The iPhone is dominant despite not being a good "phone".
So June 2007 was the historic launch of the Apple iPhone. A phone that carried with it a wave a euphoria and desire that possible no phone in history has managed to create.
Apple have always, in recent years, carried a image of being the Ferrari or the Gordon Ramsey of their respective industry. Overpriced but dripping in quality, style and "buy me" sensations.
I own an iPhone and love it but if was an insider at Blackberry/RIM, Nokia, Motorola or any other eminently popular handset company I would have been absolutely sweating bullets at standing infront of an executive board. How could I explain how between the original iPhone and subsequent 3G iteration that we'd never been able to come close to the iPhone in terms of popularity, usability, desirability or application support.
If this wasn't reason enough to worry I'd have to answer as to why the iPhone was still outselling our own phones despite being a mediocre phone.
Now don't get me wrong again I love my iPhone but as a "phone" it fails miserably. Until 3.0 you couldn't use MMS without hacks, and from launch you were unable to copy contacts from the sim card, forward sms, forward contact info, take decent pictures, capture video, view websites that contain flash, copy & past or even edit or read popular file formats.
Some of the above limitations have only just been addressed at the time of the iPhones's THIRD major hardware iteration and SECOND major firmare release. Compare iPhones list of day one limitations in similarity to the Sony PS3's limitations on day one. Again I love my PS3 but it have taken a couple of years for Sony to improve the base offering through various firmware upgrades and is now close to firmware 3.0 also. Without digressing to PS3 too much despite Sony's best efforts, sales show PS3 to be third in a three horse race. By comparison Apple's iPhone despite being in a similar situation have risen from strength to strength in an even more competitive market.
The reasons are quite clear as to it's success, it's not the phone. It's the fact that it's the best iteration of the iPod to date; it has a very slick and intuitive interface, the APP store provided a wealth of offerings for casual and hardcore gamers, business people, travellers and much more. The revenue to be made from the APP store is attractive, the price point for consumers is equally attractive and no other phone has managed to come close to this despite their best efforts. The new Blackberry equivalent app world wasn't at the time of release available for their new handset "Storm" which was their answer to "iPhone".
So again to reiterate which one of Apple's competitors could look each other in the eye and claim to be happy with progress to date. Progress in a market in which Apple made a half-baked phone wrapped around an iPod released it with a tonne of flaws and like a cocky kid smiled and sais "do better" and no one has to date.
Apple truly pulled the rug out from the competitions feet and they are yet to find their way upright. Whilst they'll always be the luxury alternative and outsider in the domestic PC market, in the phone and portable media market they've rounded up the competition and let them all battle for 2nd place whilst Apple laugh and gloat from their majest throne of power.