What made the iPhone special
As Techradar's Dean Evans explained in late 2007, Apple's greatest hits "have all been powered by superior interfaces: the Mac's desktop metaphor, the iPod's genius click wheel, and now the iPhone's feely-touch number." Multitouch wasn't new, but "it's finally been applied to the right sort of gear: complicated convergence devices aimed at consumers."
"Apple has shown it has a real solution here - a solution that sells - and now it is applying it to its other gear," Evans wrote. The iPhone's interface was coming to "the iPod touch, and if you believe the slosh of internet rumours, a possible MacTablet." As it turned out, the iPhone was a spin-off of the iPad project rather than vice-versa, but we did indeed get an Apple tablet - and Evans was right when he said that rival phone firms were often "aping the eye candy rather than rethinking their designs... who can blame them, when they have so much money tied up in the status quo?"
It took a while for the iPhone's impact to be felt in the industry. Steve Ballmer openly scoffed at it - "there's no chance that the iPhone is going to get any significant market share. No chance" - while Shacknews reported that RIM thought the whole thing was an elaborate stunt. The iPhone "couldn't do what [Apple was] demonstrating without an insanely power hungry processor, it must have terrible battery life." Both Microsoft and RIM have been playing catch-up ever since.
It's easy to mock dunderheaded rivals, but even die-hard Mac fans weren't entirely convinced. Discussing the launch on MacRumors, some commenters said that it was "a waste of a keynote", "too expensive for most people" and that it had a "tacky" exterior.
What the iPhone did
The iPhone changed Apple's fortunes: the week before it announced the iPhone, its shares were trading at just under $85. In July 2012, they cracked $600, making Apple the most valuable company of all time. In 2007 it had zero market share; in December 2012, the iPhone accounted for 53.3% of all US smartphone purchases. The iPhone is responsible for roughly half of all Apple's sales, two-thirds of Apple's profits, and 97% of all internet linkbait headlines.
If that were all the iPhone did, it would be amazing. But there's more. The reversal of the no-native-apps policy and the creation of the App Store has transformed the way we buy software, a transformation that's even visible in Windows 8. It's replaced all kinds of stand-alone devices, from handheld consoles to sat-navs and cameras. The UI, ahem, inspired an awful lot of mobile phone UIs, and encouraged Google to make Android more iOS-y and less BlackBerry-y. It loosened network operators' iron grip on phone design and features, came up with a better way of doing voicemail, and forced the operators to offer better data plans. It brought proper web browsing to mobile devices and casual gaming to millions. It paved the way for the iPad and today's Windows 8 and Android tablets, ushering in what Steve Jobs would later call the post-PC era.
It's still pretty crap at making calls, mind you. But maybe we're just holding it wrong.