The competitors
Not wanting to miss out on the new cellular gold rush, Google announced its Android operating system in 2007 and the first Android phone was released in October 2008. Android's unique selling point was its openness. While Apple was allowing third-party development for its iPhone and iPod touch devices, the developers were restricted in what their apps could do. Apple provided access to high level methods in iPhone OS while Android allowed almost any aspect of the operating system to be modified or augmented as the developer saw fit.
Android was essentially free for any cell phone manufacturers to install on their devices, so uptake of Android grew massively. Some just installed a basic, unmodified version of Android while others, such as Samsung and HTC, installed their own version of Android for better or worse. Others, such as Amazon, have taken Android, forked, and modified it beyond all recognition. That's the beauty and flaw of Android, you have the ability to do whatever you want with the operating system. Sometimes the results are stunning but other times the results are a disaster. This is what Apple is trying to avoid by limiting software access and producing their own hardware.