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General Magic was a company co-founded by Bill Atkinson, Andy Hertzfeld and Marc Porat that developed a new kind of handheld communications device they called a "personal intelligent communicator", which was a PDA precursor that stressed communications.
The original project started in 1990 within Apple Computer, when Porat convinced Apple's CEO at the time John Sculley that the next generation of computing would require a partnership of computer, communications and consumer electronics companies to cooperate. Known as the Paradigm project, the project ran for some time within Apple, but management remained generally uninterested and the team struggled for resources. Eventually they approached Sculley with the idea of spinning off the group as a separate company, which occurred in May 1990.
The company started to generate some buzz during that year, and by 1992 some of the world's largest electronics corporations, including Sony, Motorola, Matsushita, Philips and AT&T Corporation were partners and investors in General Magic. Apple also decided to re-enter the market with a project that eventually developed into the Apple Newton, and they decided to sue General Magic. The lawsuit did not produce a definitive outcome, however there remained long running tensions betweens the two companies.
The company floated an IPO on the stock exchange in February 1995 and the stock doubled on the first day.
Magic Cap, Telescript and the Cloud 
The basic idea behind the General Magic system was to distribute the computing load of a typical user's tasks across many machines in the network. They felt that handhelds would always be lacking power in comparison to the desktops and servers they would communicate with, so that making a clone of a desktop machine in a handheld form would be doomed to fail. Instead, the devices would be based on a fairly minimal operating system known as Magic Cap, which was essentially a UI and the most basic services needed to run the machine. The UI was based on a "rooms" metaphor; e-mail and an address book could be found in the office, for instance, while games might be found in a living room.
User applications were generally written in a variant of the C programming language with object oriented extensions, calling the set of objects that made up the Magic Cap OS. These programs were installed in packages that were quickly loaded and unloaded as needed in order to conserve space. These applications, and interactions between them, could be scripted using the utility language, Magic Script.
Programs could also be written in a new programming language, Telescript, which made communications a first-class primitive of the language. Telescript was compiled into a cross-platform bytecode in much the same fashion as the Java programming language, but interestingly was able to migrate running processes between virtual machines. This radical idea defined a robust agent that could serialize its code, data, and state, deploy itself across one or more remote computers, and resume execution at the next instruction with all state intact. For instance, a user might start a Telescript application on their handheld, travel over the cell phone network and start a Telescript application on a large Telescript server. The two applications would then interact to provide a complete application. The agent might perform days- or weeks-long tasks after the client disconnected, and dispatch updates periodically to the client. The user-end software was tasked primarily with request and display.
The developers saw a time when Telescript application engines would be widely available across various communications systems, first the cell phone networks and desktop machines, and later the internet. Eventually Telescript would become ubiquitous, and interconnected Telescript engines would form a "Telescript Cloud" across which mobile applications could execute. Stationary, long-lived processes called "places" would run in the cloud permanently and provide services to agents which would "go" from one place to another to access services, collect information, and eventually dispatch results back to the user.
Sony, AT&T and Motorola all introduced Magic Cap devices in late 1994, based on the Motorola 68300 Dragon microprocessor. Unlike other PDAs being introduced at the same time, the Magic Cap system did not rely on handwriting recognition, which meant it was almost an afterthought in terms of media coverage when Apple introduced the Newton. From that point on every PDA discussion was about the quality of the recognition, and the Magic Cap systems were basically ignored.
The systems also suffered from being introduced with no real infrastructure behind them. Since the cell carriers were not yet running any Telescript services, the entire distributed system was reduced to running applications on the handheld. Further, the World Wide Web and Mosaic were gaining rapid acceptance, and met users' needs well enough to obviate demand for General Magic's solutions.
Partners soon ended production of Magic Cap devices.
Later developments 
Portico: Dr. Steve Markman was brought in to run the company in 1996 and hired Kevin Surace to head up a new telephony group. This new team of 60-70 people set out to create a voice recognition-based personal assistant service that would be as close to human interaction as possible. The first service delivered was Portico (was code named Serengeti in development), and the interface was called Mary. Mary could understand some 20 million English phrases and speak several thousand different phrases herself (in addition to the Text to Speech engine). Portico synchronized to popular devices such as the Palm Connected Organizer and Microsoft Outlook and handled voicemail, call forwarding, email, calendar etc., all through the user's own personal 800 number. The system was also scaled back and sold through many partners including Quest and Excite, as well as a free advertising supported service from General Magic called MagicTalk. At its peak, the system supported some 2.5 million users. General Magic was the first company to employ a large number of linguists to fine tune the human interaction and make it seem very real. "Mary" even had multiple responses for phrases spoken by the user so the user would often hear something slightly different from her. General Magic (inventors Kevin Surace, George White and others) applied for and were awarded several key patents in the voice recognition and artificial personality arena.
Icras: While Portico ran its voice portal business, the original handheld group was spun off in 1998 as Icras. The new company sold the Magic Cap OS as hardware named DataRover. The company focused on vertical market systems.
Microsoft: General Magic announced a major licensing deal with Microsoft in March 1998, including an investment by Microsoft. This gave Microsoft access to certain intellectual property, and gave General Magic the ability to work closer in integrating Portico with Microsoft products. It also brought much needed recognition to General Magic.
OnStar: The OnStar Virtual Advisor was developed at this time as well for General Motors. That service is still in wide use today (2011). The service is offered in many cars and trucks free for the first year of ownership. Like Portico before it, the service can handle email and certain call requests. It has a much more limited vocabulary, but still uses the original "Mary" as the voice interface.
With Onstar, Portico, MagicTalk, Excite, Microsoft and other partners, revenues began to rise and so did the stock. GMGC had traded below $1 in 1997 and rose to $18 by 2000.
The New Millennium: Most of the management that was involved in bringing Portico to market left by early 2000 to pursue other interests with Internet startups. A new team was brought in led by Kathleen Layton. The new team took the company in the direction of turning its voice services into enterprise software offerings. Unfortunately, the tech market began to crater, taking telecom and enterprise software with it. After 12 years in existence and at least 3 lives, the company announced it would cease operations on September 17th, 2002. The OnStar assets were turned over to EDS to run for General Motors. The patents were auctioned by the court, and mostly purchased by Paul Allen.