Have there been products in the past that were underwhelming at launch but later software upgrades to it to add features made it a big hit?
I think these devices, especially at $300, need to be attractive at launch to become hits. Adding features 6-12 months down the line doesn't seem to ever turn a lagging product around - launch is the time when potential consumers are paying the most attention.
The HP Touchpad did that. Not because of the features per se, but the price drop allowed everyone to grab one, which brought more features along with it. Unfortunately it didn't translate into more production.
The iPhone. It wasn't terrible to begin with (a fancy phone with a decent web browser), but it became a whole different product after the SDK was released.
Not the same: the iPhone was the first mobile phone with a good web browser. (A year or two after it went on sale, there was an article that made it to the front page of HN in which Google revealed that a full 99% of visits from smartphones to Google were coming from iPhones.) The iPhone was very compelling to large numbers of people as soon as it went on sale.
People don't seem to remember that the iPhone really was a pretty crappy phone on launch day, in a lot of ways. It crashed constantly, didn't do a lot of things that other phones already did, and had audio-quality problems. In the parlance of the times, it wasn't a smartphone, it was an expensive feature phone.
What turned the iPhone into a serious product, from my own point of view, was the regular stream of updates and bug fixes that Apple provided. I didn't like my iPhone very much at first, but it just kept getting better, through no effort or expense on my part. I wasn't accustomed to buying electronic devices that magically got better over time. They won at least one loyal customer with that approach, and influenced the way I do business today.
While that's all true, people still lined up a few days in advance to get one. Kind of difficult to make the point that the public was underwhelmed by it at release.
I think these devices, especially at $300, need to be attractive at launch to become hits. Adding features 6-12 months down the line doesn't seem to ever turn a lagging product around - launch is the time when potential consumers are paying the most attention.