Steve Jobs has been known to say Apple is a software company that also makes hardware. We laugh at that, because Apple happens to make software that ONLY runs on the hardware they make.

iPhone running Parallels
But only after having an iPhone do I really understand what Steve Jobs means by that software thing.
The iPhone is a phone, a music player, and a mini computer. Big deal. So is a Palm Treo, a Blackberry, and numerous other lesser-known devices. What makes the iPhone different?
It’s the software. We’re drawn to this particular product, and most of us who have used it like using this product more–because of the software. Yeah, it’s in a beautiful package, no doubt, but what it can do–the way it simplifies tasks and beautifully executes them–that’s what sets it apart form other phones. That and brilliant marketing.
Look at the iPod: it’s a music player. A beautiful music player, but still just a music player. Big deal, right?
The big deal is the software (both iTunes and the iPod’s internal software) made it the easiest, most fun, most efficient and seamless experience available. “It just works” is a great slogan because it really does sum up the experience. It just works, and you enjoy using the appliance. Are there other music players? Sure. Do they do the same stuff? Pretty much. Do they make it as fun, elegant, and easy? I say no. I think on some level we all understand this.
I didn’t buy an iPhone because of the way it looks, (although that didn’t hurt). I bought it–and I think many more people will buy it–because of the way it works, because of the software inside of it.
Some might argue that it’s too expensive. You can get a phone for very cheap or free (with a provider’s activation fee). Similarly, you can get Paint Shop Pro cheap and MS Paint for free, but Photoshop CS3 is going to cost you some money.
I used to think Jobs was full of crap when he said Apple was a software company. Now I get it. He just loves making software so much that he’s also compelled to create the perfect hardware environment for it.