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How Apple kept its iPhone secrets
Bogus prototypes, bullying the press, stifling pillow talk - all to keep iPhone
under wraps. Fortune's Peter Lewis goes inside one of the year's biggest tech
launches.
FORTUNE Magazine
By Peter H. Lewis, Fortune senior editor
January 10 2007: 9:45 AM EST
SAN FRANCISCO (Fortune) -- One of the most astonishing things about the new
Apple iPhone, introduced yesterday by Steve Jobs at the annual Macworld trade
show, is how Apple (Charts) managed to keep it a secret for nearly
two-and-a-half years of development while working with partners like Cingular,
Yahoo (Charts) and Google (Charts).
The iPhone, which won't be available in the United States until June,
represents a close development partnership with America's largest wireless
phone company (Cingular, now a part of AT&T (Charts), has 58 million
subscribers), the world's largest e-mail service (Yahoo has a quarter-billion
subscribers worldwide), and the world's dominant search company. Although
speculation was rampant before the introduction that Apple would introduce a
phone with iPod capabilities, actual details of the device were scarce. Even
some senior Apple managers whispered during the keynote that they were seeing
the iPhone for the first time, along with the 4,000 other Apple followers who
crammed the Moscone meeting center here. Indeed, Apple's emphasis on secrecy
may have influenced Apple's choice of Cingular to be the exclusive provider for
iPhone service in the United States.
Apple: Hello, iPhone
iphone_jobs.03.jpg
Before Jobs revealed the iPhone at Macworld, Apple had to keep secrets from
multiple companees and its own employees.
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Apple, legendary for the ferocity with which it safeguards new product
announcements, had extraordinary challenges in keeping the iPhone under wraps
for 30 months. Besides involving Cingular, Google and Yahoo, not to mention the
unnamed Asian manufacturer, the project touched nearly every department within
Apple itself, Jobs said, more so than in any previous Apple creation.
No one thinks Apple went to the draconian lengths of some rivals, like
Hewlett-Packard (Charts), which bugged phones, read e-mail, riffled through
trash and otherwise spied on board members, employees and journalists in order
to track down leaks of confidential company information. However, Apple does
make it clear to employees and business partners that they will be dismissed
and possibly prosecuted for leaking company secrets. Apple has also played the
bully role, suing bloggers and other independent journalists for posting
purported advance information about unannounced Apple products.
Secrets - along with patents - protect Apple against competitive threats from
foreign companies that have become expert at instant cloning of Apple's
products and designs. But secrets also create a major buzz factor. As the giant
Consumer Electronics Show opened this week in Las Vegas, where hundreds of the
world's biggest gadget and gizmo companies show off their newest and greatest
gear, everyone was talking about the company that was not there - Apple - and
speculating on what Steve Jobs had up the sleeves of his trademark black mock
turtleneck shirt.
Many of the country's top technology analysts and journalists flocked to the
Las Vegas airport Monday night, on the first day of CES, to be able to see Jobs
reveal his secrets here Tuesday morning. Although their applications will be
crucial parts of the iPhone experience, neither Yahoo nor Google saw the actual
phone until shortly before the keynote, Jobs said. The software development was
done without needing to provide a hardware prototype. In some cases, Apple
deliberately disguised software builds, known as "stacks", to keep programmers
from seeing the actual interface.
The Cingular partnership was especially complicated. Cingular had been a
partner when Apple made its first foray into the phone business, providing
iTunes software for the ill-fated Motorola (Charts) ROKR, unleashed in 2005.
The norm in the telecom business is for carriers to dictate to phone
manufacturers which features and technologies they want to offer to their
subscribers, which is anathema to Apple culture. But in the case of the ROKR -
which I reviewed as the STNKER - it was Motorola's meddling that drove Apple
nuts. When the ROKR finally emerged, clumsy and underpowered, Jobs held it up
on stage with all the enthusiasm of a man holding a dead rat by the tail. Jobs
came out of the ROKR experience even more determined to maintain total control
over what he called the reinvention of the telephone.
An Apple phone is no slam-dunk
However, he said, he enjoyed working with Cingular. And apparently the
sentiment was mutual. Two years ago, Jobs and Cingular's chief executive, Stan
Sigman, got together to forge a multiyear pact to work together on the iPhone.
The Apple phone didn't even exist as a sketch at that point, but apparently
Sigman trusted that Jobs and Apple would deliver on their promise to
revolutionize the mobile handset. And Apple trusted Cingular not to meddle in
the hardware or feature design. "They let Apple be Apple," one Apple executive
said.
Cingular worked with Apple software developer on breakthrough features like
visual voicemail - the ability to see a list of voicemail messages in a list
and choose to listen to them in any order, instead of sequentially, as most
carriers require today - while Apple focused on what it does best, the close
integration of elegant hardware design with powerful but simple-to-use
software. Even so, Apple didn't show Cingular the final iPhone prototype until
just weeks before this week's debut. In some cases, Apple crafted bogus handset
prototypes to show not just to Cingular executives, but also to Apple's own
workers.
Meanwhile, Jony Ive, Apple's design guru, was refining the sleek, final design.
At the Macworld keynote, with Cingular's Sigman on stage with him, Jobs hinted
again that the exclusive, multiyear partnership with Cingular would yield more
phones that just the two iPhone models unveiled today. (The two are basically
identical: A $499 device with four gigabytes of internal memory, and a $599
version with eight gigabytes.)
In the end, Apple decided to reveal the iPhone several months ahead of its
official June launch because it could not keep the secret any more. Apple has
to file with the Federal Communications Commission (FCC) for the permits needed
to operate the iPhone, and once those public filings are made, Apple has no
control over the release of that information. So, Jobs said, he made the
decision to have Apple tell the world about its new phone, rather than the FCC.
Pillow talk was a challenge at the other end of the spectrum. Keeping secrets
from loved ones is especially hard. Those stresses were amplified by the
frantic race over the past half year to get the iPhone ready for launch. As
Macworld approached, dinners were missed, kids were not tucked in properly, and
family plans were disrupted, especially over the holidays. And for what?
"Sorry, that's classified" is not considered a satisfactory answer in many
households when Mom or Dad misses the school play or the big wedding
anniversary dinner.
Phil Schiller, Apple's head of marketing and one of the few Apple executives
involved with the project from the start, said he had to keep the iPhone
development secret even from his wife and children. When he left home for the
official unveiling yesterday, Schiller said, his son asked, "Dad, can you
finally tell us now what you've been working on?" Jobs paused during the
keynote to acknowledge the strain and sacrifices that the past months have
brought not just for the employees who kept the secrets so well, but also for
their families. "We couldn't have done it without you," he said, with obvious
sincerity.