Invention of the telephone
The carbon microphone was independently developed around 1878 by David Edward Hughes in England and Emile Berliner and Thomas Edison in the US. Although Edison was awarded the first patent in mid-1877, Hughes had demonstrated his working device in front of many witnesses some years earlier, and most historians credit him with its invention.
Microphone
Early microphones did not produce intelligible speech, until Alexander Graham Bell made improvements including a variable-resistance microphone/transmitter. Bell's liquid transmitter consisted of a metal cup filled with water with a small amount of sulfuric acid added. A sound wave caused the diaphragm to move, forcing a needle to move up and down in the water. The electrical resistance between the wire and the cup was then inversely proportional to the size of the water meniscus around the submerged needle. Elisha Gray filed a caveat for a version using a brass rod instead of the needle. Other minor variations and improvements were made to the liquid microphone by Majoranna, Chambers, Vanni, Sykes, and Elisha Gray, and one version was patented by Reginald Fessenden in 1903. These were the first working microphones, but they were not practical for commercial application. The famous first phone conversation between Bell and Watson took place using a liquid microphone.