Apple's vertically integrated computer business in which they insist on selling both hardware and operating system software on an exclusive basis is legendary. Amazingly, they manage to pull off the marketing miracle of being perceived as the "cool" computer platform, while opening up very little to outside vendors.
This, of course, is one of the well-known reasons why Apple has never enjoyed more than a 10% market share in PCs -- businesses like to have multiple sources, when available.
With iPod and the iTunes service, Apple managed to achieve the lion's share of the portable music player market, and became the dominant force in online music distribution. How? Through the combination of good hardware design, secure DRM and deal making with the big music labels. Yet, many critics -- especially in Europe -- have been arguing that Apple's near-lock on this market, and their use of proprietary DRM software which only their hardware is compatible with represents unfair competition.
Now at last we have the iPhone. With every techno-pundit chiming in on its significance, I'll throw in my two cents too. With cell phones, there's zero expectation on the part of the public that hardware, service provider, and software are independent entities. Complete integration, in which the hardware is supplied by the service provider, along with whatever software and services it can run, is the order of the day. While some advanced users may try to move a phone from one service provider to another, most users have absolutely no expectation of interoperability. Some reviewers of the iPhone have griped that it's only available with AT&T's cell phone service. They're off the mark.
Apple has finally entered a market where there's no expectation of interoperability, compatibility, or third-party participation. You can't even change the iPhone's battery without sending it back to the factory--no one else is allowed to touch it. Apple has found the perfect market to suit their business practices.