“It was a late morning in the fall of 2006. Almost a year earlier, Steve Jobs had tasked about 200 of Apple’s top engineers with creating the iPhone. Yet here, in Apple’s boardroom, it was clear that the prototype was still a disaster. It wasn’t just buggy, it flat-out didn’t work. The phone dropped calls constantly, the battery stopped charging before it was full, data and applications routinely became corrupted and unusable. The list of problems seemed endless,” Fred Vogelstein reports for Wired. “At the end of the demo, Jobs fixed the dozen or so people in the room with a level stare and said, ‘We don’t have a product yet.'”

Vogelstein reports, “The effect was even more terrifying than one of Jobs’ trademark tantrums. When the Apple chief screamed at his staff, it was scary but familiar. This time, his relative calm was unnerving. ‘It was one of the few times at Apple when I got a chill,’ says someone who was in the meeting.”

“For those working on the iPhone, the next three months would be the most stressful of their careers. Screaming matches broke out routinely in the hallways. Engineers, frazzled from all-night coding sessions, quit, only to rejoin days later after catching up on their sleep,” Vogelstein reports. (Details of this and other key moments in the making of the iPhone were provided by people with knowledge of the events. Apple and AT&T would not discuss these meetings or the specific terms of the relationship.)

Vogelstein reports, “…Months later, on June 29, 2007, the iPhone went on sale. At press time, analysts were speculating that customers would snap up about 3 million units by the end of 2007, making it the fastest-selling smartphone of all time. It is also arguably Apple’s most profitable device. The company nets an estimated $80 for every $399 iPhone it sells, and that’s not counting the $240 it makes from every two-year AT&T contract an iPhone customer signs. Meanwhile, about 40 percent of iPhone buyers are new to AT&T’s rolls, and the iPhone has tripled the carrier’s volume of data traffic in cities like New York and San Francisco.”

Vogelstein reports, “But as important as the iPhone has been to the fortunes of Apple and AT&T, its real impact is on the structure of the $11 billion-a-year US mobile phone industry… In other words, the very development that wireless carriers feared for so long may prove to be exactly what they need. It took Steve Jobs to show them that.”

Full article, with many behinds-the-scenes moments — highly recommended — here.

[Thanks to MacDailyNews Readers “MacVicta,” “Fred Mertz,” “Adam W.,” “AWidgetIHaveNot,” “Macmac,” and “Mike in Helsinki” for the heads up.]