my current cellphone has internet access and i use it all the time when i'm out to look up movie show times or check my gmail, though the majority of people probably wouldn't find it very useful.

what i was disappointed with is the memory size. if i'm going to spend on a new ipod, i want my 60 gigs to watch movies on.

I admit, you have a point there.

However, the iPhone will be useful to a lot of people, not only travelers. For example, I regularly have to use the train to get to work (when I can't/don't want to use the car). The train takes about half an hour and I'm not someone to sit around for half an hour doing nothing. As it is now, I hook my MacBook up with my Motorola V3x via Bluetooth and get internet access over UMTS so I can do some research/continue on a paper/write mail/etc.

If it's just mails or research I can do the same thing with the iPhone and save the time it takes to start up the MacBook and go online over Bluetooth.

Of course you can always argue that our ubiquitous lifestyle is bad and that e-mails can wait half an hour. That's all true of course, but if you work independently, productivity skyrockets when you start working even on the way to work.

I'm not going to pay Cingular umpteen dollars a month for the Internet...

I don't know about the US, but mobile internet over 3g/UMTS is quite cheap here. I pay 15 EUR a month (around 20 US$ I think) for 500MB data and all data sent and received within the carriers network is free, so even if you don't have a data plan, you can still surf for free in their network (which is often enough, they have local phonebooks, address lookup, maps, routing, access to eBay, TV guides, even all local TV programs streamed, dozens of news feeds, weather). Also, e-mail is free too.

... and if I'm in range of an 802.11 network, I'm probably at home or the office where I have a computer.

Again, quite different here. Free / open 802.11 accesspoints are just about everywhere in town. In summer I mostly work outside, in a park or something, where I get WLAN from like 5 accesspoints.

That said, a smaller $249 phone would of course be cool. No WLAN even means more battery, which is a good thing.

And for the larger version, if they don't add 3g/UMTS for Europe, it will be a failure.

There is no camera on the d*** iPhone, which is pretty much the stupidest thing ever. My Casio W41CA has a rad 3 megapixel camera, expandable miniSD memory, a built in MP3 player, GPS, web browser, TV viewer, and also works as my electronic ticket on Japan Rail. And it didn't cost $249- it was free with my phone plan. In my estimation, the iPhone looks nice (especially compared to all of the other ugly phones in the U.S.), but isn't really that hot s***.

Those are good insights into the international market that I hadn't considered. Obviously things are going to vary to some degree, but overall, I think people exaggerate their need to be online. The iPhone will enable people to be online 16 hours a day instead of 12. :) Seems superfluous to me.

Actually, there is a 2 megapixel camera on the iPhone. Not the greatest, but probably all you would need for a camera phone.

Thanks for commenting!

The problem is that most of the changes you're advocating are software in nature. They'd still have to include all of the expensive hardware, which really does not remove much of the cost of producing the actual phone. This would render the "dumbed down" version as less profitable.

I'm sure a $249 version is just around the corner. What about maps through GPS rather than Web access? I'd go for that. As mentioned, I'm sure we'll see many variations. Although it may be hard to be patient for the one for me. The iPod development was far too successful not to be followed again. After all, Apple's goal is big profits.

There is a big price gap between the iPod and the nano because of the difference in hardware used in each device - the removals you list from the iPhone to create the $249 version are all software-based.

You never know when these things could come handy, I don't carry my MacBook with me because I wouldn't have the time to use it often and it's pretty heavy. Nowadays a phone is capable of surfing the Internet, not implementing that would just be stupid, plus a third iPhone in the line wouldn't be a wise idea. I'm happy with my actual phone, but as soon as the iPhone's price drops it'll be MINE.

Also do you really think the iPhone will be sold $499 forever, I think the price will drop after the first month... (this makes me think about the über-failure of the Zune vs. über-popularity of the iPhone).

My cellphone has a 2MP camera (SE W800i) which was pretty much why I bought it, and it's more than enough. Why would you need a picture twice the size of your screen... I never understood the Megapixel freaks. The thing I'm worried though is that I don't see any flash on the iPhone for the pictures in dark (powerful LEDs on my phone, also used as torch light - and I use it all the time BTW).

Another reason for having the Internet would be to post on blogs like this when you need to kill time.

