Around 1996-97 Apple sold a digital camera, the QuickCam (and then, IIRC, the QuickCam 500). Steve killed the line when he came back, and (as someone who had access to one at work) all I can say is "good riddance".
The QuickCam was, IIRC, an 0.5 megapixel camera. It had enough on-board non-expandable memory to store 16 full-res or 32 low-res pictures, and an AppleTalk port for squirting them across to a Mac. It was a fixed-focus device with secondary viewfinder glass, no on-board LCD display, and it weighed about 0.5Kg (one of your old-school pounds). It was mostly marketed at estate agents and other professions who needed to snap shots and upload them to a computer frequently; as a consumer device it was a bit crap -- twice the cost of a cheap photo-film SLR and vastly inferior quality.
What made digital cameras practical was cheap expandability (remember when a 16Mb CF card was expensive and bleeding edge?) and digital viewfinder backs. Which didn't really arrive at a consumer-friendly price point until 1999-2000 (I remember paying £700 for a 1.4 megapixel camera with a digital viewfinder circa 1999-ish).
Which in turn tells us why iPhoto didn't come along until the turn of the millennium ...