In Parts 12 and 13, we saw how the iPhone revolutionized the smartphone market product and became a sales sensation. In Part 15, we charted the rise of Android from an experimental prototype through to the launch of the first Android smartphone, the HTC Dream, in September 2008.
Apple and Google each took very different approaches to developing smartphones. Apple believed the best products were made by controlling the software and the hardware development, and designing both to work seamlessly with each other.
Google decided to produce only the Android software and work with a variety of hardware manufacturers on new devices. This gave Google many more chances to have a hit product because even if several hardware manufacturers failed to deliver a successful Android phone, just one success story might be enough to popularize their operating system.
Apple, on the other hand, effectively needed to bet the farm on each new iteration of the iPhone. Both the risks and the rewards were higher for Apple.
In 2008, Nokia enjoyed the majority share of the smartphone market with its popular Symbian operating system. Research In Motion’s (RIM’s) BlackBerry range continued to sell well, but rocketing iPhone sales eclipsed BlackBerry sales toward the end of the year. Most people were not yet aware of the existence of Android smartphones, but a range of new devices were about to grab consumer attention.
Motorola Doubles Down on Android
A great piece of news for Google was the August 2008 appointment of Sanjay Jha as CEO of Motorola Mobility.
Jha had a good business relationship with Google’s Andy Rubin while he worked at Qualcomm, and as the new CEO he ordered that Android was the only operating system to be shipped with Motorola phones. They started a partnership with Google and Verizon Wireless, and developed the Motorola Droid.
This was the first hit Android device in the United States, selling at a faster rate than the first Apple iPhone during its first three months.
Nexus One
The Nexus One was manufactured by HTC but marketed by Google. It was the first Android phone that looked similar to an iPhone, and in some respects, it was technically superior: It had a bigger touchscreen and a noise-cancelling microphone.
The HTC Desire received rave reviews, including a five-star rating from TechRadar who concluded, “In short, this is a phenomenal phone—one of the best we’ve ever had.”
Samsung Galaxy and Galaxy S
Samsung announced the Samsung Galaxy on April 27, 2009, featuring a 3.2-inch touchscreen and a 5-megapixel autofocus camera with power LED flash.
It was released on June 29, 2009, initially with Android 1.5 Cupcake and later with Android 1.6 Donut. It received criticism for not being officially upgradable to the Android 2.3 release, and was not a major commercial success, but it gave Samsung the experience necessary to launch the groundbreaking Galaxy S the following year.
Photo by Dj106 CC BY-SA 3.0
At the time of launch, the Galaxy S had the fastest graphical processing of any smartphone, and was the thinnest smartphone at 9.9 millimeters. It sold more than 25 million units, and this success led to many more generations of the brand. The full Galaxy S series has sold more than one billion units to date.
iPhone 4—Apple’s Biggest Leap
2010 was the breakthrough year for Android-based phones, growing from 7 million to 67 million users.
In April 2010, Andy Rubin told The New York Times he expected worldwide Android domination: “It’s a numbers game. When you have multiple OEMs building multiple products in multiple product categories, it’s just a matter of time.”
By the end of the second quarter, Android devices captured 17 percent of global sales, up from a mere 2 percent in 2009.
Despite the launch of a faster iPhone 3GS model, the iPhone was beginning to look a little dated, and sales trailed behind Android-based phones, as well as RIM’s BlackBerry devices. Apple desperately needed to launch an updated model that would bring back the excitement to its users.
Apple’s answer was the iPhone 4, billed as the biggest leap since the original iPhone. CEO Steve Jobs boasted about its thinnest-ever frame, the build quality, and its integrated antennas. With four times as many pixels as before, producing sharp text that is a lot easier on the eyes, Apple claimed this was beyond the limit of the human retina for differentiating pixels. For these reasons, Apple managed to set its image far apart from its competitors by branding it as the “retina display.”
The introduction of a gyroscope opened up new possibilities for gaming, and the camera was improved with a backside-illuminated sensor for superior photos in low-light conditions, plus the ability to record HD videos.
For many, the best new feature was Apple’s FaceTime video calling, although to use it your friends also needed to own an iPhone 4, with both you and your friends connected to WiFi.
The iPhone 4 was a hit product, selling better than any of the previous iPhone models. With over 600,000 preorders within 24 hours, the launch day featured chaotic scenes with thousands waiting through the whole night for a chance to buy the iPhone 4, and police officers were called in to try to restore order.
Antenna Gate
The prelaunch hype turned negative soon after the launch of the iPhone 4. Users complained that they lost signal when holding the phone. The metal casing around the edge of the phone acted as two antennas, with tiny gaps separating them from each other. Touching the lower left edge of the phone bridged the two antennas, leading to signal loss and dropped calls.
Apple’s initial statement advising to “avoid gripping [the phone] in the lower left corner” was deemed unacceptable to many customers.
In response, Jobs organized a press conference where he announced that Apple would provide all iPhone 4 owners with a free case to help solve the problem, or a refund if they were still unhappy. Despite the many negative press headlines, less than 2 percent of customers returned their phone for a refund, with the majority of customers remaining happy with their purchases.
Patent Wars: The Wrath of Jobs
On Oct. 22, 2009, Nokia sued Apple for the iPhone’s unauthorized use of its wireless standards. Nokia accused Apple of “attempting to get a free ride on the back of Nokia’s innovation.” Apple responded by countersuing Nokia for infringing 13 patents.
