I love that they leave that up. It shows what was completely solid reasoning that lead to the wrong answer. In hindsight we can see that Forrester and others missed the fact that Steve and Apple saw people who wanted a pocket computer, not a pocket phone, and that was powerfully attractive to the new legion of "private" phone buyers. Its important to remember that prior to the Iphone, smart phones like the Blackberry were for Enterprises and this was no Enterprise phone, so the analysts didn't have any visibility into the same people who were buying iPods that Apple did.

My take on the history is that Apple made the iPod and made it "easy" to populate with music, phone makers started providing MP3 capabilities as competition, and Apple looked past a merged iPod + Candybar phone to a media rich pocket device, which happened to make phone calls.