The iPhone Before the Apple iPhone

3/26/12Follow @allegiscapital

Ask most people to tell you the story of the iPhone, and you’ll likely hear about how an innovative computer company took the traditional telephone, combined it with the Internet, and came up with an attractive and low-cost device that pioneered a new category of touch screen hardware, appealing not just to the tech savvy, but to tech novices as well.

The story, of course, is true. But there’s one detail of the tale that most people are likely to get wrong. The company that made that first iPhone was not Apple Inc., as most people assume, but rather, InfoGear Technology Corporation. And its remarkably pioneering iPhone device went on sale in 1998, nine years before the now better-known iPhone was introduced to the world.

The original iPhone was not the handheld wonder most people know today; the technology of the mid-1990s did not allow so much computing power to be packed into so small a space. It was a desktop machine that looked much like an ordinary telephone, albeit with a small gray and white screen and keyboard.

But the first iPhone shared much in common with today’s model. It evidenced the same vision about how the Web would become central in our lives. Its creators had the same high regard for good, consumer-friendly design, and the same belief that computer products should be as easy to use as TVs and toasters. The 1998 iPhone never became the marketplace sensation of the current model, but it acquired a devoted following and is credited with influencing subsequent generations of product engineers and designers.

The story of the first iPhone also demonstrates one of the most important lessons of the business world: That timing is everything, and being too early with a product can be as problematic as being too late. The makers of the first iPhone saw the future exactly as it would come to pass. That future just took a little longer to arrive than they had anticipated.

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There are many surprising aspects in the story of the first iPhone, not the least of which is the company where it originated: National Semiconductor. National was one of the first generation of Silicon Valley chip makers, but reflecting the no-nonsense personality of its founder, Charles Sporck, it was associated with all of the important but dull products—timers, converters, capacitors—that play necessary but background roles in any piece of electronics. National had none of the glamour of Intel, home of the Pentium, and not much of a reputation for cutting-edge ideas.

The first-generation InfoGear iPhone, ca. 1997

But exteriors might have been deceiving, because inside National, there was more innovation that the company was given credit for. A notable example was National’s project NIF/T, which gave $100,000 grants to internal teams of engineers so that they could pursue in-house research projects on their own. In 1995 three engineers, Chaim Bendelac and Yuval Shahar in Israel and Reuven Marko in Santa Clara, CA, were given a grant to work on an idea they had for a device that would be part telephone, part Internet. They code-named the effort “Project Mercury,” after the first American manned space effort.

The name was appropriate. In the mid-1990s, the newly-minted World Wide Web inspired the same sense of excitement and exploration that outer space had for engineers in the 1960s. Personal computers, of course, had long been staples in the office and some homes; the “Wintel” duopoly was already so well-established that it seemed like the two companies were destined to dominate computing forever. The Internet, though, was beginning to change that. People began talking about a new kind of device, one that, while not exactly a PC, would provide access to the Internet, especially for e-mail. At the time, less than 10 percent of U.S. homes were online. Personal computers were still relatively expensive, usually in the $1,000 to $4,000 range, and their high cost was widely viewed as placing an upper limit on Web penetration.

Project Mercury engineers came up with an idea for a game-changer, a low-cost device that would combine Internet access with a telephone. At National, designers had considerable experience with the thrifty use of “commodity” off-the-shelf chips; that, in fact, was the DNA of the company. The three men made good use of the skills common at National. The heart of the new device, for example, wasn’t the latest CPU from the fanciest PC, but instead, … Next Page »

Bob Ackerman Jr. Ackerman is the founder and a managing director of Allegis Capital, an early-stage Silicon Valley venture capital firm that invests heavily in cybersecurity. Follow @allegiscapital

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