hit product. But it had a cult following among two groups: savvy high school and college students and Silicon Valley engineers. Students liked that it was the first mobile device to have instant-messaging software built in. Engineers such as Page loved that it was the first mobile device to allow users to surf the Internet the same way as on their office computers. BlackBerry had mobile email down to a science, and everyone at Google had a BlackBerry. But the Internet browsers on it and other mobile devices were terrible. To deal with smaller bandwidth back then, browsers were designed to show only the bare bones of a web page’s content—typically just text. But that also made the browsing experience all but useless for businesses. One of the things that wouldn’t work in these crippled browsers were Google search ads. You couldn’t click on them. Soon Page and Brin were walking around with Sidekicks themselves, enthralling their friends and colleagues with a mobile device that nearly replaced their laptops.
According to Wired, when Page arrived for the meeting, late as usual, Rubin jumped to the whiteboard to begin his pitch: phones with computer capabilities, not laptops or desktops, were the future of technology. It was a huge market, Rubin said. More than 700 million cell phones were sold worldwide every year, compared to 200 million computers, and that gap was widening. But the phone business was stuck in the dark ages. Android would fix that problem by convincing carriers and phone makers that they didn’t need to spend money on their own proprietary software. Frustrated consumers would flock to phones that worked better. Software developers would rush to write software for a platform in such demand. A self-reinforcing software ecosystem would be born.
Page listened gamely
. He looked at the prototype Rubin had brought with him. But Page had pretty much decided what he was going to do before the meeting even started: What if Google just bought Android? he asked. He later told Steven Levy, the author of In the Plex, “We had that vision [about what the future of mobile should look like], and Andy came along and we were like ‘Yeah we should do it. He’s the guy.’” Google bought Android for about $50 million plus incentives, and by July 2005 Rubin and his seven other Android cofounders were sharing their vision of the world with the rest of Google’s management team.
Rubin was surprised and thrilled about Google’s decision to buy his company. “At Danger we had a great niche product [the Sidekick] that everyone loved. But I wanted to get beyond niche and make a mass-market product,” he said. And no company was more mass-market than Google. When reflecting on those days, he likes to tell a before-and-after story about a presentation he gave to phone maker Samsung in Seoul:
I walk into the boardroom with my entire team—me and six people. Then twenty executives walk in and stand on the other side of the table in the boardroom. We’re sitting down because I wasn’t accustomed to Asian culture and whatnot at the time. Their CEO walks in. Everyone sits only after he sits, like a military tribunal. Then I go into pitch mode. I pitch the whole Android vision to them like they are a venture capitalist. And at the end and I am out of breath, with the whole thing laid out … there is silence. Literally silence, like there are crickets in the room. Then I hear whispering in a nonnative language, and one of the lieutenants, having whispered with the CEO, says, “Are you dreaming?” The whole vision that I presented, their response was “You and what army are going to go and create this? You have six people. Are you high?” is basically what they said. They laughed me out of the boardroom. This happened two weeks before Google acquired us. The next day [after the acquisition was announced] a very nervous lieutenant of the CEO calls me up and says, “I demand we meet immediately to discuss your very, very interesting proposal that you gave us [when you were in Seoul].”
Because of Google, Rubin no longer had to worry about running out of money and having potential vendors and customers not return his calls. But after the euphoria of the acquisition wore off, it became clear that even at Google getting Android off the ground was going to be one of the hardest things Rubin had undertaken in his life. Just navigating Google itself was initially a challenge for Rubin and his team. There was no hard-and-fast org chart, as in other companies. Every employee seemed right out of college. And the Google culture, with its famous “Don’t be evil” and “That’s not Googley” sanctimony, seemed weird for someone such as Rubin, who had already been in the workplace twenty years. He couldn’t even drive his car to work because it was too fancy for the Google parking lot. Google was by then filled with millionaires who had gotten rich on the 2004 IPO. But in an effort to preserve Google’s brand as a revolutionary company with a revolutionary product—the anti-Microsoft—all cars fancier than a 3 Series BMW were banned. During this period Brin and Page—now worth more than $5 billion apiece—famously drove Priuses to work. That meant Rubin’s Ferrari was not allowed.
Rubin also had to adjust to no longer being the boss. He ran Google’s Android division, but even by the end of 2005 that was only about a dozen people in a corporation with fifty-seven hundred. But Google clearly didn’t treat Android like any of its many other small acquisitions. In those the founders rarely stayed, quickly discovering that actually working at Google was frustrating. Google often bought companies just to test out a new technology and/or hire talented engineers, but without a clear game plan. Page didn’t want Rubin to become frustrated like that, and he specifically tasked executives such as Alan Eustace—who helped Page negotiate the purchase of Android—to make sure Rubin felt that he had the access to the people and resources he needed. Google immediately opened its wallet to the tune of $10 million to help Rubin buy necessary software licenses. Schmidt personally helped negotiate some of them. To ensure the secrecy of their project, the Android team was allowed to keep its software code separate from the rest of Google, and inaccessible to anyone without Rubin’s permission. Page gave Rubin the rare privilege of being able to hire his own staff, instead of going through Google’s famously rigorous and lengthy hiring process.
