Development of an Apple smartphone began in 2004, when Apple started to gather a team of 1,000 employees led by hardware engineer Tony Fadell, software engineer Scott Forstall, and design officer Jony Ive,^[6] to work on the highly confidential "Project Purple".^[7][8]

Then-Apple CEO Steve Jobs steered the original focus away from a tablet (which was later revisited in the form of the iPad) towards a phone.^[9] Apple created the device during a secretive collaboration with Cingular Wireless (later renamed AT&T Mobility) at an estimated development cost of US$150 million over thirty months.^[10] According to Jobs in 1998, the "i" word in "iMac" (and thereafter "iPod", "iPhone" and "iPad") stands for internet, individual, instruct, inform, and inspire.^[11][12]

Apple rejected the "design by committee" approach that had yielded the Motorola ROKR E1, a largely unsuccessful "iTunes phone" made in collaboration with Motorola. Among other deficiencies, the ROKR E1's firmware limited storage to only 100 iTunes songs to avoid competing with Apple's iPod nano.^[13][14] Cingular gave Apple the liberty to develop the iPhone's hardware and software in-house, a rare practice at the time,^[15][16] and paid Apple a fraction of its monthly service revenue (until the iPhone 3G),^[17] in exchange for four years of exclusive U.S. sales, until 2011.^[18]

Jobs unveiled the first-generation iPhone to the public on January 9, 2007, at the Macworld 2007 convention at the Moscone Center in San Francisco.^[19] The iPhone incorporated a 3.5-inch multi-touch display with few hardware buttons, and ran the iPhone OS operating system with a touch-friendly interface, then marketed as a version of Mac OS X.^[20] It launched on June 29, 2007, at a starting price of US$499 in the United States, and required a two-year contract with AT&T.^[21]

On July 11, 2008, at Apple's Worldwide Developers Conference (WWDC) 2008, Apple announced the iPhone 3G, and expanded its launch-day availability to twenty-two countries, and it was eventually released in 70 countries and territories.^[22][23] The iPhone 3G introduced faster 3G connectivity, and a lower starting price of US$199 (with a two-year AT&T contract).^[24] Its successor, the iPhone 3GS, was announced on June 8, 2009, at WWDC 2009, and introduced video recording functionality.^[25]

The iPhone 4 was announced on June 7, 2010, at WWDC 2010, and introduced a redesigned body incorporating a stainless steel frame and a rear glass panel.^[26] At release, the iPhone 4 was marketed as the "world's thinnest smartphone";^[26] it uses the Apple A4 processor, being the first iPhone to use an Apple custom-designed chip. It introduced the Retina display, having four-times the display resolution of preceding iPhones, and was the highest-resolution smartphone screen at release;^[26] a front-facing camera was also introduced, enabling video calling functionality via FaceTime.

Users of the iPhone 4 reported dropped/disconnected telephone calls when holding their phones in a certain way, and this issue was nicknamed "antennagate".^[27] In January 2011, as Apple's exclusivity agreement with AT&T was expiring, Verizon announced that they would be carrying the iPhone 4, with a model compatible with Verizon's CDMA network releasing on February 10.^[28][29]