Steve Jobs will probably always be best known for being the guy who introduced the world to the iPhone, the most successful product in the history of, well, everything. It almost single-handedly made Apple the most valuable and most profitable company on earth.
It also marked the tipping point for the company, which until then had been a niche computer maker with only a tiny share of the personal computing market. It had a string of moderate hits with the iMac and the iPod, but neither would become as successful or culturally important as the iPhone.
In fact, for the iPhone to become a thing, Apple had to make a very hard decision about the iPod--which, at the time, was Apple's most successful product ever. Back then, it was the iPod that was driving Apple to record profits. It was the iPod that had made the company cool with an audience that had never used a Mac.
Apple's ads with colorful silhouettes wearing its signature white earbuds were everywhere. The iPod and the iTunes Store had legitimized and dominated an entire industry--digital music downloads--almost instantly.
The iPod had such a strong brand awareness that when Steve Jobs introduced the iPhone on the MacWorld stage in 2007, he described it, in part, as a widescreen iPod with touch controls. It wasn't really a widescreen iPod, but Jobs was leaning into the idea that people knew what an iPod was, and they could imagine what a widescreen version might look like that you could control with touch.
What Jobs was really doing is replacing the iPod altogether. With the iPhone, Apple turned the music player from a product into a feature. If you have an iPhone, you really have no use for an iPod. In almost every way imaginable, the iPhone is better at all of the things the iPod does well.
I think it's fair to say the iPhone effectively destroyed any future the iPod might have had. Sure, you can technically still buy an iPod touch--an actual widescreen iPod with touch controls, but I don't know anyone that does.
There's no question the iPhone wouldn't have been possible without the iPod. Not only did it raise Apple's brand awareness among the masses, but it also turned that brand into a status symbol. The iPod was cool.
Still, from a business standpoint, the iPhone seems like a terribly risky idea. It was a death sentence for the company's most popular product to that point. The year the iPhone was introduced, the iPod sold 50 million units. Within a few years, that number was cut in half.
Most companies take the opposite position, trying to milk their flagship products long past their prime. Once they become a cash cow, most companies are terrified of doing anything that might upset a good thing.
The problem is, if you aren't willing to look past your best product, someone else certainly will. "If you don't cannibalize yourself, someone else will," Jobs famously said. It's not just a good quote--it might be the smartest realization he ever had, and the reason the company he founded is now more valuable than any other. It's not often that a company is willing to cannibalize its own product to make a new one. It's the smartest thing Jobs ever did.