iPhone Turns 5: A Short History of Its Famously and Loudly Wrong Critics

Its easy to poke fun at Apple's naysayers in retrospect, but perhaps we shouldn't be so quick to judge.

One of the first iPhone buyers leaves the Apple store on 5th Ave. in New York on June 29, 2007. (Reuters)

In January of 2007, not long after Steve Jobs unveiled Apple's first iPhone at that year's Macworld conference, Microsoft CEO Steve Ballmer sat down for an interview with CNBC in which he was asked about his initial reaction to his competitor's new device.

He guffawed. Really, whole-heartedly guffawed. 

"$500 full-subsidized with a plan!" he said, guffawing. "I said that is the most expensive phone in the world and it doesn't appeal to business customers because it doesn't have a keyboard which makes it not a very good email machine."

We all know how this story turned out. Five years ago today, the iPhone went on sale, and proceeded to transform our relationship with personal technology. Ballmer's unfortunate laugh, meanwhile, would become a symbol for all the short-sighted criticisms of Apple's game-changing gadget.

Yet, while its easy to poke fun at Apple's naysayers in retrospect, perhaps we shouldn't be so quick to judge. Sure, there were plenty of fans who correctly predicted the iPhone's success. And yes, Matthew Lynn's confident declaration in Bloomberg that the "iPhone is nothing more than a luxury bauble that will appeal to a few gadget freaks" was a magnificently wrong piece of business punditry. So was John Dvorak's predication that there was "no likelihood" Apple could succeed in the phone business. But writing off as myopic all those companies that didn't invent the iPhone, as well as all the writers who didn't buy into it, undersells just how audacious Apple's move into mobile really was.

Apple had never been in the phone business, which at the time appeared to be a saturated industry where competitors competed on razor-thin margins. It had no experience working with wireless carriers. The phone itself, while beautifully designed, ran on AT&T's painfully slow EDGE network. It didn't have 3G capability. It lacked a keyboard, which was considered an essential ingredient if you ever hoped to crack the corporate market. You couldn't replace the battery -- a fact that New York Times business writer Joe Nocera spent an entire column obsessing about. Oh, and the basic four gigabyte version cost $499. Fully subsidized, with a plan.  

These things all seemed important at the time. But more fundamentally, the iPhone broke from the basic assumptions that underpinned tech companies' approach to building products. As Universal McCann noted at the time, it didn't seem like there was much demand for an all-in-one device that could handle media, talk, and email. Most consumers supposedly wanted their phones, their MP3 players, and their cameras separate. They wanted their "email machines," as Ballmer put it, to be their "email machines." 

It turns out consumers really wanted a device that combined all of those elements elegantly, if imperfectly. They just didn't know it until Steve Jobs showed them. 

By turning phones into tiny, sleek computers that just happened to make calls, Apple erased the walls that defined tech companies and set the industry on its current course. We're leaving behind the days of computer makers, software makers, and phone makers, and entering the era of the technology behemoths, where Google, Microsoft, and Amazon have all gotten into the hardware game, alongside media and software. In other words, everyone looks a bit more like Apple. 

It was impossible to know for sure that we'd get here until fans started camping out overnight to buy the iPhone. Those lines were Steve Jobs' first proof of concept. Before then, it was anybody's guess if he and Apple would succeed.