CIO — Rumors surrounding a possible cell phone/iPod combination device started swirling around the Internet in late 2006, with some reports claiming that Apple planned to enter the mobile space in January of the coming year with the release of two separate phones: a smartphone for business users and another music phone aimed at the consumer set. Though the prediction proved to be inaccurate, the reports also correctly suggested that the device would be announced at Apple's Macworld conference.

Linksys iPhone CIT300

Then in early December 2006, news reports claimed that Apple had filed an application for iPhone patent protection with the U.S. Patent and Trademark Office (USPTO), in relation to another patent it filed in 2004. Later that month, Cisco's Linksys division shocked iPhone speculators with the introduction of a line of iPhone voice-over-IP (VoIP) phones, sparking questions about whether Apple could acquire the appropriate approval from the company to employ the iPhone name. Cisco gained ownership of the iPhone title when it acquired Infogear in 2000, according to a BusinessWeek report.

Confirming early predictions, Apple CEO Steve Jobs in January unveiled the iPhone at the Macworld Conference and Expo in San Francisco. Jobs also confirmed speculation that Cingular—now AT&T—would exclusively offer the combination iPod/mobile phone and that two versions of the phone would be made available: a 4GB version for $499 and an 8GB model for $599.

The Apple iPhone

Shortly after the device was unveiled, CIO.com offered up some reasons why the iPhone is a non-issue for CIOs and corporate America, as well as few arguments for its being the single most important thing to happen to CIOs in 2007.

As soon as it was clear that Apple would indeed release its iPhone in 2007, analysts and commentators began speculating about the specifics of the device and whether Apple could actually hold its own in the competitive, unforgiving mobile phone market. For instance, various sources reported that an advertisement on Apple's website suggested the phone would employ an Arm processor. Arm is a leading producer of smartphone chips because its processors are powerful enough to handle the computing demands of handhelds, yet they use little power. iSuppli, a market research firm, also predicted early on that the iPhone would be a huge success, with more than 50 percent gross profit margins associated with sales of the device.

In response to all the hype surrounding the iPhone, cell phone companies began to offer their strategies for competing with Apple, regardless of the fact that the iPhone had yet to prove itself as a true rival. Motorola Chairman and CEO Ed Zander claimed he wasn't intimidated by the potential of the iPhone and that his organization was ready for the competition.

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