Did they want to get into smartphones? I worked for Nokia somewhere in 2004-2006, designing music software for their latest prototypes. I don't remember anyone I spoke to at Nokia seeing the iPhone coming. There were other things that did bits of the iPhone, but nothing as slick and finished. Nokia were bad at software, honestly. They were outsourcing all their "1st party" apps to random dev shops who didn't get enough support and technical docs from the mothership to really make their apps work well. And every dev outfit had their own design ideas and design language. Apple vertically-integrated everything and shipped a really polished-looking product and made Nokia look pretty dumb, IMO.
> Apple vertically-integrated everything and shipped a really polished-looking product and made Nokia look pretty dumb, IMO.
The first iPhone was the opposite of vertical integration. BOM was the same HW parts Nokia, Ericsson and the rest had access to. Samsung ARM SoC, Qualcomm modem, SK NAND, Sharp LCD, basic stuff. Apple had the OS, UX, SW and stuff like full feature HTML browser down to the T in ways that made Nokia and the rest feel like dinosaurs.
Yes and no, I mean many of the parts were off the shelf and the vertical integration did slowly happen over time, but on the other hand iPhones never used off-the-shelf processor silicon. While they were Arm-designed CPU cores and PowerVR GPU cores at that stage (Apple would switch to designing their custom designed Arm-compatible cores with the A6 in 2012 and their own GPU design with the A11 Bionic in 2017), the SoC of the first few iPhones and iPod Touches were custom designed for them by Samsung.
Nokia did seem to rely more on off-the-shelf SoCs so having a custom design I think did contribute in some part to the iPhone's success. It's true that the software was a massive part but Apple were able to make different trade-offs with power consumption, CPU power and GPU power that enabled that software to work that might not have been as practical with off-the-shelf SoCs at the time.
