"The iPhone introduced a new model. A true great leap forward in the state of the art. Not a small screen that shows you things which you manipulate indirectly using buttons and trackballs occupying half the device’s surface area, but instead a touchscreen that occupies almost the entirety of the surface area, showing things you manipulate directly."
Nokia's N770 was close to this in 2005, and the N800 even closer by 2007. It didn't have phone hardware, but it's not a great stretch for anyone to see that phone hardware would be a useful addition at that point.