This is part of our package about Apple’s 50th anniversary, read more here.
The thing about the iPhone is that everyone knew it was going to be a big deal, and then it was an even bigger deal than that. Hell, it’s still the biggest thing going.
It’s hard to remember, but almost 20 years ago Apple’s first iPhone really was that good. The trick that Steve Jobs and Jony Ive kept pulling off in that era was turning the limitations of the available technology into focal points of the products they made. The first iMac was built around a big, heavy CRT display – but Ive made the translucent case wrap around it, transforming the internals into a design feature. The iPod was a portable hard drive Toshiba didn’t know what to do with – but Jon Rubinstein and Tony Fadell figured it out, and once Phil Schiller came up with the scroll wheel the design became “inevitable,” as Ive was fond of saying.
The first iPhone was nothing but limitations, but those limitations became opportunities
The first iPhone was nothing but limitations, but because Jobs and Apple were so capable of making hard tradeoffs, those limitations became opportunities. There had been an internal battle inside Apple over whether to build a phone on an expanded iPod platform or a cut-down Mac OS X foundation – and when OS X won, the team ruthlessly eliminated features to make it work. Hell, the first iPhone couldn’t even copy and paste, which didn’t arrive until iPhone OS 3.0 two years later.
There was no app store, just the apps preinstalled on the device. Apple even built its own Google Maps and YouTube apps to make sure the experiences were exactly what it wanted them to be. All of this meant that Apple was free to focus on making sure the features that did ship were perfect – most notably the multitouch display and the touchscreen keyboard, which were huge risks at the time.
Most importantly, the first iPhone only ran on AT&T’s aging EDGE 2G network – but that exclusivity arrangement allowed Apple to insist upon full-featured WiFi support and a real web browser, a combination no other smartphone on any other network allowed at the time. Most smartphones had neutered WiFi to force expensive mobile data usage, but also had viciously limited web browsers to protect those networks from being overloaded.
To this day, it’s funny to watch the audience react to Jobs’ famous “this is not three devices” iPhone keynote bit – there are obvious cheers for “widescreen iPod with touch controls,” rapturous applause and hooting for “revolutionary mobile phone,” and then what amounts to confused, muffled applause for “breakthrough internet communications device.”
What was that? Well, that turned out to be everything, in the end. The whole world has reorganized itself around this breakthrough internet communications device. The iPod and phone might as well have been forgotten.
Publicly, the industry immediately bumbled its response: everyone’s seen the famous clip of Microsoft’s then-CEO Steve Ballmer dismissing the iPhone as too expensive and missing a hardware keyboard. But in private it was clear that things had been upended. BlackBerry inventor Mike Lazaridis watched the iPhone introduction from his treadmill at home and realized in shock that the iPhone was destined to compete with laptops, not phones.
“They put a full web browser on that thing,” he told his co-CEO Jim Balsillie the next morning, according to the definitive book on RIM’s downfall. “The carriers aren’t letting us put a full browser on our products.”
Limitations into features, challenges into opportunities. Everyone who used an iPhone could immediately imagine how it could do more, how it could do everything. Half-finished devices from competitors were rushed to market on the bet that a long list of unpolished features would lure consumers away from the iPhone’s limitations, only to fall by the wayside again and again. You know what Droid does? It gets discontinued, because no one cared.
It’s important to remember that the Apple of this period was the underdog – the company had spent most of its existence fighting for survival against bigger competitors like Microsoft and IBM, which owned the dominant computing platforms of their time. Even upon Jobs’ return and subsequent all-time run of hit products, the company was still small compared to its peers – you could read piece after piece comparing Apple’s business to BMW and Mercedes, profitable luxury brands with outsized influence but tiny market share.
The iPhone changed all that. For a good number of years Apple could reliably increase sales just by letting more carriers in more countries sell iPhones. Everyone wanted an iPhone, and all Apple had to do to keep it up was stay focused on layering in features with the level of polish and care that made that first iPhone such a clear glimpse of the future.
Somewhere along the way, Apple literally ran out of people to sell iPhones to
This is when things really started to change – when the scale of the iPhone and then the smartphone market as a whole started to warp the entire world. Arming everyone with a camera and a worldwide media distribution platform changed the media, changed the culture, and has forever changed our politics. Apple and Meta have the unhappiest relationship of all the tech giants, but both sides understand that they are forever linked. There are no trials about social media addiction without the iPhone, just as there are no pitched debates about banning phones in schools without Instagram.
Somewhere along the way Apple literally ran out of people to sell iPhones to. It turned its focus to making more money from all the people who already had iPhones, forever changing the software economy and resetting the worldwide antitrust policy landscape in dramatic ways.
The company gained a reputation for strong-arming developers into adding subscription features and blocking app updates that allowed any respite from the 30 percent fees producing ever-higher numbers on the quarterly earnings report. App developers would admit in hushed tones that they were terrified of the app review process, but never go on the record for fear of retaliation. In-app purchases in free-to-play games started printing money in such dramatic ways that Apple’s decade-long dalliance with TV finally had a clear purpose: to make sure beautiful Hollywood celebrities were the face of the services business, instead of Candy Crush whales. (Candy Crush has warped the industry in multiple ways; Microsoft was so desperate for relevance in mobile games it bought its owner Activision Blizzard, an acquisition that appears to have upended the Xbox entirely.)
Apple’s sheer scale and supply chain excellence operated hand-in-hand: the company needed to produce millions of new iPhones on schedule every single year, and it did so without so much as a hiccup, a testament to the machine Tim Cook created. That machine produced a technology manufacturing base in China that the world is still scrambling to compete with, and a supply chain that has so commodified the core components of a phone that virtually everything is a smartphone now. The laptops run ARM chips. Smart TVs are just big Android tablets. WiFi and Bluetooth chips are everywhere, in everything. CMOS camera sensors are their own kind of revolution, produced at scale for a smartphone industry that came into being with the iPhone. Our world is shaped every day by people with their phones – with their cameras.
Even the AI boom, overhyped as it is, operates in the context of the smartphone – in the context of the iPhone. OpenAI’s Sam Altman may believe that he can displace the smartphone with new AI-native hardware, but he turned to Jony Ive to do it, because no one else has the credibility to even try. It’s not clear if Altman and Ive can pull the same trick and turn limitations into features, because the experience of modern AI systems stubbornly denies any limitations at all, but they’re going to try. Apple certainly doesn’t seem worried. “They don’t have an iPhone, and so they’re scrambling for what to do,” the company’s Greg Jozwiak recently told Steven Levy. “A lot of what they talk about ends up being accessories for an iPhone.”
In the meantime, there will just be this year’s iPhone, and then next year’s, and the one after that. It will still be a music player, a phone, and a breakthrough internet communications device. The question is who will we become in response.
