Yeah, they'd messed with a clunky tablet for years. Then they finally developed a glass display that scrolled with touch and thought, "This would be better in a phone." I don't know if that really qualifies the iPhone as a "spinoff" of the Folio, or the Folio as even a predecessor to the iPad.
Folio was going to ship, but Jobs canceled it because it wasn’t good enough yet but let the team adapt it to a phone.
And I worked on the Pen Mac about fifteen years prior, so with that and Newton, Apple was working on the concept forever.