This was why Steve had one other demand above and beyond having total control of the design and manufacture and sales price of the phone. If Apple’s phone was going to be an instrument that drove consumption of wireless data, Steve felt that his company also should be compensated for bringing the carrier the extra business. So if AT&T wanted the right to be the initial, exclusive carrier for the iPhone, it would have to pay Apple a sales commission for the added data traffic the iPhone would inevitably foster. In other words, Steve wanted a piece of the carrier’s action. After all, Apple kept 30 percent of the take on anything sold in the iTunes Music Store. So why not do the same thing with phone data carriage fees?
All in all, his demands were every bit as bold as the vision he painted. But AT&T could see that the iPhone might give its network a highly needed boost, and something else none of its competitors could claim—a phone from what had become the hottest gadget manufacturer in the world. So it was willing to strike what, in hindsight, seems like an extraordinary deal for Apple. Steve got all that he wanted, and perhaps a little bit more than he should have. AT&T gave Apple unprecedented freedom to produce, almost sight unseen, whatever phone Steve and his wizards wanted to make. It allowed Apple to set the price for the new phones, which AT&T could not change or discount. And, last but not least, the Cupertino company would receive up to about 10 percent of the data carriage revenues a user generated each month, for the duration of that customer’s iPhone service contract. These were terms no handset maker had ever received. Never had a carrier shared its fees with a telephone manufacturer.
As it would turn out, sharing fees was something neither side liked. One year later, they changed the deal so that AT&T paid Apple the full price for each phone, instead of getting the distributor’s price, which was about $200 below retail. Since accounting rules allowed Apple to spread the price AT&T paid per phone across two years, Apple was able to smooth out revenue stream and buffer the ups and downs of usage. And AT&T was happy to get Apple’s fingers out of its own revenue stream. It was a cleaner arrangement for both sides—and many telecommunications analysts believe it has been an even better deal for Apple than the old model.
After the development of iTunes, Steve had come to fully appreciate the power Apple now commanded. He used it aggressively but intelligently. He didn’t overreach with AT&T. He knew they needed something like the iPhone, he knew nobody else could provide it, and so he made a deal that gave them what they wanted, but on terms that would make Apple very, very rich. He had Cue to handle the day-to-day business of the relationship, and Cue was on the phone with AT&T’s Glenn Lurie constantly—no one wanted a repeat of Apple’s Motorola partnership. It all worked out brilliantly for Apple. By some analysts’ estimates, the Cupertino company now pockets as much as 80 percent of the profits of the entire cellphone handset business.
STEVE WAS DEEPLY focused during these years. He had pared his life down so that he could be as expansive as possible in very specific aspects of his work. The dividing lines were clear. Family mattered. A small group of friends mattered. Work mattered, and the people who mattered most at work were the ones who could abet, rather than stifle, his single-minded pursuit of what he defined as the company’s mission. Nothing else mattered.
This is why, during the last decade of his life, Steve built so much of his work life around his collaboration and deep friendship with Jony Ive. Their relationship was unlike any creative partnership either had experienced previously. Not only were they both extremely productive, but they seemed to get along even when they disagreed. “People have talked about that roller coaster of falling in and out of favor with Steve,” Jony mused during one of two lengthy interviews we had in 2014. “I was fortunate in that we didn’t have that experience. We had a very consistent relationship that weathered his illnesses and the huge transitions the company went through.”
They had come a long way since that day in 1997 when Steve first walked over to the Design Lab, where Jony was anxiously assuming that his new boss intended to fire him on the spot. But Steve told me that he immediately recognized Jony as a “real keeper.” He could tell instantly that he liked his taste, judgment, and ambition. Nevertheless, Jony had remained intimidated during that first year, fearful that if he did a single thing wrong, he’d have to pack his bags. Such was Steve’s reputation. While Jony thoroughly enjoyed the process of working with the boss on that very first iMac, he always felt self-conscious when trying to describe some of his design decisions to Steve. But a visit to Pixar helped him realize that he and his boss were on the same wavelength. “When we visited Pixar with the first model of the iMac, it was a revelation, because I didn’t know Steve very well, even then,” says Jony. “But to hear his introduction of me to the whole of Pixar, I realized that he really understood what I was trying to achieve at an emotional level. At some level, he knew what I was trying to articulate.”
As Steve spoke, it became clear to Jony that he had an even more sophisticated and intuitive sense than Jony did of why the unusual new design made sense. This was before the product had been announced or shown to anyone else outside Apple. “He could do that,” Ive continues. “He could refine and describe ideas so much better than anyone else could. I think very quickly he understood that I had a specific proficiency in terms of having good taste and understanding of aesthetics and form. But one of my problems is that I’m not always as articulate as I would like to be. I can feel things intuitively, and Steve could sense the full meaning of what I was getting at. So I didn’t have to justify it explicitly. And then what would happen was I would then see him articulate those ideas but in a way that I was completely incapable of doing. And that’s what was so amazing. I learned, I got better at it, but obviously I was never ever in his league.”
Their relationship deepened as Apple’s metabolism accelerated. Personal computers have always been works in progress, thanks in large part to the escalator effect of Moore’s law, which forces you to redesign constantly in an effort to do more with components that keep becoming more capable. The iPod only accelerated that cycle. Jony and Steve could never pause for long to bask in the afterglow of shipping a new device. But integrating these faster cycles into the company’s routine was a deeply satisfying challenge, Jony contends. “I’ve always thought there are a number of things that you have achieved at the end of a project,” he says. “There’s the object, the actual product itself, and then there’s all that you learned. What you learned is as tangible as the product itself, but much more valuable because that’s your future. You can see where that goes and demand more of yourself, being so unreasonable in what you expect of yourself and what we expect of each other, that it yields these even more amazing results, not just in the product but in what you’ve learned.”
Ive believes that the lessons gained from each successive product development cycle fueled Steve’s unquenchable restlessness. Each product somehow fell short, which meant that the next version not only could be better but had to be better. Looking at their work this way, Steve turned the incremental development of products into an ongoing and impossible quest for perfection. What got left out of each product merely served as the basis for the next, improved edition. Steve always wanted to look forward, and the completion of a device was just one more call to the future.