Android

In 2002, shortly after the first iPod was released, Jobs started thinking about developing a phone. He saw millions of Americans lugging separate phones, BlackBerrys, and — now — MP3 players; naturally, consumers would prefer just one device. He also saw a future in which cell phones and mobile email devices would amass ever more features, eventually challenging the iPod's dominance as a music player. To protect his new product line, Jobs knew he would eventually need to venture into the wireless world.

If the idea was obvious, so were the obstacles. Data networks were sluggish and not ready for a full-blown handheld Internet device. An iPhone would require Apple to create a completely new operating system; the iPod's OS wasn't sophisticated enough to manage complicated networking or graphics, and even a scaled-down version of OS X would be too much for a cell phone chip to handle. Apple would be facing strong competition, too: In 2003, consumers had flocked to the Palm Treo 600, which merged a phone, PDA, and BlackBerry into one slick package. That proved there was demand for a so-called convergence device, but it also raised the bar for Apple's engineers.

Then there were the wireless carriers. Jobs knew they dictated what to build and how to build it, and that they treated the hardware as little more than a vehicle to get users onto their networks. Jobs, a notorious control freak himself, wasn't about to let a group of suits — whom he would later call "orifices" — tell him how to design his phone.

By 2004 Apple's iPod business had become more important, and more vulnerable, than ever. The iPod accounted for 16 percent of company revenue, but with 3G phones gaining popularity, Wi-Fi phones coming soon, the price of storage plummeting, and rival music stores proliferating, its long-term position as the dominant music device seemed at risk.

So that summer, while he publicly denied he would build an Apple phone, Jobs was working on his entry into the mobile phone industry. In an effort to bypass the carriers, he approached Motorola. It seemed like an easy fix: The handset maker had released the wildly popular RAZR, and Jobs knew Ed Zander, Motorola's CEO at the time, from Zander's days as an executive at Sun Microsystems. A deal would allow Apple to concentrate on developing the music software, while Motorola and the carrier, Cingular, could hash out the complicated hardware details.

Of course, Jobs' plan assumed that Motorola would produce a successor worthy of the RAZR, but it soon became clear that wasn't going to happen. The three companies dickered over pretty much everything — how songs would get into the phone, how much music could be stored there, even how each company's name would be displayed. And when the first prototypes showed up at the end of 2004, there was another problem: The gadget itself was ugly.