Yes, I'm an iPhone and Android developer.

Explain to me what specific FUNCTIONALITY the iPhone had over the Microsoft OS at that time. Actual detailed functionality, like the specific things I pointed out. Ouside of multi-touch.
(I still have PocketPCs, Windows Mobile, and Palm devices packed away somewhere alongside my Newtons)
So, this sounds like you don't have a clue what WinCE was actually like under neath the screenshots.
The original iOS runs the xnu kernel + a window manager running in OpenGL. Basically, the same as the lower layers of OSX 10.5. For whoever writing the apps, you had an entire UNIX kernel with preemptive multithreading, memory protection, power management, sandboxing support in-development, multiprocessor/multi-core support, and a fancy windowing toolkit which drew things smoothly with little effort because it handled offloading a lot of it to the GPU, including MPEG4/H264 support.
Windows CE 5.2 (the basis for the last Windows Mobile before Windows Phone 7.0, launched after iOS), still had a limit of 32 processes, 32MB per process, memory protection that was just enough to casually prevent processes from stomping on each other, no hope of sandboxing, no hope of multiprocessor/multicore support and a Windows 95-era graphics subsystem.
(memory gets hazy) If you're lucky, you might have had a device with Direct3D Mobile. I don't actually recall any devices which had such a thing. Anyhow, with that kind of ecosystem fragmentation, most of this stuff went unused. I think there might also not have been a consistent camera API either. And I think the sound/video APIs had, at best, MP3 audio and MPEG1 video.
And Palm had it even worse than that. In fact, prior to iPhone, it was customary to use a stripped down software platform for smartphones.
For the user, many of these people have already said:
1) iPhone brought multitouch.
2) A web browser that supported desktop web pages complete with up-to-date AJAX/Javascript support, up-to-date CSS support, etc.
Opera was good, but it didn't come close.
3) Integrated voicemail system. Everybody else just told you that there was voicemail, not actually have an interactive app for it.
4) Integrated multilanguage/Unicode GUI support. None of this having French/German/Spanish only on one phone firmware, then English/Spanish on another firmware, and then Chinese-only on a third firmware.
5) full screen, full resolution, 30fps video playback with CD-quality audio. (most other devices either couldn't do it at that resolution at 30fps or could barely do 15fps, and/or couldn't do it with the audio quality, nor H264 at all.)
6) A user-friendly and intuitive on-screen keyboard with multiple language support.
7) Automatic LCD brightness (kdarling might have a counter-example?)
8) A camera that took decent pictures for that time.
9) A UI that didn't stutter like mad during fancy animations. (It's 2013 and a Nexus 4 still can't do this right. What gives?)
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I'm not talking about bloatware on propriety carrier OS phone. It was a non-issue on any Microsoft OS phone. I could customize anything on most phones I had. And some of the carrier apps were actually really useful at the time, like streaming TV apps, something that that the first iPhone did not have and a lot of people missed.
Um, no. You are absolutely oblivious to the reality of the situation.
I was on one of the teams who was trying to hack the Motorola Windows Phones to unlock carrier-locked features such as GPS, and they were most certainly not as customizable as you claim. I don't care that you think V-cast or whatever you saw was "really useful", it already invalidated your claim that these phones let you "customize anything".