Nonetheless, Apple continued to post strong financial results, announcing at the end of April that it had shipped 2.2 million Macs, 11.01 million iPods and 3.7 million iPhones during the preceding quarter, which had seen net profit rise year-over-year from $1.05 billion to $1.21 billion.
Those numbers would be enticing to any company, particularly in a recession-bound economy, and a number of Apple's competitors began developing smartphones they hoped would siphon off iPhone customers. The most notable of these was Palm, which decided to return from the dustbin of tech history with the Palm Pre.
Heading up the Pre development effort was Jon Rubinstein, who joined Palm after leaving Apple in 2006. Considered integral to the development of many Apple products, including the iMac and the iPod, his involvement led a few analysts to suggest the Pre as a potential "iPhone killer."
The Pre came with a 3.1-inch multitouch screen, a sliding QWERTY keyboard in addition to a virtual one, Wi-Fi, USB, Bluetooth 2.1, GPS and a built-in 3-megapixel camera. It also ran the Palm WebOS, paired with an online store with mobile applications.
"Palm is the new comeback kid," Philippe Winthrop, an analyst with Strategy Analytics, said in an interview in February. "There are a lot of roots from the pedigree on Jon Rubinstein and the rest of the people who came from Apple, but everything I've seen shows they have their own take on it."
The Palm Pre posted solid numbers following its June release, selling 370,000 units by the end of that month-but the iPhone 3GS managed to move more than 1 million units during its first three days of release, ensuring that Apple would remain dominant in the consumer smartphone market. Palm continued to irritate Apple throughout the year by continually updating the Pre's software to sync with iTunes, something that Apple repeatedly tried to thwart with each new iTunes update.
Other companies also tried to make inroads in the consumer smartphone space. In August, Research In Motion released the BlackBerry Curve 8520, designed to straddle the business and consumer worlds. The Curve 8520's form factor included buttons along the outer rim of the device designed expressly for multimedia, such as "Play/Pause/Mute," "Next" and "Previous" keys.
However, BlackBerry continued to hold the advantage among business users, despite Apple's attempts to market itself toward both the enterprise and small and midsize businesses. A survey in April by Complete, for example, found that the iPhone was overwhelmingly used as a consumer device as opposed to a business tool.
Defying the economy, Apple continued to post strong quarterly numbers. In a July 21 earnings call, Apple Chief Financial Officer Peter Oppenheimer described the preceding quarter as the "highest non-holiday" one in the company's history, with profits of $1.23 billion. Sales of the iPhone were up 626 percent year-over-year.