But all this attention didn’t spare Rubin from having to navigate Google’s wacky politics. For starters, it wasn’t clear to him for a while who Google’s ultimate boss was. Eric Schmidt was the CEO and played a critical role in helping Google deal with its hypergrowth back then. He was also the public face of the company, which he did well and which Page and Brin had much less interest in doing. He had been a CEO before—at Novell—and an executive at Sun Microsystems for fourteen years before that. But Schmidt, who joined Google in 2001, was not a founder as were Page and Brin, which made his true role slightly murkier.
Officially, the three
ran Google as a triumvirate, but Google employees debated about how much power Schmidt actually had—whether Brin and Page called the shots, with Schmidt filling a largely ceremonial role, providing “adult supervision” in Silicon Valley parlance. Schmidt didn’t help with this confusion by describing his job the way a chief operating officer would, not a CEO. In an interview with me in 2004 he said,
My primary responsibility is making the trains run on time, so I try to make sure that the meetings happen, that all of the functions of a properly running company are in place and people are paying attention. Larry and Sergey have driven the top-level strategy and much of the technology strategy. I contribute by organizing the strategy process, but it’s really their strategy and their technology strategy. And if there is a disagreement among the three of us … we’ll have a significant conversation, and somebody will eventually say yes. A few months later somebody, one of the three, will say, ‘Well, maybe the other guy was actually right.’ So there’s a very healthy respect now between the three of us and it’s a wonderful thing. We’re best friends and we’re very good colleagues.
Rubin also noted to colleagues that it seemed to him as if Page and Schmidt didn’t completely agree on what Android should become. Schmidt wanted Android to be software only, and for a while he wondered if it should just be low-level software, without fancy graphics or animations. This was Rubin’s original vision: give phone makers and carriers code that runs all phones and applications the same way, but allows them to decide things such as what the opening screen would look like, and what kinds of graphic flourishes each phone would have. Page, however, was more interested in having Google build a phone. “I remember talking to Andy about this,” one Android executive told me. “He said he always made sure never to demonstrate an Android feature to Page without a prototype of the actual hardware it would run on.”
Then there were legal issues
. Most of Android was open-source software, meaning no one owned it, and the code could be modified by anyone in any way. But not all of it was open source, and Google negotiated licenses for those portions for tens of millions of dollars. Rubin hoped a big chunk of licensed code would come from Sun Microsystems, makers of Java. Sun had spent ten years building Java as an alternative to Microsoft’s Windows. It typically gave the software away for free, on the condition the user didn’t modify it in a major way. Rubin used it for the operating system on the Sidekick, and it was, back then, a widely used language by engineers coming out of top universities. But Android wanted to modify Java more than Sun would allow. No amount of money seemed able to move Sun from this view. Payments as high as $35 million were discussed. This created two problems for Rubin: Without the Java code, Rubin had to spend months of extra time creating a work-around. Second, it infuriated Sun, which believed Google had copied portions of Java to build the work-around. It ultimately became the focus of a messy lawsuit that went to trial in 2012. Google was not held liable, but Sun, now owned by Oracle, is appealing that decision.
Finally, Rubin had the enormous task of just doing what he’d promised to do: build a mobile phone operating system that carriers and manufacturers would want to use and that software developers in addition to Google would want to write programs for. There certainly was precedent for it. It’s what Bill Gates did to transform the PC industry and become the world’s richest man. Most of us now just assume that any PC we buy will run Microsoft Windows or Apple OS X, and that it will have an Intel processor running on a certain kind of circuit board that connects to every printer, mouse, keyboard, monitor, and almost every other electronic device. But in the 1980s, the PC industry was just like the mobile industry in 2005. Not until Gates came along and used MS-DOS and Windows to create a platform for developers to write to did the PC application business take off. “I remember at the time telling Andy, ‘This is going to be really hard, really, really difficult. I don’t want you to get discouraged, but I think the chances are low on this,’” said Alan Eustace, Google’s head of engineering and Rubin’s boss at the time. “And then he and I would laugh about that because he was a true believer. It wasn’t that I was a skeptic. I supported the project all the time. It’s just that we both knew it was going to be hard.”
