2007 in review: The iPhone and iPod dominate

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Whether it’s by objective or subjective measures, 2007 figures to be go down as one of the banner years in Apple’s three-decade history. And while its original computer business continues to thrive—the company twice set a record for quarterly Mac sales in the past year—Apple has two other product lines that also pushed it to new heights in 2007.

The iPod, which helped spark the boom in Apple’s fortunes in recent years, continued to enjoy its position as the handheld music player of choice, especially after a fall overhaul of the product line. To that mix, Apple added a long-anticipated mobile phone, which debuted to a metric ton of media hype—only to live up to its advanced publicity.

The iPhone, new iPod models, sales milestones, and software updates-a-plenty were just a few of the things that ruled the news for Apple’s portable device lineup in 2007.


Despite what the zodiac may say, 2007 was undoubtedly the year of the iPhone. The year began with swirling rumors that Apple was finally set to release the long mythical iPhone. And, wonder of wonders, it was actually true. The device, however, managed to remain secret until Steve Jobs showed it off at January’s Macworld Expo, an event which promptly overshadowed everything else going on, including the rival Consumer Electronics Show happening at the same time in Las Vegas.

The iPhone, which Jobs billed as three revolutionary devices in one, quickly captured attention in the mainstream, where it quickly solidified its position as the must-have gadget of 2007.

Jobs announced many of the device’s specifications during his keynote: the $499 4GB and $599 8GB models both featured Wi-Fi, EDGE networking, music, photos, video, Internet, all running on a portable version of OS X wrapped in an astounding multi-touch interface. Still, questions remained, not the least of which was, what the device would ultimately be named. Cisco, which launched an iPhone of its own in December 2006, was not about to let Apple snap up that moniker without a fight; a day after Jobs’ Expo keynote, Cisco filed suit over the product’s name. The two companies resolved the dispute in February.

Answers to other questions—What would the cell phone plans cost? Could you use the iPhone as a modem? What about third-party applications?—emerged as the iPhone made its June 29 debut. Large crowds turned out across the country, with early adopters vying to be among the first to get their hands on the iPhone. In the end, Apple sold 270,000 iPhones that opening weekend; AT&T reported that it had sold more iPhones that weekend than it had sold in the first month of any other wireless device.

Just 74 days after the iPhone’s release, Apple reported that it had reached the 1 million mark in sales, putting the company well on its way to meeting its goal of 10 million iPhones sold by the end of 2008.

Around the world in 6 months

One of the factors that will help Apple reach that goal will be international sales. As soon as the iPhone made its U.S. debut, the clamor from those residing in other countries intensified.

Apple’s stated plan was to expand into Europe in fall 2007, followed by Asia in 2008, and while there were many whispers about which countries that meant, there was no solid news until September, when Apple announced partnerships with O2 in the United Kingdom and T-Mobile in Germany. In October, France became the fourth country when Apple struck a deal with mobile provider Orange. As we move into 2008, rumors continue unabated for Apple’s deals in countries including China, Japan, and Australia; there remains no news to date for U.S. neighbors Canada and Mexico.

It’s a lock

Perhaps the most controversial issue surrounding the iPhone was the exclusive relationship between Apple and AT&T. When buying iPhone, consumers had to agree to use AT&T as the exclusive service provider, signing a two-year contract with the telecom giant.

To nobody’s surprise, efforts to untether the device from Apple’s cellular partner began in earnest as soon as the phone was released. The first major developments came in early September when a number of commercial and open source ventures began to release applications to divorce the iPhone and AT&T.

The issue truly came to a head when Apple released the 1.1.1 software update for the iPhone. In the days before dropping the update, Apple fired a warning shot, suggesting that there was the potential for iPhones that had been unlocked to become inoperable once the software update was applied. This ignited a passionate argument amongst iPhone users on whether or not it was within Apple’s rights, but as hackers eventually found ways to restore bricked iPhones and hack the new software versions, the furor eventually died down.

Meanwhile, a brief stir arose across the Atlantic when telecom provider Vodafone sued T-Mobile, alleging that its exclusive deal with Apple in Germany was against the law. T-Mobile briefly offered a more expensive unlocked version of the iPhone in Germany, but a court eventually upheld the company’s deal with Apple, and the unlocked option was quickly dropped. Meanwhile in France, Orange was required to sell an unlocked version of the iPhone in France due to that country’s laws, also at a significant premium from the locked model.

The price is wrong

Another iPhone controversy arose from Apple’s desire to stoke holiday sales of its mobile device. At the same September event that introduced new iPods (which we’ll explore in greater depth below, Steve Jobs announced a $200 price cut on the 8GB iPhone; Apple also dropped the 4GB model. “We want to make iPhone even more affordable for even more people this holiday season,” the Apple CEO announced.

