Dogfight: How Apple and Google Went to War and Started a Revolution (11 page)

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Despite the feuding and relentless deadline pressure, the iPhone—remarkably—stayed on schedule for its June 29 launch. When it finally went on sale, the last Friday of the month, the event was covered by the global news media as if Elvis Presley or John Lennon had risen from the dead. News crews camped out at Apple stores across the country to witness the pandemonium as eager customers waited on line for hours. During one live shot on FOX News in front of the New York City Apple store at Fifty-Ninth Street and Fifth Avenue, someone eager for attention stepped in front of the camera and grabbed reporter Laura Ingle’s microphone out of her hand while she was in midsentence. It almost seemed planned—though it was in not—because she was in the middle of interviewing
Newsweek
’s Steven Levy, who was one of the four journalists in the world to have gotten a review model ahead of the general public. Before the man grabbed the microphone, Ingle had given her audience a buildup, saying, in a hushed voice, “I don’t want to create a mob scene, but he’s got one … We’re going to need some security around here probably, but show us what you’ve got.”

Levy wrote about it months later in a
Newsweek
column: “Shaken but undaunted, we restarted. It got even scarier. People pressed in close, fingers stretching toward the device, Michelangelo style. Afterward, a production assistant warned me that I should have a bodyguard with me until the sale began at 6 p.m. I made it through the day without extra muscle, but I still marvel at the phenomenon. For two weeks a gizmo took its place among Iraq and Paris Hilton as a dominant news event.”

Apple sold 270,000 iPhones in the first two days they were available. In the next six months Apple sold another 3.4 million iPhones, driving many to conclude that it had changed the cell phone industry forever.

Looking back, the iPhone launch feels like an even more remarkable accomplishment than it did at the time. For all the iPhone’s revolutionary design and features, a lot was wrong with it too. At $499 for the base model, it was too expensive. Virtually every other smartphone sold for closer to half that price. Consumers got the freedom to switch cell carriers or cancel their cell service anytime they wanted in return for paying so much more for the iPhone. Other, cheaper phones required customers to keep service up and running with one carrier for two years. But was that added flexibility worth $250 or more? Most thought it was not.

The iPhone ran on the slower 2G cell network when most high-end phones were running on the newer and much faster 3G network. The iPhone had taken so long to build that the chips enabling 3G reception weren’t useable when the phone was designed. Most other phones had GPS. The iPhone did not. Most phones had removable batteries and expandable memories. The iPhone had neither. The iPhone didn’t run video made with Adobe’s Flash technology, which at the time seemed to be every video but those on YouTube. YouTube used Flash to stream videos to desktop and laptop computers but a different technology that used less bandwidth to stream to mobile devices. Most companies didn’t have the money or the technological prowess of Google to do likewise then.

Seemingly obvious features such as the ability to search your address book or to copy and paste text or to use the camera to record video were missing from the first iPhone too. Critics pointed out these flaws as if Apple had not thought of them. The problem was much more straightforward: Apple just hadn’t had time to put them all in. “There were moments where we said, ‘Well, this is really embarrassing,’” said Grignon. “But then we’d have to say, ‘Okay. It’s going to be embarrassing. But we have to ship. Even though it is a stupid, small, easy thing to fix, we have to prioritize and fix only the things that are the worst.”

There was no app store, or plans to launch one. The iTunes app store, which Apple didn’t unveil until 2008, has been as important to the iPhone’s success as the device itself. It generates $4.5 billion in revenue a year for mobile-software developers and another $1.9 billion a year for Apple. It has been one of the engines driving Silicon Valley’s boom. But Jobs, like the rest of Apple, was so focused on getting the device ready for sale that he didn’t see the potential at first. “I remember asking Steve what he wanted to accomplish with the iPhone,” Bob Borchers said. “He said he wanted to build a phone people could fall in love with. It wasn’t ‘Let’s revolutionize
XYZ
.’ It was ‘Let’s think about how to build something cool. If they fall in love with it, then we can figure out what they want to do with it.’ When we launched the iPhone, we called it a revolutionary phone, the best iPod ever created, and an Internet communications device. But we had no idea what an Internet communications device even was.”

