The marketing was good. The device sucked, and beyond the touch screen and including an actually adequate browser, was barely an incremental improvement over what was out there. Yeah, Pocket PC and Windows Mobile sucked, but the iPhone only sucked marginally less (and they had apps, the iPhone didn't).
The only thing Apple did aside the incremental technical improvement, was strike a deal for unlimited internet with a major carrier (which didn't last, btw), which got attention. More importantly, they managed to make it cool and hip, instead of being a geek toy. With those 2 things, Apple could have pushed out a white Pocket PC/Windows Mobile phone exactly like the ones that existed at the time, and ended with very similar results.