I had heard about General Magic over the years, and it was always held up as this almost mythical startup — the company that more or less developed the smartphone but was years too early.
Then, just two weeks ago, I came across a documentary on it. It’s simply called General Magic, and it’s really good, well worth watching. So I did a bit more digging, found some great articles and additional interviews with the founders.
This is the story of how one guy had this vision for a new handheld device, how he got the top talent from Apple to join him, how they got the biggest tech and telecom companies in the world to join them, how they were stabbed in the back by John Sculley, the Apple CEO, and how it all fell apart.
The Information Economy
The story starts with a guy called Marc Porat (po-RAT).
Porat wasn’t an engineer. He was an economist, went to Stanford, where, in 1976, for his doctorate, he wrote a dissertation called The Information Economy — so he is credited with actually coining the term “information economy.”
His argument is basically that America was moving into a new type of economy where more and more people were starting to make their living by creating, processing and moving information around.
His dissertation gets the attention of the US Department of Commerce, and he goes on to work there as a senior economist.
After that, he joins the Aspen Institute, basically a think tank, where he works on how communications and new technology are going to affect society.
So this is a very smart guy who spends a huge amount of his time thinking about the future of technology. He makes a documentary on PBS called The Information Society.
He then moves into business, sets up a satellite communications company that has revenues of more than $20 million by the time he sells it in 1988 — so he’s made some money.
And it's after selling his company in 1988 that Apple hires him into its Advanced Technology Group.
Now, just to note, Steve Jobs was no longer at Apple by this stage. He had been forced out in 1985. John Sculley was the CEO. There’s a whole story behind that which I will, of course, cover at some stage.
Porat was hired to essentially think about what comes after the personal computer, because Porat had been thinking about this for years, and he had a very clear vision.
He believed computing was going to move away from desktop computers into something much smaller.
And in 1989, he produced this big red notebook containing his vision for something he called the Pocket Crystal.
A small touchscreen device you could use to make calls, send messages, buy things, download software.
So, a smartphone — 18 years before the iPhone was launched.
The Pocket Crystal
John Sculley, the Apple CEO, loved the idea and gave Porat the resources to develop it.
And the first thing Porat does is convince two of Apple's top employees — Bill Atkinson and Andy Hertzfeld — to join the project.
If you were a computer nerd back then, Atkinson and Hertzfeld were superstars because when developing the Apple Macintosh, they literally invented the visual software and user interface that every computer, tablet and smartphone still uses today.
Porat’s idea is much bigger than simply building one Apple-branded device.
He wants to develop the software that will become a standard used by lots of different manufacturers. A bit like what Microsoft had done with Windows on personal computers, or what Android did with smartphones in 2008.
So that means they need partners like Sony, which makes small, portable electronic devices, and partners like Motorola, which back then was one of the biggest names in wireless technology.
And Porat also needed telecommunications companies to come on as partners.
Because remember, this is before the internet as we know it.
So if you want a device to send a message, check a share price, do all the things that Porat envisaged, you need to partner with the telecom companies because they already have the communications networks.
But they would now have to build the new data services on top of them to make Porat’s idea work.
Now, it’s worth noting as well that at the same time as Porat was getting his team together, Apple was also experimenting with handheld computers, including a project that would eventually become the Newton.
But initially, Newton had a very different idea.
It was meant to be a larger pen-based computer where you write on the screen, take notes, organise information. Whereas Porat’s device was much smaller, more focused on communication like wireless messaging and making phone calls.
Anyway, because Porat’s vision was so broad, it was decided that it was too big for Apple to do on its own.
So with the support of Apple’s CEO, John Sculley, in 1990 they spun the project out into a separate company.
They call it General Magic.
Apple keeps a stake in the business, and Sculley joins its board.
Where the Cool and Smart People Wanted to Work
With Hertzfeld and Atkinson on board, working in this new, top-secret company on an exciting, revolutionary new product, while at the same time Apple was without Steve Jobs, you now have a lot of senior Apple people who were keen to join General Magic.
As Marc Porat said: “It was where you wanted to work if you were cool and smart”.
Also, some very talented but more junior engineers clamoured to get in, including Tony Fadell.
And the reason I mention him is because he becomes a very significant figure in Apple.
He would go on to be known as the father of the iPod, he led the hardware development of the very first iPhone, and he co-founded Nest, which he sold to Google in 2014 for $3.2 billion.
Porat knows that he’s going to need some big investment to get the project developed, but he steers clear of traditional venture capital because he realised that the key to the product's success was the heavyweight partners, and that they would be able to provide the investment.
His first target is Sony — huge now and even bigger back then because they had created the Walkman a decade earlier — and it is the ideal partner to develop and launch a small, portable electronic device.
Porat makes his presentation, and Sony signs up straight away.
Next target is Motorola.
