We almost had a smartphone in the 90s. Why did it fail?

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Tony Fadell Applies the Lessons: Building the iPod

At 25:43 · chapter starts 21:50

After leaving General Magic, Tony Fadell spent years reflecting on what had gone wrong. He eventually pitched Apple on an idea for a portable MP3 player. When Steve Jobs approved the project in March 2001, Apple was $500 million in debt — financial constraint was baked in from day one. ^{[1] — Tony Fadell "Apple was $500M in debt when greenlighting iPod: When Steve Jobs greenlit the iPod project in March 2001, Apple was $500 million in debt — …" 22:27 Play} Tony's team began with a crystal-clear customer proposition: take 1,000 songs in your pocket. That clarity was the constraint that General Magic never had. Rather than building from scratch, Fadell sourced existing components from around the world — processors, batteries, screens — assembling them like Lego blocks. He even tore apart a Bang & Olufsen cordless phone to replicate its wheel mechanism for the iPod's iconic click wheel. And he set a hard deadline: the product had to ship by Christmas, because Sony was certain to release a competitor. ^{[2] — Tony Fadell "When Tony Fadell brought an iPod prototype to Apple in 2001, Apple was $500 million in debt. Steve Jobs greenlighted the project anyway — b…" 21:50 Play} The team delivered. Two hours after the iPod's launch event, Steve Jobs called Tony in to start planning the next model. General Magic had one shot; Apple iterated through 18 versions of the iPod, eventually building toward the iPhone itself.

Business

Tony Fadell Takes the Lessons to Apple

We almost had a smartphone in the 90s. Why did it fail? · Jun 26, 2026 Business

When Tony Fadell brought an iPod prototype to Apple in 2001, Apple was $500 million in debt. Steve Jobs greenlighted the project anyway — but on a tight budget and a hard Christmas deadline. That scarcity and urgency did exactly what unlimited resources at General Magic never could: it focused the team.

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You can have too much money. You absolutely — because you don't have constraints to make you think hard. When you know the clock is ticking and the bank account is draining and you have to really understand what it is you're building, it focuses people.

Tony Fadell

We almost had a smartphone in the 90s. …

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Business

Apple was $500M in debt when greenlighting iPod

We almost had a smartphone in the 90s. Why did it fail? · Jun 26, 2026

When Steve Jobs greenlit the iPod project in March 2001, Apple was $500 million in debt — a financial constraint that Tony Fadell says actually helped focus the team.

22:27 – 22:55

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I wanna take all my digital music with me everywhere I go. I wanna take 1,000 songs in my pocket. We knew exactly what that product needed to do.

Tony Fadell

We almost had a smartphone in the 90s. …

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I went to all the different big companies and small companies around the world doing MP3 to find the right processors, ground-level software necessary, the right batteries, the screens, and everything else. So it was like, what are the Lego blocks I can get, stick 'em together, add a bunch of software, add a bunch of things to make this thing work.

Tony Fadell

We almost had a smartphone in the 90s. …

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Technology

iPod built in under 8 months

We almost had a smartphone in the 90s. Why did it fail? · Jun 26, 2026

Tony Fadell's team built and shipped the original iPod in less than eight months, driven by a hard Christmas deadline and the threat of Sony entering the market.

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Technology

Tony worked on 18 iPod iterations

We almost had a smartphone in the 90s. Why did it fail? · Jun 26, 2026

Tony Fadell worked on 18 iterations of the iPod at Apple, a stark contrast to General Magic's single, years-long attempt that left no room for improvement.

25:11 – 25:30

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Technology

General Magic's Alumni Changed the World Anyway

We almost had a smartphone in the 90s. Why did it fail? · Jun 26, 2026 Technology

Despite General Magic's collapse, its alumni went on to co-found or become early employees at some of the most important companies in tech history: Google, eBay, LinkedIn, and Android. The failure was a masterclass in what not to do — and many of its graduates applied that lesson brilliantly.

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