Jobs understood why consumers would see the iPhone as a Macintosh for your pocket. It ran OS X after all. But he also hated the idea that consumers would see the iPhone this way. Computers are things that run software from developers all over the world—outside Apple. He didn’t want the iPhone to become that at all. After the unveiling, when software developers began clamoring for permission to make programs for the iPhone, Jobs said no publicly and emphatically. “You don’t want your phone to be like a PC,” he told John Markoff of
The New York Times
right after the announcement. “The last thing you want is to have loaded three apps on your phone and then you go to make a call and it doesn’t work anymore. These are more like iPods than they are like computers.”

But the iPhone had so many other cool new features that consumers overlooked its flaws. It wasn’t just that the iPhone had a new kind of touchscreen, or ran the most sophisticated software ever put in a phone, or had an Internet browser that wasn’t crippled, or had voice mail that could be listened to in any order, or ran Google Maps and YouTube, or was a music and movie player and a camera. It’s that it appeared to do all those things well and beautifully at the same time. Strangers would accost you in places and ask if they could touch it—as if you had just bought the most beautiful sports car in the world. Its touchscreen worked so well that devices long taken for granted as integral parts of the computing experience—the mouse, the trackpad, and the stylus—suddenly seemed like kluges. They seemed like bad substitutes for what we should have been able to do all along—point and click with our digits instead of a mechanical substitute. All of this captivated not just consumers but investors. A year after Jobs had unveiled the iPhone, Apple’s stock price had doubled.

Apple helped create and then took full advantage of all the hype. On launch day it sent top executives to various stores in big cities to witness it all and help whip up the crowds. Head of Global Marketing Phil Schiller went to Chicago. Jony Ive and his design crew went to San Francisco.

Steve Jobs’s store was, naturally, the one in downtown Palo Alto at the corner of University Avenue and Kipling Street. It was a mile and a half from his house and he often showed up there unannounced when he was in town. The appropriate high-tech luminaries had already gathered when he arrived. Apple cofounder Steve Wozniak and early Apple employees Bill Atkinson and Andy Hertzfeld were already standing on line. But it also seemed as if Jobs had some internal flames to fan of his own, said one of the engineers who was there along with Grignon and many others who had worked on the project, including Fadell and Forstall. “So there’s this reunion of the original Mac guys, and it’s really cool. And then Steve goes up to Tony [Fadell] and proceeds to go over in a corner of the store and talk to him for an hour and ignore Forstall just to fuck with him.”

“Up until that day, for the previous six months, everything had been Tony’s fault. Any hardware problems or ship delays or manufacturing problems—all Tony’s fault. Scott could do no wrong. But that was the day the press reviews came out, and the iPhone’s email [software] wasn’t working for people, but everyone loved the hardware. So now Scott was the bad boy, and Tony was the golden boy. And it was funny, because Steve did it in a way in which his back was to Forstall so that Tony got to look at Scott while it was all happening. I’m not joking. The look on Scott’s face was incredible. It was like his daddy told him he didn’t love him anymore.”

4

I Thought We Were Friends

Back at Google, the Android team’s initial worries about the commitment to the project were proving unfounded. Rubin got permission to hire dozens more engineers in 2007 and, if anything, found senior management paying
too
much attention to him. During presentations with Schmidt, Brin, and Page, they leaned on him hard for not getting Android up and running fast enough. They threw out ideas at a frenetic pace and were unyielding when they didn’t like what they saw. Notes from one meeting in July 2007 included Schmidt’s declaring that there weren’t enough people at Google writing software for Android and that that needed to change “ASAP.” It also included admonitions from Page, who said that Android needed to get faster and easier to use, and from Brin, who was concerned that the software needed to better accommodate power users who might store more than ten thousand contacts.

Page was particularly specific. All screens needed to load in less than two hundred milliseconds, he said, and the Android needed to be user-friendly enough so that anyone could navigate the phone with one hand while driving. In another meeting Schmidt, unhappy with the operation or design of the slide-out keyboard planned for the Dream phone, said to one of the Android product managers, “First impressions really matter here. Don’t fuck it up.”

