It was not. But you got contradicted by people who actually remember what happened. It is fairly well documented, and was common knowledge even at the time. Jobs was initially sold on Web Apps for several reasons, and the state of iPhoneOS 1 and its internal APIs was very precarious and not stable enough for serious third-party development. Again, this was known at the time thanks to the jailbreak community, and it has been explained in details over the years by people who left Apple since then, and Jobs himself in Isaacson’s biography.

When they pivoted towards the AppStore model, there was no predicting how big it would become, or even if it would be successful at all. The iPhone was exceeding expectations, but those were initially quite modest. It was far from world-record revenue.