You seem to be doing some history revisionism, at least from the point of view of someone in France. At the time of iPhone release (that I imported in France) there were very few phones of what you could consider smartphones.
I actually had one of those, on windows mobile 6.5, complete with the stylus and it just sucked. You could get one of the early 3G contracts, but it wasn't really worth it unless you really needed that for business use. Because outside of receiving mails there was not real application that would benefit a lot from the connectivity (that only existed inside the big city, and only at certain spots since it was just the start of 3G rollout).
The iPhone made it so there were at least 3 use cases that were worthwhile getting that : full internet browsing with decent experience and speedy enough ; real-time map download for navigation and emails.
Of course the first iPhone was limited by its connectivity speed, but it didn't matter because at this point 3G was not even really there for the vas majority of peoples. Then the next year we got the 3G iPhone that actually made sense to buy with a 3G contract because it became viable in the big cities.
The other "smartphones" who had 3G before that were largely irrelevant because even if you had the connectivity, using them wasn't worth your time and that's just ignoring the fact that outise of city centers you were out of luck (I know, been there, done that...).
There is a reason before the iPhone, Blackberrys were so popular, that's because they were the only decent option for the only use case that made sense before iPhone : email/messaging.
I really don't like the recent developments at Apple, but pretending that they didn't completely changed the game at the time is bonkers...