“What we had suddenly looked just so . . . nineties,” DeSalvo said. “It’s just one of those things that are obvious when you see it.”

The cell phone industry in 2005 was the perfect example of a hairy Google-size problem. The software industry for mobile phones was one of the most dysfunctional in all technology. There wasn’t enough wireless bandwidth for users to surf the Internet on a phone without frustration. Phones weren’t powerful enough to run anything but rudimentary software. But the biggest prob­lem, as Jobs had learned, was that the industry was ruled by an oligopoly: Few companies besides the carriers and the phone makers were writing software for phones, and what existed was terrible. Wireless bandwidth would improve and phone chips would get more powerful; but back then it looked as if the carri­ers and phone makers would control it all.

“We had done a deal with Vodafone [the big European carrier] to try to get Google search on their phones,” said one top Google executive who would not give his name. “But the search they offered us was that we could put some results on, but that they would control most of them, and that our results would be at the bottom of every query. They didn’t have a good mobile browser. Ring-tones [that they were selling] sometimes got prioritized in search results. All the carriers were doing this. They thought they could provide all the services inside a walled garden [as AOL had in the 1990s], and that this control was the best way to make money.”

The reason few developers built software for mobile phones was because anytime they tried, they lost money. There was no standardization in the industry. Virtually every phone ran its own software and set of applications, meaning software written for a Samsung phone often wouldn’t run on a Motorola phone, which wouldn’t run on a Nokia. Software platforms were incompatible even within companies. For example, there were a handful of different versions of Symbian. Put simply, the mobile industry screamed “money pit” to any enterprising developer. Most stayed away. The most lucrative business was not writing apps for phones. It was owning a testing company that would make sure your apps worked on all the phones in the market. Larry Page has never been shy talking about how frustrating those days were for him and Google.

“We had a closet full of over 100 phones [that we were developing software for], and we were building our software pretty much one device at a time,” he said in his 2012 report to share­holders. In various remarks over the years he has described the experience as both “awful” and “incredibly painful.”

But Page and the rest of Google’s executives knew that some­one would figure out the mobile business eventually, and they were particularly concerned that that company would be Microsoft. Back then, Microsoft was still the richest and most powerful technology company in the world, and it was finally getting trac­tion with its Windows CE mobile phones and software. Windows CE smartphones were still a niche market, but if consumers took to the platform en masse as they did later with the iPhone, Google’s entire business could be in jeopardy.

This wasn’t an exaggeration. Back then, Microsoft and Google were in the midst of a nasty battle of their own for dominance in search, and for top dog in the tech world. After two decades of being the first-choice workplace of top engineering talent, Microsoft was now losing many of those battles to Google. Chairman Bill Gates and CEO Steve Ballmer had made it clear they took Google’s challenge personally. Gates seemed particularly affected by it. Once or twice he made fun of the way Page and his Google cofounder Sergey Brin dressed. He said their search engine’s popularity was “a fad.” Then, in the same breath he would issue the ultimate compliment saying that of all his competitors over the years Google was the most like Microsoft.

Google executives were convinced that if Windows on mobile devices caught on, Microsoft would interfere with users’ access to Google search on those devices in favor of its own search engine. The U.S. government’s successful antitrust trial against Microsoft in the 1990s made it difficult for the company to use its monopoly on desktops and laptops to bully competitors. It could not, for example, make Microsoft’s the default search engine in Windows without giving users a choice between its search engine and those from Google, Yahoo, and others.

However, on smartphones, few rules governed how fiercely Microsoft could compete. It didn’t have a monopoly there. Google worried that if Microsoft made it hard enough to use Google search on its mobile devices and easy enough to use Microsoft search, many users would just switch search engines. This was the way Microsoft killed Netscape with Internet Explorer in the 1990s. If users stopped using Google’s search engine and began using a competitor’s such as Microsoft’s, Google’s business would quickly run aground. Google made all its money back then from the search ads that appeared next to its search results. “It’s hard to relate to that [fear of Microsoft] now, but at the time we were very concerned that Microsoft’s mobile strategy would be successful,” Schmidt said in 2012 during testimony in the Oracle v. Google copyright trial.

***

On the day Jobs announced the iPhone, the director of the Android team, Andy Rubin, was six hundred miles away in Las Vegas, on his way to a meeting with one of the myriad handset makers and carriers that descend on the city for the Consumer Electronics Show. He reacted exactly as DeSalvo predicted. Rubin was so astonished by what Jobs was unveiling that, on his way to a meeting, he had his driver pull over so that he could finish watching the webcast.

“Holy crap,” he said to one of his colleagues in the car. “I guess we’re not going to ship that phone.”

What the Android team had been working on, a phone code-named Sooner, sported software that was arguably more revolu­tionary than what had just been revealed in the iPhone. In addition to having a full Internet browser, and running all of Google’s great web applications, such as search, Maps, and YouTube, the software was designed not just to run on Sooner, but on any smartphone, tablet, or other portable device not yet conceived. It would never need to be tethered to a laptop or desktop. It would allow multi­ple applications to run at the same time, and it would easily con­nect to an online store of other applications that Google would seed and encourage. By contrast, the iPhone needed to connect to iTunes regularly, it wouldn’t run more than one application at a time, and in the beginning it had no plans to allow anything re­sembling an application store.

However, the Sooner phone was ugly. It looked like a Black-Berry, with a traditional keyboard and a small screen that wasn’t touch-enabled. Rubin and his team, along with partners HTC and T-Mobile, believed consumers would care more about the great software it contained than its looks. This was conventional wisdom back then. Revolutionary phone designs rarely succeeded. The Nokia N-Gage, which in 2003 tried to combine a gaming system with a phone and email device, often gets mentioned here. RIM had become one of the dominant smartphone makers on the planet by making BlackBerry’s unadorned functionality one of its main selling points: you got a phone, an incredible key­board, secure email, all in one indestructible package.