And again, this is a huge name, one of the leading manufacturers of mobile phones and pagers.
They sign up.
So they have two big manufacturers, and now they need a telecom company.
Porat goes straight to AT&T, the biggest telco in the US and one of the biggest in the world.
And again, they’re impressed by Porat, by his vision and his charisma.
Because this is the thing about Porat — he’s very charismatic.
A New York Times journalist wrote that Porat has “astonishing persuasive powers,” while The Wall Street Journal described him as a “silver tongued devil.”
And in the documentary, one of the General Magic team said of Porat: “Marc was one of the most charismatic presenters you could ever imagine.”
Now, having watched the documentary, I wouldn’t put him above Jobs in terms of charisma or showmanship, but in fairness, that’s a very high bar.
Porat definitely had a confidence and a certain visionary magnetism to him, and it worked.
Each of the founding partner companies invests $6 million for a 10% stake in General Magic.
So by 1991, Porat had brought together huge, world-class partners and an internal team with a massive amount of talent.
A Frat House Building the Future
But building the product is already proving far more difficult than imagining it.
Because the team is attempting to create both an operating system and a completely new way for these new devices to communicate with each other.
And while the company had some of the best minds in Silicon Valley at that time, everything was a bit chaotic in the offices, and this really comes across in the documentary.
The office is like a frat house.
There are toys and pets everywhere, including a rabbit called Bowser, who wasn’t in a cage. It was walking around and crapping all over the office.
And Bowser actually becomes part of the company logo — a drawing of a rabbit popping out of a magician’s top hat.
But while there was very little in the way of structured management within the offices, people are encouraged to experiment.
And from the documentary, you get a really good insight into how passionate and energetic everyone was about the project.
They knew that if they could succeed, they really would create something that would change the world, so there was such a vibrancy in the company.
And of course, because they were working on something so big, so revolutionary, there was huge secrecy.
Even Apple employees who enquired were told nothing about the project.
But of course, there was one key Apple employee who knew everything.
John Sculley, the Apple CEO, who was also on the board of General Magic.
The Betrayal
And in May 1992, at the Summer Consumer Electronics Show in Chicago, Sculley publicly unveiled the Newton.
Now, it’s not going to be launched for another year.
But the design and function of the Newton has changed considerably from its initial concept.
During the demonstration at this show, they show someone using the Newton to order a pizza by moving little topping icons onto a picture of a pizza and then faxing the order directly from the device.
These are features that have been lifted directly from General Magic.
The General Magic team were gobsmacked.
As Hertzfeld said: "Sculley was on our board! It was a real betrayal."
Bill Atkinson said: "We felt completely betrayed."
Now, Sculley attempted to defend his position by saying that he was responsible for Apple, that he believed the Newton and General Magic’s device could coexist.
But there’s no two ways around this — it was a betrayal.
And I’m guessing the reason he did it was because Apple was in dire straits financially. Sculley was under huge pressure, and he believed Newton would save his ass and revive Apple.
As a result of the Newton announcement, there is now massive pressure on General Magic to get their product out there.
So it forced General Magic to go public with what they were doing because they couldn't afford to stay in the shadows while Apple grabbed all the headlines.
Porat goes on a massive PR counter-attack.
The New York Times ran a front-page profile naming General Magic "Silicon Valley's most closely watched start-up".
Then, on February 8th, 1993, General Magic finally came out properly into the open at a big press event in New York.
And it goes really well because, as I already mentioned, Porat is a very good presenter.
He has this huge vision, and he articulated so well what this device was going to do and how it was going to change the world.
Now, of course, the device itself wasn’t ready yet.
But the reaction is huge.
The Los Angeles Times describes what General Magic is showing as a “pocket-size peek into the future”.
The story gets picked up internationally, and General Magic goes from being this secretive Silicon Valley start-up to one of the most talked-about technology businesses in the world.
Apple’s Newton Disaster
Meanwhile, over at Apple, things are falling apart.
In June 1993, after huge losses, John Sculley is fired as CEO.
And then that August, the Newton finally went on sale for $699.
Apple had poured over $100 million into its development and had projected sales of one million units in its first year.
It doesn’t get anywhere near that.
About 80,000 units are sold.
And the problem is that when people finally get their hands on it, its most famous feature, this new handwriting technology, is pretty crap.
One reviewer wrote that taking notes felt like "trying to translate ancient hieroglyphics."
There were other issues as well.
It was a bit too big. It wasn’t backlit.
And while the General Magic team were relieved that the Newton wouldn’t pose a threat to their device, the fact is that Newton's very public failure kind of soured the entire retail market on personal digital assistants — PDAs.
Consumers and the media were very sceptical about them.
Sixteen Partners, One Massive Headache
By March 1994, Porat had taken the consortium model into overdrive because by now they had sixteen multinational corporations as partners, including NTT, France Telecom, Cable & Wireless, Toshiba, Fujitsu, Sanyo and Mitsubishi.
