A great article on Patently Apple about the almost-made iPod Phone. Choice quote:

“Jobs called Fadell, Rubinstein, and Schiller to a secret meeting in the design studio conference room, where Ive gave a demonstration of multi-touch. “Wow!” said Fadell. But they were unsure that they would be able to make it work on a mobile phone. So they decided to proceed on two paths: P1 was the code name for the phone being developed using an iPod trackwheel, and P2 was the new alternative using a multi-touch screen.

After six months of working on the trackwheel P1 and multi-touch P2 phone options, Jobs called his inner circle into his conference room to make a decision. Fadell had been trying hard to develop the trackwheel model, but he admitted they had not cracked the problem of figuring out a simple way to dial calls.”

It’s amazing to think that the future of Apple was transformed forever based on the notion that dialing a series of numbers into a click wheel was kind of a clunky experience.