When the iPhone first came out there were no native apps. Only web apps. There is no way people would be making this much money if Apple hadn't opened up the platform.
If I remember this was also a major criticism: Some other phones at the time could install third party software, the iPhone could not.
However, despite the ability of installing third party apps existing in many phones, that never really took off before the iPhone SDK came out.
(Also, the iPhone did have a relatively slow start. It sold well and along with what Apple was publicly stating as its goal, but it took a generation before the phone really did take off like a rocket.)
> However, despite the ability of installing third party apps existing in many phones, that never really took off before the iPhone SDK came out.
To be fair, though, the iPhone was also being compared against the PDA market of the time, where 3rd party apps had existed for a decade or more. In that regard, the iPhone was a partial step backwards (at the time). It gave all the connectivity a PDA user could want, but none of the apps that they were accustomed to. The PDA use-case was also why people thought it couldn't work without a stylus. For 15 years that's what PDAs had and it worked pretty well. The change in UI was significant for people making comparisons to that market, and not just the Blackberry market (which, at least all the ones I ever saw, relied more on the built-in keyboard than a stylus, did they ever have a model that used a stylus?).
He'd been dead wrong before as well: just a few years before the iphone, when people wanted to see an ipod with video capability, he said nobody would ever want to watch video on a mobile device.
It really bugs me that apple makes these "nobody would ever want" proclamations and then reverses itself without saying, "we goofed". The next one coming is 5+ inch screens for the iphone. They'll make no mention of the fact that they criticized large screen phones before ("look, my thumb goes from corner to corner!"). Oh well.
Apple doesn't like to tell people what it's doing. So if they say "We're not doing X", it might mean they're not doing it. Or, it might mean that they are doing it, and don't want anybody to know yet.
With the iPod Video, they ixnayed it in public up to a few weeks before they released it.
In the case of the App Store, it seems pretty obvious that Apple intended to let developers write apps for it, but the APIs weren't stable enough to have 3rd party developer depend on them. So they stalled for a year, depending on superior hardware to keep momentum going until the OS settled down some.
If the original iPhone had supported apps, it probably would have run them a bit better than most most other phones of the time, but it still would have run them badly.
[IIRC, there also was the issue that time to market meant there was no SDK at the time; it wasn't even clear how apps would be kept separate from the OS. Even if there were a clear idea about it, I somewhat doubt Steve would have allowed apps on version 1. The risk of apps interfering with the user experience on that hardware was just too great]
Whatever the reason(s), there was no support for apps at release. So, salesman Steve sold the idea that users wouldn't want apps, just like he sold the idea that users wouldn't want to look video on their iPod. And both were, when he said it, not untrue for the average consumer (that video would have been a low-contrast postage stamp that you would have to transfer to your iPod at home. Sure, some people would do that, but it wasn't ready for the masses yet). Nowadays, he would probably say nobody wants Google Glass, too.
It doesn't mean Apple or Jobs believed any of it, just that they'd say anything to pretend competitors were clueless. It seems very un-Apple to say "yes, X feature is a good idea, our competitors have it but we weren't able to deliver it for this product cycle".