In the aftermath of the iPod's success, pundits began debating whether apple would get into the competitive smart phone market. Speculation continued until January 2007, when the company announced the iPhone. the phone's release on June 29, 2007 prompted enormous lines outside of Apple stores as well asadoring praise from reviewers. (It was named TIME's "Invention of the Year.") The phone-music player-pocket computer sold some 1.4 million units by Sept. 30 of that year. But some early adopters felt like suckers after shelling out $599 for the 8GB iPhone and $499 for the 4GB version, only to learn just two months after the release that the company was slashing the price of the phones by $200.
A year later, the iPhone 3G was released at $199. That seemed to be a value proposition which made sense to everyone concerned: Every model since, including this year's iPhone 5, has started at the same price — as long as you sign a new two-year contract with a mobile phone service provider.