Some of the issues in building Android were similar to the ones Apple faced. Few people had put an operating system as sophisticated as Android on a phone chip. Meanwhile, all the testing had to be done on simulators because the actual chips and displays Rubin wanted to put on the Dream phone weren’t going to be manufactured for another year. But Google was in an even worse position than Apple to take on these challenges. At Apple the iPhone had nearly brought the company to its knees, but at least Apple was used to building things that consumers wanted to buy. Google had no such experience. Google made money selling advertising. Everything else it built—web software—it gave away for free. It had no fancy industrial-design division comparable to Apple’s. Indeed, the idea of a finished product of any sort was anathema to Googlers. To them the beauty of building web software was that it was never finished. When a feature was mostly done, Google would release it, then refine it over time based on consumer usage with updates to their servers.
Google also viewed marketing with the kind of contempt only an engineer could muster. If a product was good, word of mouth on the web would get people to use it. If it was not good, people would not use it. The idea that Google might be selling more than just a cool phone, but amorphous feelings of satisfaction and self-confidence—the way Jobs sold Apple’s devices—seemed silly. This thinking was firmly rooted
in Google’s DNA as a corporation. In Google’s early years executives had hired the famed consultant Sergio Zyman—the former head of marketing for Coca-Cola—to draw up a plan to get the world excited about their new company. After he spent months working on a plan, the founders rejected the whole marketing concept and did not renew Zyman’s contract. They believed—correctly—that Google’s search engine would sell itself. Google didn’t even have a director-of-marketing position until 2001.
Rubin and the Android team believed they could compensate for these deficits by partnering with wireless carriers and phone makers. That was the whole point of Android, after all: everyone would do what they did best. Google would write software, manufacturers would make phones, and carriers would supply bandwidth and sales and marketing heft. HTC and T-Mobile were committed to the project. They had helped Rubin build the Sidekick when he was at Danger.
Rubin’s problem was that T-Mobile wasn’t a big enough carrier in the United States to get Android on enough phones, and the two other big US wireless carriers, AT&T and Verizon, were deeply suspicious of anyone from Google interested in a business deal. For all Android’s promise and Rubin’s ability to sell that promise, by the end of 2006 the rest of Google was starting to scare people, telecom companies in particular. Google had clearly created
a new and incredibly profitable form of advertising, and it was recording profits and amassing cash at astonishing rates. In 2003 it had seemed like a friendly, plucky start-up. By the end of 2006 it was a colossus with nearly eleven thousand employees, $3 billion in profits, and more than 60 percent market share in search advertising. Would Google soon replace Microsoft as the big bad monopoly in tech? some started to ask.
Executives at companies
such as Verizon had experienced Microsoft’s aggressive behavior firsthand in the 1990s as Gates started trying to leverage his desktop monopoly into adjacent industries. Convinced that Windows would soon become the hub for the convergence of our PCs and TVs, Microsoft invested $1 billion in Comcast, $5 billion in AT&T, and another $500 million in smaller cable and telephone companies. Carriers worried that Gates didn’t just want to speed the adoption of broadband Internet and install Windows on every cable set-top box. They believed he wanted to make phone companies irrelevant.
Google, if anything, made the telecom industry more jumpy than Microsoft. For years Schmidt, Page, and Brin had had a team of engineers doing nothing but experimenting with ways to route around the telecom industry. As Google quickly became the most powerful company on the web, powerful enough to control the search-advertising business and spend $1.65 billion to buy YouTube in 2006, the telecom companies worried that Google might soon announce that it was becoming a carrier itself. By the spring of 2007, when Google announced it was buying online ad firm DoubleClick, these worries had crept into executive suites worldwide as well as into the halls of antitrust regulators in Washington and the European Union. “Google’s vision of Android
is Microsoft’s vision of owning the operating system of every PC,” a platform monopoly, former Verizon CEO Ivan Seidenberg told author Ken Auletta. “Guys like me want to make sure that there is a distribution of platforms and devices. Is it in Google’s interest to disintermediate us? Yeah.”
When Rubin and the Android team were done dealing with the initial shock of how good the iPhone was, little drama surrounded what needed to be done.
Rubin is at his core a start-up CEO—messianically convinced that his path is the best one regardless of whether people and circumstance agree with him. He was used to setbacks. The iPhone was good, but what he was doing was going to be different—and better. It would be technically superior to the iPhone and more widely distributed. Rubin believed that
all the software engineers at carriers and phone makers added 20 percent to the cost of a phone. With Android, they wouldn’t need that infrastructure and would be able to sell their phones for less. And the iPhone would help focus Google’s attention on the Android project. When the iPhone was announced, Rubin had about four dozen people. Two years later he’d have more than a hundred.
In retrospect, having the iPhone beat the first Android phones to market was arguably a good thing, some at Google have told me. Apple spent tens of millions of dollars educating consumers about how to use these new devices with a touchscreen. By the time Android phones started to arrive two years later, the iPhone had become hugely popular. That meant that those carriers who didn’t have the iPhone—which was everyone but AT&T at the time—were looking for an alternative. This wasn’t a short-term problem. AT&T’s contract with Apple gave them exclusive rights in the United States for four years. “They [the carriers and manufacturers] saw the writing on the wall, and that definitively helped Android. It helped cause people to sit up and take notice and take Android seriously,” Eustace said.
