That chart shows cumulative sales only until early 2008, before the 3G was introduced. This does not show the most interesting aspects of iPhone growth. The subsidy model existed, but it did not apply to the iPhone. Here's a more revealing chart (from Jan 2012):
http://paidcontent.org/2012/01/25/419-chart-apple-iphone-sal...
Note how in '08, when the subsidized iPhone 3G was introduced ("New features, new price") it sold almost more in one quarter than the previous original had sold all year. Of course, it also had a number or new features such as an app store, but the one that really made a difference was the subsidy. Also, as mentioned below, it was sold internationally so that certainly helped, but it was the US smartphone market that first saw phenomenal growth.
As you say, the original iPhone did do well, but that was compared to the rest of the smartphone market, which in ~2007, was tiny by today's standards, because it was mostly limited to business users. The subsidized iPhone suddenly created a consumer smartphone market. Even as the iPhone was gaining market share, the other players were also selling more and more devices every year, which is why they were complacent. Until they weren't. The rest as they say is history.
> Note how in '08, when the subsidized iPhone 3G was introduced ("New features, new price") it sold almost more in one quarter than the previous original had sold all year. Of course, it also had a number or new features such as an app store, but the one that really made a difference was the subsidy.
But, er, that's not actually what happened. The original iPhone was released in about six countries in June 2007, usually at $600 or equivalent. In September 2007, the price dropped to $200 (in the US; there were regional variations). In June 2008, the 3G was released, at $200, in 22 countries.
It had 3G (the original's lack of 3G made it a hard sell in Europe, in the few countries where it was even available; many European telcos had skipped EDGE and gone straight to UMTS/HSDPA), and the app store, and people were more used to the idea. In 2007, normal consumers simply didn't know what a smartphone was, at all. It's far more likely that a combination of that was responsible for the growth than a price drop which actually happened nine months earlier.
Hmm, I guess I'm looking at the wrong time frame. Do you know what sales were like from launch until they subsidized it? I remember tracking its progress from announcement through launch and until a couple years ago, and as I recall it only really took of after the subsidies. Am on a phone, so can't find a cite to back that up at the moment though.
Note how in '08, when the subsidized iPhone 3G was introduced ("New features, new price") it sold almost more in one quarter than the previous original had sold all year. Of course, it also had a number or new features such as an app store, but the one that really made a difference was the subsidy. Also, as mentioned below, it was sold internationally so that certainly helped, but it was the US smartphone market that first saw phenomenal growth.
As you say, the original iPhone did do well, but that was compared to the rest of the smartphone market, which in ~2007, was tiny by today's standards, because it was mostly limited to business users. The subsidized iPhone suddenly created a consumer smartphone market. Even as the iPhone was gaining market share, the other players were also selling more and more devices every year, which is why they were complacent. Until they weren't. The rest as they say is history.