I have three revolutionary products here

“Today we are going to make history together,” said Steve Jobs as he stepped onto the stage at MacWorld Expo in San Francisco on January 9, 2007, wearing his trademark turtleneck and blue jeans. He kept the audience in suspense for the next twenty minutes. He recapitulated the transition to the Intel platform, the successes of the iPod, iTunes sales, and Apple TV. Then he took a sip of water and paused for a moment to separate his previous presentation from what was to come. To emphasize the significance of the following statement.

“I’ve been looking forward to this moment for two and a half years,” he admitted as he put down his glass of water. “Once in a while, a revolutionary product comes along that changes everything. It’s a great privilege to be able to participate in such an event. Apple has had the privilege of introducing several such products to the world. In 1984, we introduced the Macintosh. It changed not only Apple, but the entire industry. In 2001, we introduced the first iPod and changed not only the way we all listen to music, but the entire music industry,” Jobs said in a serious voice, and immediately continued: “Today, I’m going to introduce three revolutionary new products. The first is a widescreen iPod with touch controls,” he said, but he was interrupted by applause. He didn’t let it fade away, immediately continuing “The second is a revolutionary mobile phone,” and the applause rang out again, much louder.

“And the third is a breakthrough Internet communications device,” he announced to the audience, who rewarded him with rather uncertain applause. “So three devices. An iPod, a phone, and an Internet mobile communicator,” Jobs repeated, while icons of the iPod, phone, and Safari were projected behind him. “Do you get it? These are NOT three separate devices, it’s one device. And we call it the iPhone. Today, Apple is reinventing the mobile phone. Here it is!”

Behind him, an image of an iPhone designed as an iPod with a classic telephone dial was projected onto the screen, causing the audience to burst into laughter. “The problem with today’s phones is that they have this plastic keyboard at the bottom, whether you need it or not,” Jobs said heatedly. Although it would take him another 90 minutes to present his vision of the iPhone to the audience, he was definitely not lying.

He had just rewritten the future of the telecommunications industry for many years to come.

Image: Steve-Jobs-Iphone

The unusual fact that Jobs only unveiled the new iPhone and that it will not go on sale for another six months did not go unnoticed, but at first, the company’s cover-up worked when Jobs explained that he wanted to be the first to introduce the phone and didn’t want to wait for its appearance to be found in the US FCC’s database of approved devices, something that commonly happened to his competitors. At that time, it was not yet clear that Apple had a beta version rather than a finished product and that it would require a number of modifications. When the iPhone hits the US market on June 29, 2007, eager fans will be lining up outside Apple stores the day before, hoping to buy the 8GB or 4GB version of the phone for $599 or $499, respectively, which Steve Jobs has promised will be a truly exceptional experience. And since it will take until November for the phone to officially go on sale outside the AT&T network and the US (specifically, November 9, 2007, in Germany and the UK), the iPhone will become a popular subject of shopping speculation. Grey exporters offering their services on eBay will bypass stores, buy iPhones and export them to countries where eager fans are also clamoring for them. Paradoxically, Apple will have to introduce iPhone sales exclusively by credit card, not cash, for a long time in order to limit the number of units sold per credit card. It was not until August 2008 that the iPhone officially went on sale in the Czech Republic, but by then it was already the successor model, the iPhone 3G.

We have reviewed the history of the iPhone’s creation. We have shown that Apple used tactics and procedures that it had already learned with the iPod:

•quickly acquiring interesting teams of people and incorporating them into its development

•invest substantial sums in advance to start production of components and technologies that are key to its new product and are not available on the market in sufficient quantities or at a reasonable price.

•use these production resources to differentiate itself from the competition by offering products based on technologies that are otherwise unavailable at the time and at price points where others cannot easily compete and where it achieves staggering margins

•use the attractiveness of their products to change (or enforce) established business models on the market, for example, to introduce digital music sales, earn commissions from mobile phone operations, sell applications, etc.

Now it’s time to look at the impact the iPhone has had on the telecommunications industry. But how can we evaluate the device today, when we already know the outcome? Perhaps it would be best to look at the article I wrote about it on January 20, 2007, shortly after the phone was unveiled. Authentic impressions from that time, reflecting confusion, pessimism, and what was new about the phone.

The context of this story

I have three revolutionary products here

Table of contents