The Phalanx, a rapid fire "machine gun" principle, is much cheaper to operate and is better for defending point targets, such as ships, army bases etc. It is widely used by the US and proven effective, but needs to be placed near the intended target. (Think "machine gun".) I suspect Israel made a strategic decision to develop the Iron Dome missile system for short range missiles to defend the larger area of northern Israel and the Gaza envelope, not particularly Sderot. Now that this is done, Phalanx will be purchased too. Buying Phalanx first might have caused the government not to spend on Iron Dome.
Two police officers wounded in shooting in Lincoln, Nebraska (AP)
from the article: MESS Report / Iron Dome passes tests, but how much will it cost Israel?