For Rubin and the Android team, the more complicated issue to emerge from the iPhone’s unveiling was their own company’s involvement in the iPhone’s project. Google, they learned, was Apple’s key partner in the venture. Indeed, Jobs had made the inclusion of Google software one of the iPhone’s selling points during his unveiling. He said the iPhone was
the “Internet in your pocket for the first time ever” and “You can’t think about the Internet without thinking about Google.” Google CEO Eric Schmidt had joined Jobs onstage during the unveiling to reinforce the depth of their partnership. “Steve, my congratulations to you. This product is going to be hot,” Schmidt said during three minutes of remarks.
The Android team knew Schmidt was on the Apple board. What they didn’t know was how tight the companies had become. While they were developing Android, a handful of engineers in another building a few hundred yards away had become privy to the Apple operation, possessing some of the Apple employees’ knowledge of the iPhone project. Inside Apple, Jobs strictly controlled and siloed access to the various portions of the iPhone project, and Schmidt made efforts to avoid conflicts of interest issues with Android and iPhone because of his position on the Apple board. And yet, some members of the Google team working on apps for the iPhone had seen the iPhone’s software and hardware development. “Apple particularly wanted the Google Maps product,” said one of the engineers. “Steve, I think, personally liked it a lot and wanted to make sure it was integrated into the iPhone. So we knew the iPhone was coming.”
Having two product teams seemingly in competition with each other wasn’t a new thing at Google. Many of Google’s best creations, such as Google News and Gmail, grew out of that philosophy. But the engineers at Android had also come to believe that maybe they were different. Cofounder Larry Page was their patron. They had privileges and perks that few other teams of their size at Google had. And they felt justified in having them. To them, it wasn’t just that Rubin had started Android or built the Sidekick, it was that he probably knew more about the mobile phone business than anyone else at Google, maybe all of Silicon Valley.
Then forty-four, he’d been building cutting-edge mobile products in Silicon Valley since the early 1990s. It was his vocation and his avocation. People describe his home as something akin to Tony Stark’s basement laboratory in Iron Man—a space jammed with robotic arms, the latest computers and electronics, and prototypes of various projects. Like many electronics whizzes in Silicon Valley, he had Tony Stark’s respect for authority too.
At Apple in the late 1980s
he got in trouble for reprogramming the corporate phone system to make it seem as if CEO John Sculley were leaving his colleagues messages about stock grants, according to John Markoff’s 2007 profile in The New York Times. At General Magic, an Apple spin-off that wrote some of the first software for handheld computers, he and some colleagues built lofts above their cubicles so they could more efficiently work around the clock. After Microsoft bought his next employer, WebTV, in the mid-1990s, he outfitted a mobile robot with a web camera and microphone and sent it wandering around the company, without mentioning to anyone that it was connected to the Internet. The sights and sounds it recorded were beamed worldwide until Microsoft security, which was not amused, discovered the problem and turned it off. Danger, the company that made the Sidekick, got its name from what the robot in the 1960s TV show Lost in Space barked whenever it sensed, well, danger.
This loyalty to Rubin made his team worry about Google’s potential conflict of interest. Why should they even continue working on Android? Apple was now clearly light-years ahead of them, and Google’s top management was clearly behind that effort. Trying to compete with both Apple and their own company with a project that then seemed so inferior seemed like a waste of time.
“Frankly, the iPhone created a morale problem,” said one of the senior engineers. “Some of the engineers actually said, ‘Oh my God, we’re doomed. This is Apple. This is the Second Coming. What are we going to do now?’”
Rubin and those on down had the additional frustration of watching Jobs, in their view, wrongly take credit for innovations that were not his or Apple’s. Jobs was an amazing innovator who had an unparalleled sense for when to release a product, how to design the hardware and
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Fred Vogelstein
Тип: электронная книга
Жанр: Зарубежная деловая литература
Язык: на английском языке
Издательство: HarperCollins
Дата публикации: 16.04.2024
Отзывы: Пока нет Добавить отзыв
О книге: The deathmatch between Apple and Google is not just a story of corporate competition – it’s a dramatic saga of a friendship gone sour, of trust and agreements betrayed, of visionaries Steve Jobs and his successor Tim Cook versus Larry Page, Sergey Brin, and Eric Schmidt. This is a story of bickering, backstabbing, poaching and paranoia, of hardware versus software and patents versus products.After more than a decade of reporting on this rivalry, Fred Vogelstein has incredible access to the boardroom conversations, unofficial reactions, outbursts, personalities, deals, lawsuits and allegations that have shaped how we use these products.