We didn't realize it at the time, but there were a couple of serious malfunctions as the craft accelerated to more than Mach 2.9 (2150 mph or 3460 km/h). About 7 seconds after ignition, a 60 knot (70 mph or 110 km/h) wind shear caused an unintended 90 degree rotation, which the pilot corrected. Just 10 seconds after starting its climb it reached Mach 1, and the rocket continued burning for another 66 seconds before automatically shutting down.
Late during this powered phase, one of the motors which control the trim adjustment malfunctioned and although Melvill quickly swapped to a backup system the ship wasn't quite at the right angle as it climbed. The combined anomalies put it 20 miles off course and ultimately cost about 30,000 feet of altitude.
This very nearly resulted in the failure of the test to reach its initial goal of 100 kilometers, in fact SpaceShipOne ended up getting to an altitude of 100,124 meters - only one tenth of one percent above its target altitude, and quite a long way short of the intended altitude of 108,000 meters..
A later thread quoted a statement form Rutan that they found the cause for each failure and fixed them.
He expects the next flight to be the "1st of 2" required to win the Xprize.
I didn't see anything on the "Spaceship" that looked like a heat - shield, and am a little curious as to why even early suborbital capsules had to contend with the scorching heat of "Re-Entry", while it does not appear to be a big deal with this rig.
What keeps this craft from burning up on re-entry like the last Space Shuttle did?
As you can probably tell, I have lots more curiosity than clue here...