HTC may have had a touch UI, but they didn’t have a capacitive touch screen (did the XDA use a stylus? I’d wager it did).
More importantly, Apple was the only company willing to:
* commit all their resources to a single UI and single phone
* write their own operating system for said phone to have control over its fate and optimize for that UI
* offer a sales experience where people could discover the phone, see how it worked, and get expert help, with sales people who actually knew about the phone and weren’t offering users the choice of three dozen competitors at the same time
This "Apple is only good at marketing" idea is vastly off the mark.
Apple could put a capacitive touch screen in because they were willing to sell a phone for $600, carrier-locked on a 2-year, $40/month contract, at a time when phones sold for about 1/3 of that, and they could run a single well-optimized UI because they were somehow able to get Verizon (I think?) to agree to let a phone run a third party's UI untouched. It may not be "marketing" per se, but their success was very much business rather than technical.
In the USA it was AT&T. Other than that, agreed; it was an expensive smartphone. They've always been expensive smartphones, with ridiculous prices for storage (compare with Iriver H340 series). The cheapest iPhone was an iPod Touch.
It wasn't just "an expensive smartphone". It redefined how much the category cost. These days we shrug off a $1000 price tag so it's difficult to remember how extreme it was by the standards of the time, but "expensive smartphone"s in those days were $300 unlocked.
HTC may have had a touch UI, but they didn’t have a capacitive touch screen (did the XDA use a stylus? I’d wager it did).
More importantly, Apple was the only company willing to:
* commit all their resources to a single UI and single phone
* write their own operating system for said phone to have control over its fate and optimize for that UI
* offer a sales experience where people could discover the phone, see how it worked, and get expert help, with sales people who actually knew about the phone and weren’t offering users the choice of three dozen competitors at the same time
This "Apple is only good at marketing" idea is vastly off the mark.