Comment by kube-system

The iPhone was seen as a niche device when it was introduced. It was both "too expensive" to be a mass market consumer device and lacked features that the enterprise demanded at the time. At the time, consumer phones were much cheaper, and smartphones were PDAs that made calls -- they were electronic Rolodexes. "Kids don't want to play with a rolodex, they want MP3 players!"

What nobody expected is the power of: people just loving the device. Enterprise IT departments were approached by C-suite folks demanding to use the device. Consumers decided they did want to fork out big bucks for one, and carriers found a way to finance them.