General Magic built the smartphone OS in 1994 — nobody bought it

General Magic was founded in May 1990 by three ex-Apple engineers — Bill Atkinson, Andy Hertzfeld and Marc Porat — who had just built the most influential personal computer in history and wanted to build the next one: a handheld communicator that would replace the PC. The company was spun out of Apple's internal Paradigm project and quickly attracted Sony, Motorola, AT&T, Matsushita and Philips as founding partners, each investing up to $6 million. By 1994, the alliance had grown to 16 companies including NTT, Toshiba, France Telecom and Northern Telecom.

The product was Magic Cap, an operating system built around a rooms metaphor — email in an office, games in a living room — controlled by a touchscreen with a software modem and a scripting language called Telescript that let software agents roam networks to fetch information. The first devices shipped in summer 1994: the Sony Magic Link at $800 (roughly $1,740 in 2025) and the Motorola Envoy. Both ran on AT&T's dedicated PersonaLink network, a closed system that did not connect to the emerging internet.

The devices were too expensive, the wireless networks were too slow and AT&T shut down PersonaLink in 1996. Magic Cap had no handwriting recognition, which put it at a marketing disadvantage against the Apple Newton. Sales were dismal. The company raised $96 million in a February 1995 IPO and $200 million total, but losses mounted and the stock collapsed. General Magic announced it would cease operations on 18 September 2002, and was liquidated in 2004. Most of its patents were bought by Paul Allen.