Aside from the “well duh” factor, and the fact that this wasn’t even a secret, The demo had to happen long before it was ready to ship because the FCC filings were slated to go public and they didn’t want the world to find out about the phone from that source.

This wasn’t the demo of a defective unit shipped to customers, it was the demo of incomplete software and hardware. The reception of the first iPhone was overwhelmingly positive. So much so that Google abandoned their plans for Android being a BlackBerry knockoff.