What was the price of the original iPhone and how did it compare to the popular phones of the day?
The 8GB version was $600, with no subsidy (*).
That's what led to Steve Ballmer laughing at the iPhone as too high priced for the US. And he was right. Within a short period of time, Apple was forced to reduce the price by a huge 1/3, down to $400.
As to how it compared, it was missing a lot of functionality. But it was easy for the neophyte to use. It was the first major phone to implement the change to finger friendly UIs, a change which had been widely predicted by insiders in 2006, to be coming in 2007.
(*) At least, none that helped the buyer. However, Apple had a deal with AT&T where Apple basically got each subscriber's monthly subsidy stipend in addition to the full $600 upfront price. This would've amount to a lot of money, but since the phone was already paid for, you could sell it without penalty. So, many people (~20+%) unlocked their phones to work on other networks and/or sold them that way. This meant Apple did NOT see the monthly payment from AT&T. So when Apple's first year's contract with AT&T was up, Apple gave in and went with the normal subsidy model where they got paid full price up front and the customer got a far lower upfront price.
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