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Apple's Phone: From 1980s' Sketches to iPhone. Part 2

Apple's Phone: From 1980s' Sketches to iPhone. Part 1

Early Work with Motorola – First Arguments

In early June 2004, there exists just a preliminary cooperation agreement between the companies. The first meeting of the company representatives reveals differences in cultures, business approaches, and as a consequence – to products. Apple is aware of the RAZR model, but it is not a music solution and Motorola refuses to integrate iTunes in it. Jeffrey Frost on the Motorola side gets to understand that a separate product line for music models is called for in order to utilize Apple's resources and brand power. Later, that lineup becomes known as the ROKR. The work starts with Motorola's first music phone, the E398, which has dual speakers, an unusual feature on the market at the time, situational lightning, decent stock headphones, and a huge market potential. An excellent, however already unveiled model, which Apple dislikes. Jobs needs something new to present with the product in order to astonish the public; an existing product won't create a commotion, and everyone understands that.

But Apple needs access to the operator market and the company accepts Motorola's conditions again. The work on creating an iTunes player for the Motorola E398 begins, some future products are being discussed, yet Motorola cannot provide an overview of the ROKR line since the company itself doesn't know what will end up in its portfolio and when, the plans are changing every week. The following approach is propagated: let's make an iTunes player and then decide where to install it. Apple is amazed by that but remains silent. The company becomes active in pushing Motorola into talks with operators as regards selling the jointly developed device. Apple is not interested in the model sales per se; rather, it is doing its best to make friends among the carriers.

Motorola suggests Cingular Wireless as an operator for the future product; the companies share a successful history of cooperation, the latter's network coverage is great and trade volumes are large. As of 2004, the carrier is not focused on data services; those are slated on 2006 or even 2007. Therefore it is interested in expensive products that can offer something special yet not related to the call functionality. The joint offer from Motorola and Apple appears promising. Apple employees show up at the meetings, get acquainted with the operator, and start to get involved in the new area. There are no active deeds on the Apple side at this stage. The first objective has been achieved: Apple is presented to the carrier, gets to know the people; this knowledge is put into use later on.

In January 2005, Motorola has iTunes prototypes, which work on the E398, at its disposal. During the CES show, without Apple's approval, Ron Garriques, the executive vice-president of Motorola, demonstrates the prototype music player. He reveals the player interface and provides a basic overview. This is an unexpected move for Apple, since nobody asked them for opinion and it was against Jobs' convictions. He will do the same to Motorola later but in an elegant way. Garriques gives his speech on Thursday; no longer than the next day, Motorola's press service states that the phone displayed was just to demonstrate the iTunes player, and although based on the E398 is not a finalized model. Apple restrains from any comments. This fact initiates another wave of rumors about an iTunes phone to be presented at Macworld Conference & Expo due in a week. Neither company has had such plans, though.

In years 2000-2010, disruptions of product R&D and marketing plans becomes Motorola's chronic disease. Year 2005 is not an exception. The first device was to be announced at CeBit in March along with its launch in the U.S. Practically a few hours before the event, the launch gets put off. The schedule time is not met and the introduction is shifted to September; this timing is well justified since both companies can get ready for the Christmas sales. It has become a tradition for Apple to present its new products at that time of the year, yet Motorola doesn't keep that in mind nor in general pay attention to such "nuisances." According to the latter's top management, their product is of greater importance. During CTIA Wireless 2005 held in New Orleans, Ron Garriques from Motorola adds oil to the burning flames: "The first thing you're seeing here is a merger of two different industries with different ideas of launching products. [Apple CEO] Steve's [Jobs'] perspective is that you launch a product on Sunday and sell it on Monday."

Apple does not provide any public comments on that; in the meantime, Motorola's top management continues to discuss Apple, Jobs and company business. It looks like Motorola considers itself to be an indispensable partner and Apple to play to its tune whatever happens. Such beliefs come from the fact that Jobs has been eager to cooperate and sacrificed some of his principles for that. Motorola considers that to be its own achievement rather than one stemming from Apple's interests and thus treats the partner unfairly, even in the public. I don't have any evidence on what kind of emotions are boiling in Apple, but knowing Jobs' hot temper one would be safe to say his fingers must be itching. His response is to follow at a later date, and it will dot the i's and cross the t's.

ROKR E1 Immediate Failure

The joint work between Motorola and Apple sees its climax on September 7, 2005. In over a year after the announcement of the cooperation, Motorola readies the first phone with an iTunes player onboard. The model, dubbed the E1, gets a standalone player button, which was not present in the E398, and exactly the same case, albeit white. Save for the case color and player, an identical copy of the Motorola E398. Almost immediately, the model becomes available through the Cingular Wireless network at the price of USD 249.99 with a two-year plan. Motorola is also intended to ship it to the European countries covered by the iTunes media store program. The company hosts a presentation in London with an emphasis on the advantages of the model.

