Birth of the iPhone

Michael Gartenberg | March 16, 2007, 10:37 AM

Excellent article in the Journal on the birth of the iPhone. From the article...

"Behind the scenes in the making of the iPhone, Apple bucked the rules of the cellphone industry by wresting control away from the normally powerful wireless carriers. These service providers usually hold enormous sway over how phones are developed and marketed -- controlling every detail from processing power to the various features that come with the phone.

Not so with Apple and Cingular. Only three executives at the carrier, which is now the wireless unit of AT&T Inc., got to see the iPhone before it was announced. Cingular agreed to leave its brand off the body of the phone. Upsetting some Cingular insiders, it also abandoned its usual insistence that phone makers carry its software for Web surfing, ringtones and other services. The deal also calls for Cingular to share with Apple a portion of the monthly revenues from subscribers, a person familiar with the matter says."

This is an amazing story. When the rumors first started circulating, I said that Apple have a hard time coming to market with a device based an traditional carrier terms, I just could not believe that Apple would yield over important issues such as design, logo placement or software builds. Likewise, it was hard for me to conceive of a carrier ceding such control to any handset vendor. If Apple is also getting a cut of the revenues as the story outlines, the iPhone will be hugely disruptive to the industry for changing the core carrier/handset vendor model. This is going to get even more interesting to watch.