Both, I think. The first iPhone was more of a prototype. No, apps and no 3G. It had a great browser but you could barely use it anywhere outside your home/office.

You had Symbian, Palm, Windows CE devices which had all of that and keyboards. I won't pretend it was 100% obvious to me who was going to win at the time (and I don't think I was unique in that).

The first iPhone was the "early-adopter" model. Later phones learned from its flaws and stabilized the pricing schemes for the general consumer.