No other brand could have had much reach beyond a tiny luxury niche at the price point required to build the iPhone in 2007. It was the iPod that paved the way in the early aughts, when it was quite literally the only way to liberate ones entire Napster hoard from the confines of the minitower. Had the market not been primed by that freak wave incident, those telco execs' predictions might have well become true.
The iPod was key but not for the reason you’re thinking: it wasn’t the device itself as LG and Nokia had devices in 2007 which were pricier (LG’s Prada even beat Apple to the touchscreen market) but rather that the iPod’s dominant status as the prestige music player meant that AT&T wanted the “iPod phone” badly enough that they were willing to give up the control which carrier greed had used to strangle the American smartphone market until that point.
The high price of cellular data plans is the most obvious factor - people used to fear letting an app use more data than they expected and getting hundreds of dollars in overage charges – but the other thing was the lack of AT&T control of the device. The carriers used to put ugly skins, disable features which competed with their paid services, lower call quality to serve more devices per cell tower, or use huge percentages of your device storage for undeletable bundled promos, but worst of all was how apps were sold. You didn’t have standard terms but “call us” agreements negotiated with each carrier, with high entry fees and percentages based on your company’s total revenue. There were exceptions like the Treo and (IIRC) Windows CE devices which allowed arbitrary app installs but a lot of devices were locked down by the carrier, and the combination of market fragmentation, limited access, and expensive data meant that not many people were even attempting to write apps. Even if money was no object there just wasn’t enough of a supply.
Right, there was a lot of bending over carrier side riding on the waning but still strong "white earbud cables" ad image. Carriers were still dreaming of being able to recreate the glory days of paid SMS I guess. The project that got us from zero cameras in phones to zero phones without cameras in what felt like weeks, MMS, was still pretending to not be quite dead yet.
An interesting perspective. From that angle it looks very much like the "not a smartphone because no apps" wasn't Apple not being ready yet, but Apple deliberately pretending to get a foot in the door.
