Apple’s iPhone was not the first cell phone with an integrated music player (the Samsung Uproar, 2000), nor the first with a touchscreen interface (LG Prada, 2007). And phones with touchscreens had been available for nearly a decade. The iPhone wasn’t even the first on which a user could download and install mini applications (the Palm OS–powered Handspring Treo 180, 2002). So what was so special about it?

Quite simply, the iPhone leapfrogged its competitors, integrating advanced and disparate hardware attributes into a smooth, simple, friendly, clever, and almost magical multitouch intuitive user interface needing no drop-down menus, all dressed in arguably the sleekest and sexiest cell phone case ever designed. The iPhone appeared like a Ferrari driving alongside its Model T–like competitors.

The iPhone’s great breakthrough came not through in fashion, feel, or functionality but in its operating system. Before its introduction, cell phone carriers controlled the design and implementation of the manufacturers’ handsets they sold, particularly cell phone applications. Carriers directed how owners used their phones, which meant in ways from which the carriers could profit.

The iPhone destroyed this carrier-dominated dynamic. Apple gave consumers the power to personalize the functionality of their phones the way they do their PCs, enabling nearly anyone to write and sell applications. At its height, the Palm offered the most “open” cell phone operating system at the time, with some 30,000 largely business and industry-specific applications available. By the end of this year, there will be 300,000 iPhone apps, which include Urban Spoon—shake the iPhone and a list of potential restaurants in your neighborhood spin into position like a slot machine; GottaGo—generate a timed fake phone call to escape an awkward meeting; Shazam—hold the iPhone up to a loudspeaker to identify the name of the song blaring from it; Bump—trade address, phone, and e-mail contact info by fist-bumping another iPhone user with your iPhone; and thousands of games, reference tools, shopping engines, and utilities.

Once Apple pioneered the way, an army of app-centric cell phones running Google’s Android operating system, Palm’s webOS, BlackBerry, Nokia Ovi, and, most recently, Samsung Bada, soon followed, along with Apple’s own WiFi-enabled iTouch multimedia player.

Hard to Be Easy

Not long after the iPod went on sale in October 2001, Apple cofounder and CEO Steve Jobs was thinking about an iPod cell phone. Inexperienced in the cloistered cell phone world, he initially partnered with Motorola on the iPod-enabled ROKR in late 2005. But ROKR, the technological equivalent of a built-by-committee platypus, proved an ugly failure. Jobs understood that only Apple could produce an Apple cell phone.

Even before the ROKR, Jobs had approached Cingular, which would become AT&T Wireless in December 2006. Apparently Apple had been working for nearly a year on revolutionary multigesture touchscreen technology that could be adopted for a cell phone. Cingular, attracted to the potentially huge volume of data minutes consumers would consume downloading music and video files and the cachet of selling an exclusive Apple device, was willing to discard its design monopoly and cede complete creative control.

While the deal with Cingular was still being negotiated, several hundred Apple engineers and programmers got to work transforming the company’s Mac OS X into a brand new mobile-specific interface and building the hardware, while chief Apple industrial designer Jonathan Ive worked on the now iconic shell.

But in the fall of 2006, only three months away from its scheduled January 2007 debut, the iPhone failed to work. Apple engineers and coders shifted into all-nighter overdrive for the next 90 days. In mid-December, Jobs was able to demonstrate the iPhone to slack-jawed AT&T executives. iPhone development had cost Apple an estimated $150 million, but the investment has paid off handsomely.

New Phone, New Paradigm

Other than the mass of fun, informative, and functional apps available, Apple has innovated a number of now standard touchscreen hardware and operational features:

·     visual voice mail, which enabled users to listen to selected messages rather than running through them in sequence;

·     multigesture control, in which a user can “pinch” an on-screen object, text, or image, in order to increase or decrease its size;

·     an accelerometer and proximity sensor, which automatically reoriented the screen into either landscape or portrait viewing mode according to the attitude in which the device was being held; and

·     a sensor that turned the phone’s touchscreen off when a user placed it up to the face for conversation, then snapped back on when pulled away after the end of a call.

No later touchscreen phone dares skimp on these now basic conveniences.

When the iPhone went on sale on June 29, 2007, lines at Apple and AT&T stores snaked for blocks. By the end of 2007, Apple had sold 3.7 million, making it the fastest-selling smartphone ever. More important, iPhone and iTouch subscribers have downloaded more than 2 billion apps, marking the complete destruction of the carrier-centric paradigm.

Future Trends:

AT&T has become a victim of its own success with the iPhone. At the end of last year, iPhone accounted for 55 percent of all mobile Web traffic in the United States. AT&T’s network often slowed to a crawl, angering users and creating a public relations nightmare. AT&T, along with all other carriers, is banking on next-generation 4G networks, which use analog TV bandwidth recovered during the digital television transition. 4G networks promise wider wireless pipes and broadband speeds twice to 10 times as fast as current EV-DO and HSPA 3G networks, giving all open-operating-system smartphones more cyber elbow room and enabling a host of new features, such as real-time video calls, high-definition video clip transmission, and powerful new applications and functions not yet dreamed of.

Key Bio:

Steve Jobs (1955—2011)

Arguably the most influential, innovative, and important figure in the world of high technology, Steve Jobs cofounded the company that set off the personal computer revolution, reinvented how consumers buy and listen to music, and remade the cell phone industry—while helping to create the world’s leading animation movie studio. It’s hard to imagine our technological world without him or Apple.

Jobs’s work shepherding the iPod and iTunes into existence came during his second act at Apple. Forced out of the company he founded, Jobs returned in 1996 as a savior, officially interim CEO at $1 a year. He terminated several projects and initiated others, including the opening of the first Apple retail stores in 1997, the all-in-one iMac PC in 1998, and, most significantly, iPod and iTunes in 2001, reenergizing the company, its stock price, and reputation. He stills earns just $1 a year.