The capacitive touch screen was necessary but alone wouldn’t have meant much without the revolutionizing software stack. You may think “revolutionizing” seems hyperbolic here but a lot of people forget or don't realize how truly far behind the competition was.

Software keyboards were considered a complete no-go, even by folks within Apple (Ken Kocienda's “Creative Selection” is a great read on the development of the keyboard). Dragging / flinging / pinch to zoom didn’t exist anywhere else or if it did, only in prototype or proof-of-concept form. The capacitive screen unlocked these features but no one else knew how to build them.

I was working at Sony Ericsson when the first iPhone was released. I distinctly remember holding it in my hand and using mobile Safari for the first time and thinking... “we’re fucked”. The company simply didn’t have the engineering chops needed to catch up. Later on Android would provide a possible solution but we managed to screw things up even with a full OS handed to us.