Because, of course, that’s the company's MO.
General Magic’s success will partly come down to having as many manufacturers and telcos on board.
Total strategic investments across the consortium reached $200 million.
And while that sounds hunky-dory on paper, the practicalities of managing this were almost impossible.
You now had several different telcos, several different manufacturers — all of them fierce competitors, each with its own commercial interests.
And every time another partner comes aboard, the engineers in General Magic have another set of requirements to deal with.
So they were overwhelmed by each partner’s custom requests.
And of course, General Magic is relying on all of these partners to deliver their part of the system, and a lot of them are running late.
But probably the biggest problem is that General Magic itself is running way behind as well.
And this is where the free-wheeling, frat-house nature of the company — which is credited for helping them be so energised and creative — becomes a major problem.
This lack of structure, this internal chaos, adds massively to their problems.
You see, Porat is too busy managing the relationships with their main partners.
He actually estimates that managing these relationships is taking up about 80% of his time.
Now, the board does try to bring in some structure.
They put one person in charge as project manager, but the rest of the team push back because they think it will kill the creativity.
So there is nobody really managing the various teams, setting deadlines and, you know, all that other important stuff.
Which is just crazy, because you need to have some sort of structure.
And because there’s so little structure, nobody is really there to stop the key people from constantly tinkering, from constantly making changes.
Which is what happens because Atkinson and Hertzfeld, left to their own devices, were perfectionists.
Atkinson spent months tweaking custom animations, while Hertzfeld kept rebuilding parts of the core software from scratch.
And of course, others took their lead from Hertzfeld and Atkinson.
So people would get distracted by something really cool, and they’d spend loads of time going down rabbit holes developing cool, fun things that ended up having no bearing on the actual product.
As Hertzfeld said: “We were too dazzled by what it could possibly do to realize we were biting off more than we could chew.”
They Had to Ship
But after numerous delays, they had to eventually ship.
The product isn’t ready, and they know it.
Here’s a quote from Hertzfeld: "The screens aren't really good enough. They don't run long enough on batteries. And the wireless communication infrastructure just isn't here yet"
Regardless, in September 1994, Sony launched the Magic Link, priced at $995.
And when you open the device, you see this illustrated office and all the clever features the engineers have spent years building.
And this is the thing.
The tech and software that they create is, by the standards of the time, pretty amazing.
This new operating system, they developed a new type of modem, this new, very clever user interface.
There were a lot of individual groundbreaking elements.
The problem was that the finished product was very much less than the sum of those parts.
On this Sony device, if you want to send messages or make a phone call, you need to connect the device to an ordinary telephone socket.
The screen has no backlight, so it's difficult to read in poor lighting.
As Hertzfeld mentioned, the batteries don’t last very long.
General Magic had hoped the first Sony device might sell around 100,000 units.
They sold just 3,000 units.
But initially, this doesn’t mean that General Magic is in trouble.
While internally, some people in General Magic are very worried, the investment and tech community aren’t looking at the Sony Magic Link as the finished product.
They're looking at it as the first device in what they believe could become a much bigger platform.
Sony is just one manufacturer.
Motorola is bringing out its own device soon.
And General Magic has all these other huge consumer electronics manufacturers lined up behind it.
So despite the Sony flop, there’s still huge momentum and excitement around General Magic.
Wall Street Buys the Dream
And so Porat decides to take the company public.
And the IPO isn't just about raising money.
It's also about buying General Magic some independence from all of their very demanding partners.
As Porat put it: “We needed to be clear of them, and an IPO would get us enough money where we did not actually have to be so beholden to them.”
The excitement and expectation around the IPO is huge.
And there's a great story about a banker from Goldman Sachs who is so desperate for Goldman to lead the IPO that he offers Porat the actual shirt off his back.
Porat accepts.
And the banker literally takes his shirt off in the middle of the office.
So that gives you some idea of the frenzy.
The IPO happened in February 1995.
And the demand for shares is huge.
They raised $96 million, and the company is valued at more than $800 million.
Now, just one month after the IPO, Motorola launches their product — the Envoy.
And this one can actually connect wirelessly.
But the thing costs around $1,500, weighs nearly 800 grams, the screen still has no backlight, and the wireless network is slow and massively expensive, with a monthly data bill of around $400.
So just like the Sony device, it’s a huge flop.
Two devices, two turkeys.
The Revolution They Missed
Then, on top of all this, things are starting to move and change very significantly and quickly in the tech space.
You see, the General Magic engineers were so focused on their big vision, creating this potentially revolutionary product, they weren’t tuning into an actual revolution that was starting to happen in 1994.
I am, of course, referring to the World Wide Web, the internet.
