The iPhone Before the Apple iPhone


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the home, as the office market was ruled out because its telephony landscape was dominated by complex PBX systems. The user interface would be a touch screen – would be a cross between a telephone and an ATM.

The iPhone would not be a PC replacement, but instead, a new kind of “appliance” device that did only a few things—telephone, e-mail and simple Web browsing—but did them very well. The mission of the product was described in an early InfoGear press release: the iPhone would not replace the PC, but instead “co-exist with PCs much as the microwave co-exists with a conventional oven.”

To cut down on both the hardware and software resources (and their related costs) that would be required inside each iPhone, InfoGear adopted what was then called a “client-server” architecture. That approach allowed most of the software necessary for the iPhone to be stored on a big central computer, and be downloaded quickly on an as-needed basis when the device was turned on. The approach also had other advantages, including how it freed users from loading, updating and patching software. Today, of course, the company would say it was working “in the cloud.”

The rapidly evolving Internet was the main influence on the iPhone design project. But another major source of inspiration came from France, in the form of Minitel. Minitel terminals were small black and white consoles, provided by state-owned France Telecom, which during the late 1980s and early 1990s had become mainstays in every French home and office. They were used for train tickets, directory assistance, stock purchases, e-mail and a host of other applications. It was a simple, brain-dead device, but it was incredibly useful.

Designing a consumer product like the iPhone today simply involves picking up a phone and telling a one-stop-shopping “Original Design Manufacturer” in Taiwan or in China what you need. In the 90s, though, the computer industry supply chain wasn’t as well developed, and assembling a product required a global shopping spree. As the National engineers refused to move to California from Israel, much of the engineering for the project was done in the Middle East, ten time zones away from Silicon Valley. At the height of the original iPhone work, there were 20 engineers in Israel and another 40 team members working in Mountain View.

The design team decided to use the same processor from Project Mercury. While the initial three-man team had written a few software components for their laboratory device, much more code needed to be written before the iPhone could be used by everyday consumers. And the product itself needed to look like something that would blend in with a modern home. To help give the iPhone a sleek, sophisticated look, Frog Design, famous for its work on Sun, Next and Apple computers, was called in to help.

Pricing is an important decision for any company, but even more so for one hoping to have a consumer market hit on its hands. InfoGear was hoping to be able to sell the iPhone for $250 to $300. Working backwards, that would mean its component cost, known as the “Bill of Materials,” would need to be around $100.

This is where the team got the first bit of bad news: the actual figure came in at $210. Then, as now, the most expensive component in the system was the display. Having a touch-screen LCD, the sort used in ATMS, was key to the iPhone’s design. But this was still the early days of that technology, and individual units cost upward of $80.

What was needed was a distribution partner willing to subsidize expenses. There were two obvious candidates, telephone companies and cable companies, both of whom were in the business very much like the one InfoGear wanted to be in, providing “Customer Premise Equipment,” along with a monthly data plan. InfoGear’s argument to phone companies would be that the iPhone represented the next iteration of the telephone. For cable companies, the device would be depicted as representing a new revenue opportunity at a time of flatlining sales.

To run the company, meanwhile, I recruited Robert Marshall, who had recently stepped down as COO of Tandem Computers, the maker of very high-end “fault-tolerant” computers used mostly in the financial sector. Since InfoGear was headed to a partnership with a telephone or cable company, a solid operations manager like Marshall would be perfect to run it.

When unveiled in 1998, the first model hit nearly all of the design goals the company had set. There was, of course, a standard telephone line and corded handset, albeit with advanced call waiting and … Next Page »

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Robert R. Ackerman Jr. is the founder and managing director of AllegisCyber, an early stage venture capital firm specializing in cybersecurity, and a co-founder and executive at DataTribe, a cybersecurity startup studio in metropolitan Washington D.C. Follow @bobackerman

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7 responses to “The iPhone Before the Apple iPhone”

  1. Interesting article. One of the common elements in all Apple products is that they are never first to market: PCs, laptops, music players, smartphones, tablets… their competitive advantage lies elsewhere and they know it.

  2. As part of InfoGear iPhone’s R&D team I acknowledge that we worked with continuous excitement and the sence of making history. Cisco tried to continue this line of products, and after acquisition we worked on a product called … webPad, based on InfoGear’s original technology. Needless to say, the concept was quite the same as Apple’s iPad – but as you said Bob the ideas must not only be great, but also come in right time and place.

    I keep telling this story everywhere, and just recently was interviewed about that by a popular Russian business coach.

  3. Aidee says: