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Of course he wasn't right. Apps instantly became a signature part of the iPhone experience and a huge success story for the platform.
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Imagine if he had stuck to his guns on native apps. iPhone would’ve either died or we’d all be living in a web apps paradise right now.
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It wouldn't have died - most apps are still just a thin UI over a corresponding online service, and most of the data and services proprietary APIs provide ended up achievable in a browser too. It is really just the internet that makes apps and smartphones useful.

All apps really offered was a way to gatekeep payments in games that groom impulsive spending habits, they just happened to start making very serious money on Facebook right about the moment Jobs changed his mind.

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Early on it was different with a lot more stuff actually running locally vs cloud service era. App store predated that for a little bit actually. There weren't microtransactions initially either. What you'd call a AAA game for that platform back then would actually be $9.99 one time payment.
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OK...but basically everyone uses custom apps because they are tremendously useful. You'd just ban all of them?
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