But at the same time, Google showed zero sign of backing away from its relationship with Apple and the iPhone. Rubin and the Android team may have felt competitive with Jobs and Apple from the moment the iPhone was announced, but Google’s ruling triumvirate didn’t feel that way at all. After the iPhone was available for sale June 29, Brin and Page were never without one, and in Android meetings they often critically compared those features planned for the Android with the iPhone’s features. DeSalvo said he remembers a number of meetings in which “one of them would ask, ‘Why are we even doing this project? I have a phone. It’s got Google services. It does Gmail. It does Calendar. Why do I need this Android thing?’ It used to really piss me off.”

Brin and Page won’t discuss the thinking behind their remarks, but Schmidt will. He says Google was absolutely two-faced about the iPhone and Android back then, and for good reasons: Google desperately needed to get Google search and its other applications on mobile phones. It had been trying and failing for years. And the iPhone and the Android, while promising, were new enough that choosing one over the other seemed foolish.

In 2007 Google and Apple didn’t even seem to be in the same business. Google made money from search ads. Apple made it on selling devices. “It was not obvious to us in 2006, 2007, and 2008 that it would be a two-horse race between Apple and Google,” Schmidt said. “These are network platforms, and it is traditional that you end up with a couple [of dominant companies] as opposed to ten [companies]. But it was not obvious back then who would be the winners. Symbian was still quite strong from Nokia [then the largest phone maker in the world]. Windows Mobile had some level of traction. And, of course, BlackBerry was quite strong [with a lock on almost every corporation in the world].”

So, while Brin, Page, and Schmidt were pushing the Android team hard, they were also beefing up the Google iPhone team. Most notably, they put Vic Gundotra, a newly hired but well-known executive from Microsoft, in charge of running it. Gundotra, who was thirty-seven, had spent his entire career working for Bill Gates and Steve Ballmer, becoming their point person for the company’s relationship with all external Windows software developers—tens of thousands of geeks worldwide. Gundotra was well-known for his technical acumen, his near-Steve-Jobs-quality presentations, and his willingness to take risks and be controversial. Microsoft’s incredible growth and dominance during the 1990s was in no small part the result of his tireless evangelism, convincing legions of programmers worldwide to write software for Windows when few thought it would succeed. It was such a coup for Google to hire Gundotra that even when Microsoft said it would enforce his one-year noncompete agreement—a rare step—Google hired him anyway. Google just paid him not to work for a year, until the end of June 2007.

Gundotra’s 2007 start date at Google has been compared to a “tornado whipping through a Midwestern town.” He put executives on the spot in management meetings, asking questions about their businesses’ profitability. When outlandish ideas were proposed, he asked whether their promoters had drawn up business plans. These are normal questions at most companies. At Google, which prided itself on making a product popular before making it profitable, they could get you fired.

But Gundotra thrived, and he quickly made Google’s success in mobile not just a business imperative but a cause. He went to conferences and talked about how he carried and used more than a dozen phones; why Google was going to be on every mobile platform; and how, as he liked to put it, “we’ve seen this movie before. The exact same dynamic that happened on the PC will happen on mobile phones.” The difference this time, he said, was that Google and Apple were on the right side and Microsoft was on the wrong side of that evolution. He’d been thinking about the future of mobile since 2005 when his young daughter suggested he use his phone to find answers to questions instead of saying, “I don’t know.” He’d ended up at Google because he couldn’t convince Microsoft to listen to his ideas.

What made Gundotra such a disruptive force at Google was that he quickly realized Google’s future in mobile depended almost exclusively on the iPhone. He was supposed to figure out a way to get Google’s applications on
all
mobile platforms. But he quickly realized that that was a waste of time—that the iPhone was such a revolutionary device that it would soon catapult it and all other Apple devices to the top of the heap. Not only would the iPhone rocket Apple past other mobile phone makers such as Nokia and RIM, makers of the BlackBerry, it would signal the end of Microsoft’s dominance—with Windows and Office—of desktop computing too. “You could see it. It was a game changer. No one had done anything like it,” he said.