Initially, in General Magic they thought the web was rough, all text-based, whereas they were creating this graphics-rich product that you could carry around with you.
And while the internet was initially this text-heavy world that was difficult for most people to access, Netscape launched Navigator in December 1994.
And suddenly, people could move around the web using pictures, links and simple point-and-click menus instead of typing commands.
That opened the web up to the general public.
So now you had this new technology with a worldwide reach, and it was free, whereas General Magic was developing a closed network with AT&T and other telcos that people would have to pay for.
And in fairness, by early 1995, within General Magic there is now the realisation that the next iteration of their device will have to be internet-enabled.
And as an interesting side note, there is someone in General Magic who grasped the internet's huge potential very early doors.
Pierre Omidyar (oh-mid-yahr) is a software engineer in General Magic, and in September 1995, he launched a website called AuctionWeb.
That site, of course, goes on to become eBay — one of the great early internet companies.
The Palm Pilot Finishes the Job
Anyway, by the end of 1995, things were not looking good for General Magic.
Their losses for the year were $23 million.
Netscape had floated in August of that year, kicking off the dot-com boom, so everyone had moved on.
General Magic really was yesterday’s news.
And then, as if things weren’t bad enough, in 1996 the Palm Pilot launches.
And the Palm Pilot is everything General Magic's devices are not.
It costs between $299 and $369.
It weighs just 160 grams.
It runs for weeks on two small batteries.
It doesn't have a wireless modem, and it doesn't try to connect to a massive, complicated network.
It just synchronizes your calendar and contacts with your computer.
And it sells hundreds of thousands of units in its first year.
It proves that consumers want simple, cheap, functional organizers, not heavy, expensive communicators.
And unsurprisingly, the consortium members — AT&T, Sony, Motorola and all of the others — realise that the General Magic platform is a dead end.
By September 1996, its shares were trading at $2.
And while they have plans for a much-improved device with internet capabilities, a proper cell phone, a much better product overall, it was still going to be a very difficult product to build.
And by this stage, their trade partners are leaving, the engineering team is exhausted, burnt out, and they start to leave.
In the words of Porat: “We kind of ran out of gas”.
And in December 1996, Porat is replaced as chief executive.
Now, the company does pivot, turns into a voice recognition company and has limited success before finally, at the end of 2002, General Magic files for Chapter 11 bankruptcy.
What Happened to the People Behind It?
In terms of the main characters, Porat went on to found a few more startups, mainly in green technology.
Hertzfeld stayed in software. He joined Google in 2005 and was heavily involved in their Google Plus project before retiring in 2013.
While Atkinson more or less walked away from Silicon Valley and became a photographer.
He passed away in 2025.
Now, when I was researching this story, I found myself regularly comparing Porat to Steve Jobs.
Both were charismatic.
Both were visionaries.
And of course, what General Magic was trying to build was basically the original smartphone, so there’s a huge link there.
And given Jobs’ almost unrivalled ability to take completely new technology and turn it into products like the iPod and the iPhone — products that didn’t just sell, they stopped people in their tracks and completely changed the market — it made me think and ask the question:
If Jobs had been running General Magic, would it have turned out very differently?
I don’t think it would have.
Would Steve Jobs Have Saved General Magic?
Now, I do think Jobs would have cracked the whip.
He would have brought far more discipline into the company.
He would have stopped people disappearing down all these rabbit holes, forced them to focus on what actually mattered and probably got a much better and more beautiful product onto the market.
Because under Jobs, I think they’d have developed both the hardware and software in-house.
Jobs was way too much of a control freak to have all of these other manufacturers involved.
But even then, I still don’t think it would have been enough.
Because as Kara Swisher says at the end of the documentary:
“The user base was not there. The technology was not there. The things to do on it weren't there. It's like inventing the television in the 1880s.
it doesn't matter if you invented it cuz you didn't have shows.”
And I think that’s really the whole story.
It wasn’t just that the technology wasn’t ready.
The things you would actually use the technology for weren’t ready either.
When Jobs launched the iPhone in 2007, most people were already using email.
YouTube was there.
Facebook was there.
Everyone was on the internet.
And then in 2008 you have the App Store, so suddenly you have all these other things that you can actually do with the phone.
None of that existed when General Magic was trying to launch its device.
So they were trying to do too much, too soon.
And I’m sure the frustrating thing for Porat and the rest of the General Magic team is that they were right.
Almost everything they had drawn on paper, all of these ideas about carrying around one little device that could communicate, send messages, get information and run different services, it all eventually happened.
They were just far too early.
That is why it took another 12 years before the iPhone launched.
And I already mentioned that Tony Fadell, who worked for General Magic, would later become one of the key people behind the iPhone.
Well, there’s another significant connection.
Andy Rubin, who also worked at General Magic, would go on to create Android.
So yes, General Magic failed.
But what a legacy and what a story.