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How Apple kept its iPhone secrets

2007-06-06 10:52:40

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.