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Friday, August 03, 2012, 11:09 am PT (02:09 pm ET)

Phil Schiller relates Apple's struggles to develop iPhone, iPad; shock at Samsung's copies

Apple's senior VP of worldwide product marketing Phil Schiller took the stand today, describing Apple's development of the iPhone and iPad at a time when few believed the company could shake up the mobile industry.

Revolutionary, iconic products

Schiller noted that the iPod had "really changed everybody’s view of Apple both inside and outside the company," adding that it prompted the people to discuss what industry the company could shake up next, "make a camera, make a car, crazy stuff," Schiller related.

As noted earlier in comments by Steve Jobs, Schiller said Apple had been working to develop a tablet but realized it could use much of the work already done to develop a revolutionary mobile phone.

“At the time, cellphones weren’t any good as entertainment devices,” Schiller said. Apple's attorneys, arguing the case that Samsung "slavishly copied" Apple's unique designs, had Schiller recite reviews touting the iPhone and later the iPad as "revolutionary" and "iconic" new devices.

Established competitors in the smartphone market, including top executives from Palm and Microsoft, predicted the iPhone would fail. When asked why, Schiller answered, “probably the biggest reason was that Apple had never had a phone before. They expected we would fall on our faces."

When Apple brought the iPad to market, it was also a big risk. "People had tried to make tablets before and failed miserably," Schiller stated.

He revealed that Apple spent $97.5 million advertising the iPhone in fiscal 2008, $149.6 million in 2009 and $173.3 million in fiscal 2010, with the iPad getting ad additional $149.5 million ad budget in 2010.

“The advertisement has to give you a sense of how it might work, and what it might do for you before you have a chance to head to the store and try it yourself,” Schiller said. The ads “create a reason that you might want a tablet in your life."

The problem with copies

When Apple attorney Harold McElhinny asked Schiller about the effects of others copying the designs Apple created, the marketing chief answered that it "creates a huge problem in marketing on many levels. We market our product as the hero and how distinctive it is, how consistent we’ve kept it over time."

Schiller added, “now when someone comes up with a product that copies that design and copies that marketing, then customers can get confused on whose product is whose. […] If you steal [the iPhone's design] you’re stealing all the value we’ve created.”

Schiller noted that in billboard or TV advertising, "customers only get a glimpse of the product.” He also
At first sight of Samsung's Galaxy S, Schiller said “I was pretty shocked at the appearance of the Galaxy S phone and the extent to which it appeared to copy Apple products and the problems that would create for us.”

When he saw Samsung's Galaxy Tab, Schiller said, “I thought, ‘they are just going to steal our whole product line.'"

“I absolutely believe it has had an impact on our sales,” Schiller said.

Samsung's cross examination

Samsung lawyer Bill Price, cross examining Schiller, tried to establish that the move toward a virtual on-screen keyboard simply necessitated the adoption of the basic overall design of the iPhone, and that various features of the iPhone were not unprecedented. The company introduced emails noting that the LG Prada phone had a large touchscreen and that by 2005, Palm's Treo smartphones had a library of third party apps reaching 10,000 titles.

The cross examination also included efforts to designate the iPhone's design as largely functional rather than aesthetic, as Apple's strongest case is its design patents, which are limited to ornamental features rather than purely embodiments of function. For example, Samsung's attorney tried to establish that design elements such as its rounded corners were actually functional because they made it easier to put in one's pocket.

Samsung was also working to use Apple's sales surveys to establish that people bought the iPhone for its ease of use more than for its design or appearance, an effort to undermine the value of Apple's design patents. The attorney also asked about what Apple would be changing in the design of iPhone 5, a question that Schiller answered simply with, "I’d prefer not to tell confidential information about future products."

Presented with Samsung's Continuum smartphone, Schiller said, “I looked at this phone and it was my opinion that Samsung has ripped off a number of our design elements and in doing that may be causing confusion.”

Schiller added that Apple's iPhone was developed to incite a “lust factor,” to which the cross examining attorney asked if Samsung's multiple buttons inspired the same "lust."

Schiller answered that while Samsung may be trying to be beautiful, “I don’t think they are as beautiful as iPhone.”