My recollection of history is a bit different. What I remember is that people were practically begging Apple to build a phone. You might say there was a half-hearted attempt with the ROKR, in partnership with Motorola, but it didn't really address what people were seeking. The calls for a phone done the "Apple way" continued. Now, I do believe Apple ended up greatly exceeding the expectations of the customers with the iPhone and, as you suggest, perhaps even created a new market segment because of that, but was hardly a surprise to see them announce something phone-like.