Sure, surfing on a 3.5" screen isn't what most people would prefer, but if you need to look up something while not being behind your computer, it's g****** useful to be able to. Of course, a lot of people won't care, but I'm sure if it gets cheap enough, internet connectivity will become something most people will demand from their phone as much as they demand cameras today.

Actually, i would like to turn your proposal around. I would rather have an iPod with no phone capabilities, but with WiFi, a web browser, and the large touchscreen. That would be very cool to watch movies (which still isn't that great on a 5G iPod).

There is an 2 megapixel camera on the iphone.

The software doesn't make the device expensive, so giving up Safari and Mail does no good. You'd have to give up the huge touch screen to start, as well as the hardware that allows OS X to run.

Ian: the iPhone does have a camera.

You make a fair point, but dropping WiFi and some software won't make the price fall that much (unfortunately).

I personally think Apple should have made the phone unlocked, partnering with a network (as cool as visual voicemail is) was a sucky idea. Not that I care, I'm in the UK :)

As for Front Row, I actually use that app all the time. I have an iMac on the other side of the den I sleep in, so I use it for media, music, et cetera. I suppose it depends on who you are, what you're looking for... the iPhone will be just the same.

H***, I'll buy it anyway.

Rich

The idea of a $249 phone is great, but cutting Safari, Email and Google maps isn't going to cut the price that much. Let's face it, most of the cost of manufacturing this phone is in exactly the parts you want to keep - the iPod and the Phone and the screen.

This story lacks a little in technical insight. I'm willing to bet that removing Safari, Mail and Google Maps functionality whilst retaining the iPod, phone and calendar/address book functions would not reduce the manufacturing cost of the iPhone at all, let alone to $249. These are purely software features and you can bet the iPod and phone functionality as is uses much more cpu time compared to Safari etc.

Ian, the iPhone does have a 2 MP camera. Look at the image on this very page, there is a camera icon.

About the article. How is not including 3 software applications going to cut $250 of the cost of the iPhone? software doesnt increase production costs.

The thing that makes it expensive is the multitouch screen, the 4 gigs of flash memory and the 2 years of R&D.

@Ian - It has a 2 megapixel camera.

The problem with the $249 iPhone is that you didn't save any hardware cost. Possibly a wifi chip (unless Apple eventually allows you to buy music directly to an iPod...)

All the things you cut out are software.

Besides you don't realize how handy it is to look something up on wikipedia during a conversation in the middle of no where :)

Your copyrights year is to change...

I have to dissagree.

I rely on public transportation and spend 2 hours of my day on the bus and the web connectivity would be fantastic.

Also, since I don't have thousands for a Nav. system for my car this would be a great alternative.

I do agree regarding a price reduction...
For a little more than the suggested price I could buy a micro laptop.

I think your generalisations are a little too general, or perhaps it's just the country barrier.
"a vast majority of the people that are going to buy one of these devices is in front of a computer all day and much of the evening"
Why? You don't need to work with computers all day to be a computer/Apple nerd these days. What use would there be for iPods if that were the case? We'd all just listen to music from our computer.
That said, I'm sure you're right that a lot of people won't need the connectivity and would love to just buy the phone and music features.
We use Frontrow quite a lot to watch TV shows, from the MacBook or hooking it up to the TV. Hubby also hooks it up to the stereo and TV when people come over and plays a music shuffle - that's getting quite nerdy though.
I'm glad Alexander mentioned 3G, we'd need that in Australia too.

Thanks for commenting, everyone. I'm sorry I was delayed in approving your comments (long day at the office today). My tardy approval of your comments led to some redundancy.

I see your point(s) about how a software-only reduction of features doesn't compensate for a 50% decrease in price. Nevertheless, after a certain period of manufacturing, Apple's profits will pay for the development costs for the iPhone, and their manufacturing costs will be minimal.

A simple software & firmware change on the same hardware to reach a new segment of the cell phone market (the people unwilling to pay more than a couple hundred bucks for a phone--regardless of how great it is) could be a very wise, strategic move for Apple down the road.

Two EXTREMELY important things to remember...
1) iPods were extremely expensive for 3 years, and when everyone started buying one, prices came down dramatically.
2) The iPod was created near the start of the mp3 player market, so it took time for the prices to drop. The iPhone is coming into a huge market. Apple only needs to sell a couple million until the price drops.

note: I'm just hoping the release the same looking device but only for music/video. I don't like carrying a phone, ever.