iPod, Phone, Internet - with these three words on the slide behind him, Steve Jobs introduced the iPhone to the public at the MacWorld event in early 2007. He criticized the inconvenience and difficulty of using current smartphones, was dissatisfied with keyboards and the limitations they create, made a good joke about the patented multi-touch, and declared that Apple had "reinvented" the phone.
At first, few competitors took Apple's presentation seriously. From the outside, in front of the media. But it turns out that there were also people who took the iPhone demonstration much more seriously and saw the device as a significant threat to their products.
In the archives of the Finnish Aalto University, there is an internal presentation by Nokia titled "Apple iPhone was launched". It was prepared by Peter Breyer, Scott Cooper, Gordon Murray-Smith, Timo Partanen, Peter Richardson, Jussi Valimaki and Riku Osterman. David Evans and Sanna Puha also helped. Some of these people had C-level positions. The very fact that so many people were involved already indicated that the manufacturer's outward calm was purely "marketing".
In this article, we will go through the main points of the presentation and try to understand how one of the largest phone and smartphone manufacturers actually saw the iPhone at the time of its introduction in 2007.
"The user interface has been Nokia's strength, so the UI may be the biggest threat posed by the iPhone."
The first slides of the presentation provide a general overview of the first impressions of Nokia's specialists and the audience. The announcement of more than 200 patents for the new user interface made us immediately think about our next steps, even though Nokia saw UI as its strong point. Before that.
Almost immediately, experts recognized that "the iPhone's touchscreen interface could set a new state-of-the-art standard" and that things could not be left as they were. An answer is needed.
"Nokia needs to develop the touch interface to fight back. [...] Nokia needs a chief user experience architect to drive Nokia's user experience innovation across all platforms and businesses," the slide reads.
OS X itself (at that time, the iPhone operating system was not yet called iOS) was also recognized as beautiful, and according to the presentation comments, the design really hit S60 and Windows for Mobile. At the same time, Nokia did not expect that Apple would sell the system to other manufacturers and wondered whether there would be support for third-party applications (which initially was not) and Java.
"The iPhone will take over the coolness in the US media, there is not much coolness left for Motorola"
However, they also took into account the cost. The first iPhone models cost $499-599 (depending on the size of the drive), but with a two-year contract. Without it, the price was $649. For comparison, one of Nokia's flagships, the N95, was estimated at more than $700. At the same time, in Europe, the price of an iPhone was $779 or €600.
And even at that time, the Finnish manufacturer feared that the iPhone would change the expensive segment of smartphones and stimulate customer demand (which could also play into the hands of all manufacturers). Moreover, the company anticipated that Apple would also release a cheaper version of the iPhone, thereby "hitting" sales of cell phones, which were plentiful at the time.
Nokia expected Motorola to struggle with the price, noted the problems of SonyEricsson, which at that time paid a lot of attention to the media capabilities of its models, and expected serious problems for BlackBerry (RIM) and Palm, whose shares immediately went down. And the authors of the presentation clearly understood that flagship devices attract business buyers, which is what they expected for the iPhone.
One of the strengths of the Apple smartphone was the display. With its 3.5 inches, it was really big. But most importantly, it was touch-sensitive and even supported gestures. Meanwhile, competitors often used resistive screens rather than capacitive ones. When Steve Jobs first demonstrated the iPhone, he emphasized that such a display did not require a stylus, and that people were "born with a dozen of their own".
Things that are now commonplace, such as zooming in on a photo with gestures on the display, were completely new in 2007. Multitouch was something so fresh that Apple had a patent for it. The usual swipes for "flipping" through images or scrolling through the media library of a music player application had separate presentation areas. Meanwhile, all other manufacturers offered to do this with buttons.
The same applies to such innovations as a proximity sensor that turns off the display during calls, a light sensor that adapts the brightness of the backlight depending on the lighting conditions, or even an accelerometer. Yes, the aforementioned Nokia N95 also had an accelerometer, but it was not used to rotate the image depending on the position of the smartphone body, but only for the correct orientation of landscape and portrait photos.
"Voice as a killer app"
It's quite funny now, but not funny at all for a 2007 Nokia, there were certain "software" moments. The iPhone allowed you to receive pushes with images, had a more convenient Safari browser, offered to use Google maps (yes, without GPS, but still), and even then had widgets like weather and stocks.
But a separate slide was devoted to the phone's app. In addition to the fact that it really demonstrated all the available functions quite intuitively, there were two other things that were not widely used by other manufacturers at that time. The iPhone was connected to a Mac or PC via iTunes, and this allowed you to synchronize a lot of information (competitors also had solutions, but they were more complicated and many users ignored them). In addition, the phone's application was better at displaying and listening to voicemail (which was used much more actively in the United States than in Ukraine). In 2007, even such things were considered an advantage.
