Calling the stage units prototypes is being nice. The reality was that at that point the iPhone had barely gotten to a proof of concept stage. Months before this event, the developers were still using a giant desktop tower to simulate the phone's hardware.

That the photos of the phone were real and not concept art, that the stage units weren't just unusable rubber dummies was a magic trick itself.

When the developers revealed years later that the iPhone presentation (just the presentation, not even the actual launch) was a make or break moment for the company, they absolutely were not kidding.

And then they went from "should not even be working" test units to fully functional production units in six months!

Whatever your opinion of Jobs or Apple, credit where credit is due.