By Chris Smith From BGR

The day Steve Jobs unveiled the original iPhone model (January 9th, 2007,) Google’s Android team, which had been secretly working on a smartphone for two years, took a “kick in the stomach,” The Atlantic revealed. While Google knew, as everyone else also knew at the time, that Apple was working on a smartphone, the company “just didn’t think it would be that good,” Ethan Beard, an early Android business development executive said. Watching the iPhone keynote on his way to a CES 2007 Android-related meeting in Las Vegas, Rubin reportedly stopped his car to see the entire performance Steve Jobs was putting on stage at the time. “Holy crap,” he told a colleague, “I guess we’re not going to ship that phone,” referring to the BlackBerry-like Android device his team was working on at the time.

“Sooner” was the codename of the first Android handset that never shipped because of the iPhone. The device was arguably “more revolutionary than what had just been revealed in the iPhone,” the publication writes, but it was “ugly,” featuring a traditional keyboard and a touch-less small display.

“As a consumer I was blown away. I wanted [an iPhone] immediately. But as a Google engineer I thought ‘We’re going to have to start over’” Chris DeSalvo said. “What we had suddenly looked so… nineties. It’s just one of those things that are obvious when you see it.”

After working for two years on Sooner, which was supposed to ship in late 2007, the Android team had to refocus on a different device, a phone with a touchscreen that could compete with the iPhone, codenamed Dream at the time, and whose launch was pushed back to fall 2008.

“I never got the feeling that we should scrap what we were doing – that the iPhone meant game over,” then Android’s project manager Erick Tseng said. “But a bar had been set, and whatever we decided to launch, we wanted to make sure that it cleared the bar.”

Interestingly, Google managed to reach its goal with Android, which at the time the iPhone launched was making sure Microsoft would not do to the smartphone business what it did to the PC business before, and keep its search-based services relevant in the growing mobile ecosystem. “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,” Google’s Eric Schmidt said during his testimony in the Oracle vs Google copyright trial last year. Since then, Android became the most successful smartphone platform, by market share, with Apple still making most of the profits from the mobile business.

PHOTO: Potential Google Android prototype featuring a full QWERTY keyboard and a touch-less display Image credit: Reuters

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