I always thought this was a genius move. Remember, at the time, Apple had no product in the space. The market was highly fragmented, and cell phones were becomi

I always thought this was a genius move. Remember, at the time, Apple had no product in the space. The market was highly fragmented, and cell phones were becoming commodity devices. Here's Apple wading into a sea of competitors, with a product that was priced outside of the normal range and needing to differentiate itself. With the AT&T deal, Apple accomplished several things: 1. It put the marketing might of one of the largest corporations behind its brand-new, niche product. The deal created an incentive for this corporation to market the product on Apple's behalf. 2. It created a forced scarcity. Only /some/ people (those on AT&T) could get the iPhone, which immediately created a brand distinction necessary for a luxury product. On day 1, there were haves and have-nots. 3. It provided an out for Apple not ramping up production too fast (whether they could or not). If the iPhone failed, they wouldn't have product everywhere. If Apple couldn't make iPhones fast enough, they would only be affecting a subset of the market. 4. It limited Apple's engineering requirements. They only had to support AT&T's network on day 1, and not the network technologies of the other carriers. Limiting exclusivity to AT&T meant that they could focus on the product while delaying the technical challenges of supporting multiple cellular networks.