You seem to have a different remembered version of history. They very first iPhone had Wifi, and could do loads of things other devices couldn't, like play video, browse the web using a real full browser, and IMO way better typing than any physical keyboard.

You're acting like iPhone's lack of an App store on day one put it at a disadvantage, but there weren't exactly a lot of other options. The app store was released only a year later, and you could do loads from the browser before that.