The history of iPhone began with a request from Apple Inc. CEO Steve Jobs to the company's engineers, asking them to investigate the use of touchscreen devices and tablet computers (which later came to fruition with the iPad). Many have noted the device's similarities to Apple's previous touch-screen portable device, the Newton MessagePad. Like the Newton, the iPhone is nearly all screen. Its form factor is credited to Apple's Chief Design Officer, Jonathan Ive.

In April 2003, at the "All Things Digital" executive conference, Jobs expressed his belief that tablet PCs and traditional PDAswere not good choices as high-demand markets for Apple to enter, despite receiving many requests for Apple to create another PDA. He believed that cell phones were going to become important devices for portable information access, and that mobile phones needed to have excellent synchronization software. At that time, instead of focusing on a follow-up to their Newton PDA, Jobs had Apple focus on the iPod. Jobs also had Apple develop the iTunes software, which can be used to synchronize content with iPod devices. iTunes was released in January 2001. On September 7, 2005, Apple and Motorolareleased the ROKR E1, the first mobile phone to use iTunes. Jobs was unhappy with the ROKR, feeling that having to compromise with a non-Apple designer (Motorola) prevented Apple from designing the phone they wanted to make. In September 2006, Apple discontinued support for the ROKR, and released a version of iTunes that included references to an as-yet unknown mobile phone that could display pictures and video.
On January 9, 2007, Steve Jobs announced iPhone at the Macworld convention, receiving substantial media attention.Jobs announced that the first iPhone would be released later that year. On June 29, 2007, the first iPhone was released.
On June 11, 2007, Apple announced at the Apple's Worldwide Developers Conference that the iPhone would support third-party applications using the Safari engine. Third parties would be able to create Web 2.0 applications, which users could access via the internet. Such applications appeared even before the release of the iPhone; the first of these, called OneTrip, was a program meant to keep track of users' shopping lists. On June 29, 2007, Apple released version 7.3 of iTunes to coincide with the release of iPhone. This release contains support for iPhone service activation and syncing.
According to The Wall Street Journal, the iPhone is manufactured in the Shenzhen factory of the Taiwanese company Hon Hai (also known as Foxconn). Also, according to recent news, Apple will shortly begin outsourcing the manufacturing of iPhones.

Connect To AT&T
When Apple announced the iPhone on January 9, 2007, it was sold only with AT&T (formerly Cingular) contracts in the United States. After 18 months of negotiations, Steve Jobs reached an agreement with the wireless division of AT&T to be the iPhone's exclusive carrier. Consumers were unable to use any other carrier without unlocking their device.
Apple retained control of the design, manufacturing and marketing of the iPhone. Since some customers were jailbreaking their iPhones to leave their network, AT&T began charging them a $175 early-termination fee for leaving before the end of their contract.

Court Cases

Questions arose about the legality of Apple's arrangement after the iPhone was released. Two class-action lawsuits were filed against the company in October 2007: one in Federal court and the other in state court. According to the suits, Apple's exclusive agreement with AT&T violated antitrust law.
The state-court suit, filed by the law office of Damian R. Fernandez on behalf of California resident Timothy P. Smith, sought an injunction barring Apple from selling iPhones with a software lock and $200 million in damages. In Smith v. Apple Inc., the plaintiffs said that Apple failed to disclose to purchasers its five-year agreement with AT&T when they bought iPhones with a two-year contract and cited the Sherman Act's prohibition of monopolies.
The second case was filed in the United States District Court for the Northern District of California. The plaintiff, Paul Holman, filed a complaint against Apple and AT&T Mobility that he could not switch carriers or change SIM cards without losing iPhone improvements to which he was entitled. Holman also cited a Sherman Act violation by the defendants.On July 8, 2010, the case was affirmed for class certification.On December 9 the court ordered a stay on the case, awaiting the Supreme Court's decision in AT&T v. Concepcion(disputed whether the state's basic standards of fairness were met by a clause in AT&T's contract limiting complaint resolution to arbitration).On April 27, 2011, the Supreme Court ruled that AT&T met the state's fairness standards.
United States Release
On June 28, 2007, during an address to Apple employees, Steve Jobs announced that all full-time Apple employees and those part-time employees who had been with the company for at least one year would receive a free iPhone. Employees received their phones in July after the initial demand for iPhones subsided.
Initially priced at US $499 and US $599 for the 4GB models and 8GB models respectively, the iPhone went on sale on June 29, 2007. Apple closed its stores at 2:00pm local time to prepare for the 6:00pm iPhone launch, while hundreds of customers lined up at stores nationwide.
In the US and some other countries, iPhones could be acquired only with a credit card, preventing completely anonymous purchases of iPhones.At the time, there was no way to opt out of the bundled AT&T data plan. At first, iPhones could not be added to an AT&T Business account, and any existing business account discounts could not be applied to an iPhone AT&T account. AT&T changed these restrictions in late January 2008.
The Associated Press also reported in 2007 that some users were unable to activate their phones because, according to AT&T, "[a] high volume of activation requests [was] taxing the company's computer servers. On Oct 29, 2007, the Usenet newsgroup misc.phone.mobile.iphone was created.
Early estimates by technology analysts estimated sales of between 250,000 and 700,000 iPhones in the first weekend alone, with strong sales continuing after the initial weekend.As part of their quarterly earnings announcement, AT&T reported that 146,000 iPhones were activated in the first weekend. Though this figure does not include units that were purchased for resale on eBay or otherwise not activated until after the opening weekend, it is still less than most initial estimates. It is also estimated that 95% of the units sold are the 8GB model.
Credit Text Wikipedia