During the presentation, Motorola shows a video clip with Madonna and a number of other famous singers who are to advertise the ROKR E1. The idea is that various singers come together in a single product with the help of iTunes. The clip is not bad, attracts some attention, but neither journalists nor prospective buyers feel excited about the model itself. Motorola's previous device, the E398, has been selling in Europe since July 2004 and its unsubsidized price approximately equals USD 300; the same price is in the U.S. Therefore, what Cingular Wireless is asking for practically the same model with a two-year contract appears far from being reasonable. One can't use wireless networks to download music to the phone, has to find a computer for that. This is considered to be a con of the phone, even though it doesn't have integrated Wi-Fi and music download via cellular networks isn't cheap in 2005. The phone capacity is artificially restricted to 100 songs, whereas the existing players from Apple are free of that limitation. On Cingular's request, iTunes melodies can't be used as ringer tones; the users are paying up to USD 3.0 to the carrier for one downloaded from the net. Experienced users have an option to use any mp3 tune for that, but it has to be downloaded separately, which is not that simple compared to the Motorola E398. It is amusing to observe that even years after, Cingular's opinion about what shouldn't be done on a mobile phone remains the same: it is mainly due to the carrier's request that the first iPhone has a fixed set of inbuilt chimes.

The European presentation is not that manifold; this is what it looks like:

In the meantime, Steve Jobs' presentation goes rather in the traditional Apple fashion. Jobs sticks to his part of the deal with Motorola, presents the phone, and advertises it, albeit not without a hitch. After his call to Zander, the music playback won't resume from the latest position. Other than that, no glitches.

The tension between the companies can hardly be noticed during the presentation. Apple is not picking on the partner as opposed to Motorola's conduct earlier that year. However, Jobs has prepared a surprise for the Motorola management and personally for Ron Garriques who had presented the player with iTunes at CES in January. Not only does Jobs announce the ROKR, he also unveils the iPod Nano and sets its price to USD 199 and 249, respectively. This is an explicit take on Motorola that does not expect such move from its partner. Against the iPod Nano announcement, the phone image fades away, it doesn't receive much feedback, and that received turns out to be purely negative; it suffices to recall a few titles back then: "The ROKR is a failure", "Motorola ROKR: Instant failure" and so on. A Google search for the word "failure" in the context of the phone would reveal over 50,000 results in October 2005. An exceptional figure. If I may, here is a quote from Slashdot:

"The companies are pitching the phone as a Shuffle combined with a Motorola phone, which makes it a big, expensive Shuffle packed in an unattractive body surrounded by a user interface that's notoriously bad. It appears that Motorola licensed iTunes, but forgot to license the cool that goes with it."

In 2009, Gizmodo creates a list of 50 worst devices of the previous decade, and the ROKR ranks 19-th. I want to emphasize that not a single device from Apple has ever been subject to excessive critique or disregard; whereas those falling for ROKR have been outnumbered, their voices lost in the background. ROKR's failure had been obvious at its presentation already. During the forthcoming months, Motorola is trying to save its sales, which makes the ROKR E1 without iTunes appear in other countries (the music button launches an ordinary player, case and headset are the same). The unsubsidized retail price is around USD 260. It's early 2006, and the device attracts no interest, leaves no trace.

The iPod Nano receives absolutely different reception, it's another bestseller. Both the general public and journalists praise it as much as they dislike the Motorola ROKR E1. Apple has no hard feelings for the ROKR, all of that is compensated for by the new player. Everyone believes that the ROKR E1 has been doomed to fail and that's exclusively Motorola's fault; the product is not perceived as one designed by Apple. To the larger extent, it's correct; the ROKR E1 is a model from Motorola with a minimum level of participation from Apple. In many aspects, the game of Apple is more sophisticated than Motorola's management who cannot have anticipated being used. It is sufficient to take a look at the latter's attempts to promote the condemned product, abundance of advertisement, huge phone picture on the company website. Cingular follows the same general track; they even launch a separate website, makemedance.com, to showcase the ROKR. And this is what the Apple website looks like on September 7, 2005; I guess no comments are needed here since the company's priorities find their graphical revelation and require no further explanation.

It is a hard blow for Ed Zander's ambitions; two weeks after the ROKR and Nano announcements, he says the following at a leadership (feel the irony) seminar: "Screw the nano. What the hell does the nano do? Who listens to 1,000 songs? People are going to want devices that do more than just play music, something that can be seen in many other countries with more advanced mobile phone networks and savvy users".

In my opinion, an expressive confession of that kind from the Motorola CEO nicely concludes his working experience with Apple and the cultural difference. In that partnership, Motorola has been a weak company, incapable of designing either a product or a strategy or anything else. Apple, on the other hand, has managed to get everything it needed from Motorola – i.e. carrier contacts, mobile phone expertise, promising directions for development. Zander has admitted that his company hadn't had any of that, and resorted to the aggressive blaming of the rival product. The future brings several other iTunes-enabled models on the Cingular network, none of them popular in the end. By November 2006, the company has shipped around a million phones with iTunes, whereas the Apple iPod sales reach a 7-million mark within just a quarter of the same year. After that, iTunes simply disappears from Motorola phones and the project gets discontinued as an unsuccessful one. However, some tension on the Motorola top management side towards Apple still remains. For a long time, the former would be saying that they had revealed all their groundwork to the latter, shared their expertise and market prospective, and Apple had used that for its own profit only. What I can say? Business is business, and Motorola just happens to be the unsuccessful party. Had the company been able to create a competitive product on the level of Apple's, the cooperation results would have been different, I believe. The conflict that occurred in the middle of the process didn't allow the companies to finish what they had started. Zander's personal ambitions turned out to be greater than Jobs', who met the demands of Motorola. And as the history shows, Jobs turned out to be even more successful without its help.