The US seems to have had a fascination with loyalty oaths for many years; Joseph Heller captured the many ridiculous aspects of them in Catch-22 (apologies for the length, but it's pure gold):

Almost overnight the Glorious Loyalty Oath Crusade was in full flower, and Captain Black was enraptured to discover himself spearheading it. He had really hit on something. All the enlisted men and officers on combat duty had to sign a loyalty oath to get their map cases from the intelligence tent, a second loyalty oath to receive their flak suits and parachutes from the parachute tent, a third loyalty oath for Lieutenant Balkington, the motor vehicle officer, to be allowed to ride from the squadron to the airfield in one of the trucks. Every time they turned around there was another loyalty oath to be signed. They signed a loyalty oath to get their pay from the finance officer, to obtain their PX supplies, to have their hair cut by the Italian barbers. To Captain Black, every officer who supported his Glorious Loyalty Oath Crusade was a competitor, and he planned and plotted twenty-four hours a day to keep one step ahead. He would stand second to none in his devotion to country. When other officers had followed his urging and introduced loyalty oaths of their own, he went them one better by making every son of a bitch who came to his intelligence tent sign two loyalty oaths, then three, then four; then he introduced the pledge of allegiance, and after that "The Star-Spangled Banner," one chorus, two choruses, three choruses, four choruses. Each time Captain Black forged ahead of his competitors, he swung upon them scornfully for their failure to follow his example. Each time they followed his example, he retreated with concern and racked his brain for some new stratagem that would enable him to turn upon them scornfully again.

Without realizing how it had come about, the combat men in the squadron discovered themselves dominated by the administrators appointed to serve them. They were bullied, insulted, harassed and shoved about all day long by one after the other. When they voiced objection, Captain Black replied that people who were loyal would not mind signing all the loyalty oaths they had to. To anyone who questioned the effectiveness of the loyalty oaths, he replied that people who really did owe allegiance to their country would be proud to pledge it as often as he forced them to. And to anyone who questioned the morality, he replied that "The Star-Spangled Banner" was the greatest piece of music ever composed. The more loyalty oaths a person signed, the more loyal he was; to Captain Black it was as simple as that, and he had Corporal Kolodny sign hundreds with his name each day so that he could always prove he was more loyal than anyone else.

"The important thing is to keep them pledging," he explained to his cohorts. "It doesn't matter whether they mean it or not. That's why they make little kids pledge allegiance even before they know what 'pledge' and 'allegiance' means."

It looks to me as though Apple played a twin-track strategy here.

The core strategy was to launch a bleeding-edge, early adopter device to the Apple faithful, take their knocks from the critics, learn their lessons about what they'd failed to understand about this new market. They would then be in a position to make some software upgrades in time to make the device more attractive in time for the Christmas rush, and then release a second-generation device with wider appeal, and a better price-point some time next year. Standard Apple strategy.

The secret 'reality-distortion field' vision was that the critics would love the iPhone, and sales would start very strong and stay that way, meaning that demand was potentially insatiable. Amortise your costs over sales say 5x what your core strategy estimated, and suddenly there's a ridiculous amount of margin to play with.

Sacrifice all that excess margin, and you've got a insanely great product for the price. You're wiping the floor with all the smartphones, and many of the high-end phones, and you've got the buzz that means that their new, competing products are all still-born.

You've got AT&T getting customer conversions out the wazoo, you're only 20 months away from the end of your deal, and all the telecoms companies are getting edgy about Google's bid for wireless spectrum. Everyone will want to cut you a deal (siooma, AT&T).

You've got a potentially massive revenue stream from your cut of all those accounts. You've got iTunes music and ringtones revenues ramping up (siooma NBC).

Steve Jobs is probably now looking five years down the line, where 'smartphone' means '60% Apple, 39% other brands, 1% ZunePhone :-), and smartphones all that anyone buys in the west...

DISCLAIMER: Please note that I'm not going all fanboi here, and saying any of this is bound to happen because Jobs can do no wrong, but if you take something like that as his vision, you can understand why he thought the risk of upsetting a few of his old 'Apple Computer' customers was worthwhile.

I'm just glad I'd not bought one!