That was just a cover for the fact that the app store infrastructure wasn't ready and they weren't even certain the iPhone was going to take off. They only had

That was just a cover for the fact that the app store infrastructure wasn't ready and they weren't even certain the iPhone was going to take off. They only had so much engineering talent and money, and it went into the phone itself. They had been working on the beginnings of app franeworks and the store before launch. The huge response to the iphone caused them to both lower the price (to widen the potential market once it would be wildly profitable) and increase the speed/budget of the app infrastructure engineering.