The iPhone presentation was followed by a small demo of such things. Steve Jobs called Johnny Ive from the stage (who, if I'm not mistaken, answered from the Motorola Razr), and Phil Schiller intervened in their short conversation. Jobs quickly set up a conference with them. The ease and speed of such processes surprised the audience. And it certainly made the competitors think twice, which is evident from the fact that Nokia paid more attention to the phone application than to the browser. (If only someone had told them that young people in 2025 would avoid making phone calls to the last...)
"If Apple manages to achieve its goal at the announced price, it will create a new high-end market"
Sales were scheduled to start in the US in June 2007, in Europe in the fourth quarter of the same year, and in Asia in 2008. It was then that Nokia expected to see the first results of Apple's efforts. The Cupertino company expected to cover only 1% of the market, or sell 10 million devices. Again, these are relatively ridiculous numbers for Apple now, but few people believed it would be possible at the time.
Moreover, companies usually look a little deeper into such figures. If Apple really got to 1% of the market, it would be about 4% of the total, and the share among devices costing more than €300 would be about 30%. And it is quite obvious that Apple was primarily counting on the premium segment of the market.
Among the reassuring notes in the presentation were references to the high cost, the manufacturer's only one model (and the iPhone has indeed been available in only one version for a long time and still has a small selection of new devices compared to competitors), and potential distribution difficulties. Of course, no one expected to see lines of people with tents in front of the Apple Store.
Nokia assumed that with a market share of 1.1%, Apple would be about 10th among manufacturers in the world. However, in the case of smartphones, which were not yet very popular at the time, these figures would have been quite different. Given the assumption of 10 million smartphones sold, Apple would have been number two in the ranking, slightly behind Nokia. If 14 million iPhones were sold in 2007, mobile OS X would have become the second most popular platform, trailing only Symbian. So there was plenty to worry about. Not to mention the blow to the value of Palm and RIM shares.
"Highlight the potential weaknesses of the iPhone"
Of course, no one suggested simply monitoring the situation. Instead, they suggested a number of steps that could be taken to improve their own situation. These included, for example, closer cooperation with T-Mobile, as cellular operators also needed an alternative to Cingular's cooperation with Apple.
Prioritizing the development of UI for touchscreens, simplifying basic functions, and improving the PC Suite were considered important. The Nokia N800 model, which was considered a "tier one player," could help with this. Nokia also had to analyze the possible release of a cheaper version of the iPhone and potentially prepare for a response. And, in general, to add improvements for mid-budget devices with its own and third-party services (from Google and Yahoo), to speed up the development and improvement of its services.
The standard steps with "patent disputes," emphasizing the weaknesses of the iPhone, and improving cooperation with partners have not been canceled either. But these are all recommendations. There was also a separate list of "What Nokia needs to do" that considered the N800+ to be the best competitor to the iPhone. But some points left more questions than answers (or the latter remained purely verbal).
Nokia believed that this form factor could be conquered by the iPhone (especially since it was one of the thinnest, if not the thinnest, at the time). At the same time, the devices were considered similar due to the use of gray and black body elements (in fact, they are very difficult to call similar). The company also had to "highlight" that its iPhone competitor was cheaper, had more applications (such as Skype), possibly add a "hard drive", offers to operators, develop the developer community (which was already relatively large), etc.
Indeed, the first iPhone was not at the cutting edge of technology at the time. Despite the simplicity and attractiveness of the interface, and the convenience of using a capacitive display, it was impossible to add memory to the iPhone, it did not support 3G, its battery could not be replaced with the same ease as others, the camera resolution was 2 MP, while competitors had 5 MP...
Instead of conclusions
Apparently, competitors were more concerned about the user interface, the simplicity and ease with which the smartphone was demonstrated. Yes, it is unlikely that everything was perfectly prepared at the beginning of January 2007. No, Steve Jobs had several smartphones to demonstrate different functions. However, later the company managed to reach a much better level and launch sales with more or less ready-made software.
"Those who are serious about software must also create hardware," Steve Jobs quoted Alan Kay as saying before the presentation of the first Apple smartphone. In fact, a lot was invested in software, and Jobs was known for his strict approach to it. "Hardware, of course, was no exception. And the combination of these factors played a significant role in the success of the iPhone. Many of the advantages of Apple's products are still attributed to the fact that the company independently develops the first and second.
In addition, the iPhone is still considered one of the devices that radically changed the industry, killing the giant companies at that time that could not cope with the competition and Apple's success. Some were too confident, some underestimated innovations, and some lost due to a combination of these factors. However, presentations like this one still demonstrate well that there were specialists who felt threatened by the new player and were already preparing for the upcoming changes. And the external calm was supposed to support the stock price, and probably did not correlate much with the internal situation.