Not wanting to be outdone, Nokia filed a second lawsuit and a U.S. International Trade Commission complaint against Apple over seven more patents. This was just the beginning of a major patent war that ran on until June 14, 2011, when Apple agreed to pay Nokia an undisclosed one-time payment as well as continuing royalties.
While Apple’s patent disputes with Nokia were growing, Jobs was also increasingly concerned about Google’s growing market share in the mobile phone market.
In the summer of 2008, Google and HTC reluctantly surrendered to Jobs’ demand to remove iPhone-like features from the HTC Dream. Jobs was still unhappy that he needed to threaten Google in the first place, and in a meeting with Apple employees he stated, “These guys are lying to me, and I’m not going to take it anymore. This ‘don’t be evil’ stuff is bullshit.”
As both Google CEO and a member of the Apple board, Eric Schmidt recused himself from discussions involving the iPhone. Schmidt repeatedly downplayed the significance of Android to Jobs, saying that the Android project might be scrapped, and even after the HTC Dream launched, Schmidt was allowed to continue as a member of the Apple board.
But Google announced Chrome OS on July 7, 2009, and this additional threat to Apple was the final straw for Jobs, who issued a press release on Aug. 3, 2009, stating:
“Unfortunately, as Google enters more of Apple’s core businesses, with Android and now Chrome OS, Eric’s effectiveness as an Apple board member will be significantly diminished, since he will have to recuse himself from even larger portions of our meetings due to potential conflicts of interest. Therefore, we have mutually decided that now is the right time for Eric to resign his position on Apple’s board.”
In Jan. 2010, HTC introduced an Android phone with multi-touch and many other aspects of the iPhone look and feel. Jobs went livid, and while preparing a lawsuit against HTC, he told biographer Walter Isaacson:
“I will spend my last dying breath if I need to, and I will spend every penny of Apple’s $40 billion in the bank, to right this wrong. I’m going to destroy Android, because it’s a stolen product. I’m willing to go to thermonuclear war on this.”
Apple issued the suit in March 2010, with Jobs commenting, “We can sit by and watch competitors steal our patented inventions, or we can do something about it. We’ve decided to do something about it.”
A Google spokesman commented, “We are not a party to this lawsuit; however, we stand behind our Android operating system and the partners who have helped us to develop it.”
HTC countersued Apple, claiming infringement of patents HTC obtained from Google. In Nov. 2012, HTC settled the case, agreeing to pay royalties of an undisclosed sum to Apple. By this time, Apple was in the middle of another patent war with Motorola, and an even bigger patent war with Samsung.
Jobs’ Legacy
Sadly, this litigation outlived Jobs. Due to his deteriorating health, Jobs submitted his resignation to the Apple board on Aug. 24, 2011, and recommended Tim Cook as the next CEO.
Five weeks later, Apple introduced the iPhone 4S, and as the event ended, Cook, Jony Ive, and a few other Apple executives received a call inviting them to say their final goodbyes at Jobs’ home. Jobs passed away the next day on Oct. 5, 2011.
In a rare showing of unity with their longtime rival, Microsoft joined Apple in lowering their flags to half-staff throughout their headquarters and campuses.
The new Apple CEO, Cook, announced, “Apple has lost a visionary and creative genius, and the world has lost an amazing human being. Those of us who have been fortunate enough to know and work with Steve have lost a dear friend and an inspiring mentor. Steve leaves behind a company that only he could have built, and his spirit will forever be the foundation of Apple.”
Microsoft CEO Steve Ballmer said, “My heart goes out to his family, everyone at Apple, and everyone who has been touched by his work.” Microsoft chairman Bill Gates issued a statement saying, “Steve and I first met nearly 30 years ago, and have been colleagues, competitors, and friends over the course of more than half our lives. The world rarely sees someone who has had the profound impact Steve has had, the effects of which will be felt for many generations to come. For those of us lucky enough to get to work with him, it’s been an insanely great honor. I will miss Steve immensely.”
The White House responded by issuing a statement with President Obama, concluding “The world has lost a visionary. And there may be no greater tribute to Steve’s success than the fact that much of the world learned of his passing on a device he invented.”
In their book “How Google Works,” Eric Schmidt and Jonathan Rosenberg disputed with Apple’s patent claims, but praised Jobs, saying “There is no better example of the impact a smart creative can have on the world than him. He embodied a combination of technical depth, artistic and creative talent, and business savvy that allowed him to create computing products with which people actually fell in love.”
iPhone Versus Android—Who Won the Smartphone War?
We could look at the sales figures for both companies over the years and make a variety of analyses for claiming minor superiority of one platform over the other, but this would be missing the main point. The fact is both Apple and Google have won the smartphone war.
The former giants of the industry, Nokia and RIM (now BlackBerry Limited), as well as contenders such as Microsoft, have failed to achieve the long-term success of Apple and Google. Today, the smartphone market can be described as a duopoly: While you can choose from a few different iPhone models and from a wide variety of Android-based devices, the vast majority of consumers will always buy a phone running on either Android or iOS.
The past few episodes of this series have been about the 21st century battle for control over which devices you consume the internet on. This century has also seen a different fight, over what information is allowed to be seen on the internet, who is allowed to see it, and what information should be kept secret.
The next few parts will explore the role of government on the internet, and the story of WikiLeaks.