The problem that Apple faced was entering a new market and needing a partner. I personally think they would have sold just as many phones at £700 as they have at £270 with a £420 minimum contract. That would have been a very brave thing to do and it's understandable no-one was prepared to stick their wedding tackle on the block over that one.
I would have done the exclusive deal with one carrier - wheedled out of any penalty should the phone be 'unlocked', and ooops, accidentally slipped someone the keys to the back door so the thing can be used on any network. I'll never go to heaven.