The story was hilarious as it showed the sheer depth of incompetence at apple, and Jobs' utter inability to be flexible until reality hit him in the face several times over.
When you think about it, the Japanese market is perfect to iphone's "style over substance" approach. That's how it always functioned, and now just with phones but with many consumer goods ranging from electronics to plush toys (which have a huge adult market in Japan!) Problem is, Japanese have some very specific requirements when it comes to their goods that are typically completely unique to Japan and do not exist outside that country. They need to be made suitable for them functionally and culturally, as they have a very different approach to many things from one we have here in the West.
So initial foray was an unmitigated disaster. People returned early iphones back to stores in droves and the reason was utterly obvious - Jobs' idea for iphone was "same thing everywhere", and Japanese absolutely needed several significant adjustments to their phone, such as integration of certain Japan-centric services and input methods. The crash of iphone in market that everyone thought it would immediately take it by the storm actually got major players like Fujitsu say that Japanese market was so different, Western companies just don't stand the chance.
Then someone at Apple hit Jobs with clue bat hard, "one approach for all markets" paradigm was buried for Japan and iphones sold in Japan were significantly adjusted to match expectations of Japanese public.
Rest was history. While numbers are not quite as silly as this article suggests, Japan today has one of the highest iphone sales per capita in the world, because the general idea behind iphone, the "style over substance" approach is simply what Japanese market and mindset is all about. All it needed was understanding that no, your product is not perfect for all people everywhere and that some important adjustments for cultural differences and expectations are necessary.
In many ways, it makes for a good extreme case study on how products, no matter how good they are, always need to be adjusted for sales in target area.