That news wasn’t well-received by early adopters of the iPhone, some of whom stood in line for hours to buy a $599 phone that, just two months later, could be had for $399. Apple found itself the target of scathing criticism from many sources, from Steve Wozniak to a New York woman who actually filed suit over the price cut. In a move to quell the outrage, Jobs posted an open letter on Apple’s site that offered a $100 store credit to all who had paid the higher price for the iPhone.

New iPods all around

Compared to the media furor surrounding the iPhone, Apple’s iPod line had a relatively quiet, though no less successful year. For most of the year, the lineup went unchanged, save for a chromatic facelift to the iPod shuffle in January that added pink, blue, green, and orange models to the basic silver. Just like the leaves, however, those colors were out of favor by the fall when Apple revised them yet again, adding a red model that donated part of its proceeds to charity as well as a purple version and slightly paler green and blue models. But the shuffle’s changes were all purely cosmetic: the 1GB capacity, simple design, and $79 price point remained the same.

Change came much more dramatically to the other existing iPod models in the fall, when Apple held a September press event with the cryptic tagline “The beat goes on.” Rumors abounded that the phrase was a reference to The Beatles and meant the Fab Four would finally show up on the iTunes Store—but those waiting for the Liverpudlian quartet were only to be disappointed yet again.

Instead, that event introduced the latest iPod nano. Shorter and squatter than its predecessor, it boasted video-playing capability and the first major revision to the iPod’s user interface. Apple even managed to cram all of that functionality into a package that managed to out-slim the earlier second-generation model. Available in the same 4GB and 8GB capacities as the 2G iPod nano, the 3G nano didn’t add much in the way of storage to the nano line, despite being able to play back video on its sharp 2.5-inch screen.

Also introduced at the same time as the nano was the device’s big brother, the iPod classic. Intended to replace the fifth-generation iPod, the classic sported a black or silver case, while featuring the same new flashy interface as the third-generation nano. It also remains the supertanker of the iPod lineup, with hard drive capacities of 80GB and 160GB.

While the first run was plagued by a number of quality issues, including loops of crashes and a slow interface, many of these glitches were soon ironed out in a software update.

Can touch this

The nano and classic weren’t the only iPods introduced in September. Steve Jobs unveiled an entirely new model—one that had been anticipated ever since Apple’s handheld device added video playback. The new model was a widescreen iPod that Apple dubbed the iPod touch.

Available in 8GB and 16GB models, the iPod touch offered many of the same features as the iPhone, only without the phone capabilities. It offered the same widescreen display and multi-touch interface, though it lacks the speakers, microphone, and earpiece of the iPhone—and, as it turns out, a number of seemingly arbitrary software features too. While Safari was present, there was no Mail application, and though you could view events in the Calendar app, you couldn’t initially add or edit those appointments (that feature was finally added as a bugfix by version 1.1.2 of the touch’s software, released in November).

Some early versions of the iPod touch also ran into a problem with their displays in which they exhibited a “negative black” effect that made video almost unwatchable, an issue resolved by the 1.1.1 software update.

Hackers, unite

The iPod touch and iPhone quickly became favorites for both those software developers looking to try their hand at the hottest devices around and consumers who weren’t satisfied with the features that Apple had built in. Initially Apple told developers to make Web-based apps for its handheld devices, but many software makers preferred to write native code, even if there wasn’t an easy or legitimate way to get it onto the iPhone.

Hacking hit a high point in late August with the introduction of Installer.app, and installing the huge number of available apps only became easier with successive updates. Until, that is, Apple released the 1.1.1 iPhone software update, which locked out the existing method of installing third-party applications. That set off another round of hacks to restore third-party apps to the iPhone and iPod touch.

The hacking games figure to come to a halt in 2008, once Apple releases the promised iPhone Software Development Kit in February.

Milestones met

The iPhone wasn’t the only device out of Cupertino to reach a significant sales mark in 2007. In April, Apple announced that the 100 millionth iPod was sold, some five-and-a-half years after the music player’s debut.

The past year also saw the end of some familiar models. Despite the “classic” moniker, the new full-size iPod marked the demise of the iPod’s iconic white exterior. It wasn’t the only casualty of 2007, however: the Special Edition U2 iPod’s beat didn’t go on past September either. Finally, Apple’s foray into the bookshelf market from the previous year, the iPod Hi-Fi, shuffled off this mortal coil as well, falling prey to the plethora of other quality iPod-compatible speaker systems on the market. Inexplicably, the $99 leather cases introduced at the same time as the Hi-Fi remain available from the Apple Store.

Get ready for 2008

How does Apple follow up such a busy year on the iPhone and iPod fronts? Look for the iPhone to remain in the headlines, as its global presence continues to expand and a new version featuring high-speed 3G technology appears sometime during the year. (iPhone partner AT&T promised a 3G iPhone in 2008.)

As for the iPod, expect more of the same from the industry’s leading music player. At this time last year, we saw very little reason to expect the iPod to loosen its grip on the hearts and minds of consumers; that seems especially true as we head into 2008.

[Associate Editor Dan Moren covers iPhone developments at iPhone Central while co-editing the MacUser blog.]

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