That's not how it happened. It did sell respectably well the first year it was released, but that was only as far as smartphone sales went back then, which was a very small market. It was still had only a small share of the smartphone industry, primarily because the pricing meant very few people could afford it. I had the original iPhone and I was the only person in my entire direct and extended social circle that had one, and that too only because my employer bought it for me. I remember looks of envy from strangers wherever I took it out. The sales numbers from that time bear this out.
But then a year later AT&T started subsidizing the iPhone 3G in exchange for a two year contract, and that's when sales really took off. You can clearly see the uptick in July 2008 when that happened:
https://en.wikipedia.org/wiki/Mobile_operating_system#/media...
That is what changed the mobile phone industry. It created a whole new market: the consumer smartphone market. Previously it was only really affordable for two markets: enterprise buyers and rich people. With this new model, everyone could afford a smartphone. Now I don't have any proof of this, but my hunch is Jobs convinced AT&T to go with this business model. If true, his true genius when it came to the iPhone was not really in making a really nice device, but in creating a whole new market for it.
The iPhone sold more in 2008 Q4 than in the previous 5 quarters combined, which I suspect is when the AT&T subsidization started.
Also it's worth noting the iPhone didn't initially have an app store or support 3rd party apps, which is what Ballmer was referring to. Had that held, history likely would have proven him right.
There were subsidized smartphones well before The iPhone did it. I had a T-Mobile Dash that ran Windows Phone 5 in 2006 and it only cost $150 or so with 2 year contract. Compared to the iPhone it was a joke--clunky interface stuck in the early 2000's, web browser that was barely a step up from a dumb phone, etc. The iPhone was just a better phone in all aspects.
Agreed. It was the data contract that changed everything. No-one wanted an always connected phone when you paid by the byte.
I remember being envious of the iPhone for just that reason and as soon as other operators offered competing data deals I stumped up the cash for a smartphone.
The original price included a mandatory 2 year contract didn't it? And Apple got payments from AT&T, subsidizing the phone even at the high initial price.
Initially there was no app store or third party apps. I believe that is what transformed the mobile phone industry, and we have to frame Ballmer's criticisms in the original context. The iPhone as originally released (no extension via native apps, no price subsidization, trailing in connection speed and camera) would have failed.
