In 1972 Steve Jobs and his friend and Apple co–founder Steve Wozniak decided to start a business with blue boxes. These were electronic devices which allowed users to make free telephone calls illegally by generating the same tones used by a telephone operator’s dialing console.
The idea of selling such illegal gadgets belonged to Steve Jobs. He was inspired by the famous “phreaker” or phone freak/hacker John Draper also known as Cap’n Crunch. Draper, who was featured in a documentary about the history of hacking, got his nickname from a whistle received upon purchasing Cap’n Crunch cereal in the early 1960s. The whistle generated a perfect tone (2600 Hz) needed to enter an operator mode on AT&T phone system.
Blue boxes were producing tones used to switch to long distance calls. Once you got into operator mode, you could reroute your call with no restriction wherever you wanted and no one would be able to trace you. Understandably, these gadgets easily got popularity amongst criminal circles.
Jobs and Wozniak managed to design and build the best blue boxes in the world. However, the profit from this business wasn’t huge – they made about $6000 – and eventually stopped after they were almost caught by the police.
In mid 1990s blue boxes stopped working as the phone systems in most countries no longer used in-band signaling, employed by the devices, and became digital.