I'm still scratching my head today how they managed to turn that into a success. I thought for sure with all of those issues it was going to be a flop. I still don't understand why it wasn't.
I had two smart devices at the time. A Windows Mobile iPaq or whatever it called and a BlackBerry. The BlackBerry was the ultimate two-way pager, but the browser experience was MISERABLE. Given that Citibank and JP Morgan owned like 150,000 of the things, you'd think that the browser would render CNBC. Not so!
The Windows Mobile Device was sort of better, but the browser was some sort of scaled IE 5 derivative. It still had a stylus, and a Windows 95 style UI, complete with checkboxes and other awkward UI elements. The only third party app of any use was Google Maps.
The iPhone broke free of the carrier nickle/dime racket, had a good web browser and offered a user experience 10x better than anything else. EDGE was a bummer, but a slow network that would work was better than 3G without anything to do. The touch interface, pinch to zoom, etc was a game changer.
Still, there were just so many things I had gotten used to (and not just Google Maps and other nav programs like TomTom). I could still buy those phones without carrier junk if I wanted to pay full price. The main issue was that there weren't as many decent options for prepaid or MVNO deals and my $45/mo Sprint plan came with unlimited 3G so it was as good as any $80+ plan from ATT that I'd have had to get with an iPhone.
Even stuff we take for granted now like listening to streaming radio was missing. I was (and still am) a huge fan of several Shoutcast stations that I used via headphones or plugged into the car when everyone else was paying for XM. I had a tuner card in my home PC with my cable connection hooked up and a server app running so I could skim through my home media library or any live cable station and have it piped to my old Windows Mobile phone.
Hell, you could even make video calls at whatever low resolution the front camera had at the time and there were the precursors to services like Periscope like Qik. The iPhone didn't even let you change the wallpaper or ringtone for eff's sake.
That's not to rag on the stuff they did right. The iPhone wasn't targeted at me. It was targeted at people who used their phones for texting, calls, and maybe email or the early mobile web. Compared to those RAZRs and lower-end Blackberrys, the iPhone didn't really take anything away. It added a much better interface that was smoother and more responsive than anything on those featurephones or my beloved PPC. And yeah, the web browser was the killer feature. Passable web browsing was fine on my WinMo but the iPhone's browser was so much nicer to use.
In the end I just couldn't give up my unlimited 3G, GPS, multitasking, third party apps, or customization options in order to double my bill and pick up an iPhone. Still, I am thankful to this day that they hit everyone else where they were lacking (interface and responsiveness) so those later competitors were forced to address that even as Apple slowly added in the features they were missing from other smart phones.
Nowadays it's almost moot as the insane growth in mobile development has made even $150 contract-free phones capable of all those fancy features.
Than they used that leverage on at&t , which was the weaker carrier in that time - in return only distributing via at&t - at&t agreed to give Apple full control - a thing unheard of in the industry. They repeated similar tactic in every geography.
That full control was the thing that enabled them to offer the best user/developer experience like matwood says and ride moore's law curve much better than the rest .
I still don't understand why it wasn't.