Year in review: Apple's iPhone takes center stage

Apple took several bold steps this year, proving that it's one of the most influential companies in the technology and media worlds.

Presumably you've heard of the iPhone. Apple's first attempt at cracking the mobile phone market was received with almost unprecedented coverage from both the technology and mainstream media. The iPhone was first introduced in January at Macworld, and made its debut on a balmy June night to lines of customers all over the country. We, along with hundreds of our colleagues, were there as iPhone madness swept the country for a day.

As the year progressed, Apple sold 1.4 million iPhones by the end of September and rolled the device out to customers in the U.K., Germany, and France.

Not everything went as smoothly as planned, as controversies over the $200 cut in the price of the iPhone just months after it arrived, as well as the retaliatory steps Apple took to relock hacked iPhones, rankled some early adopters. But without a doubt, the iPhone made the mobile phone industry sit up and realize that Apple had made a breakthrough with average consumers in terms of design and user interface, and that it would have to come up with an answer.

This year was not just about the iPhone, however. Apple totally redesigned its iPod lineup in September, bringing the iPhone's interface over to the iPod Touch, and tweaking the iPod Nano in a more video-friendly manner. Six years after it was first introduced, the iPod continued its run as Apple's single most successful product ever, and shipments during this holiday season are expected to top last year's 21 million units.

Apple also saw a great deal of momentum around the Mac. The company continued to benefit from the PC industry's overall move toward notebooks, but didn't do much with the basic MacBook Pro and MacBook design during 2007. It did launch the all-in-one iMac in August with the titanium-gray color scheme used on the Mac Pro and MacBook Pro.

And although it had to be delayed four months to make sure the iPhone launched on time, Mac OS X Leopard, the sixth version of the company's operating system, sold 2 million copies the first weekend it went on sale. That was about 9 percent of the total Mac installed base, an astonishing number for a major operating-system upgrade. Although some complained about problems with the first version of Leopard, those seemed to subside following the release of Mac OS X 10.5.1.

As the year closes, however, perhaps the most turbulent area of Apple's business is the iTunes Store, which is facing competition like never before. Amazon launched its own music store this year, and television networks like NBC have signaled they want to take the online distribution of their shows back into their control. The iTunes Store is still the preeminent place to find (legally available) music and TV shows on the Internet. But as we turn the clock to 2008, this is one area that will bear watching: can these new competitors catch up to Apple's online juggernaut?