Why am I not impressed?

First, making an entertainment device is much different from making a phone. Over the years, plenty of phones offering lots of nice "toys" for users have disappointed. Ultimately, they were not very good phones. And the bottom line is that you have to build a good phone first, and then add features on top of that. Otherwise, don't bother. You can ask Nokia, Motorola, RIM and others about this. All have had flops with what on paper were devices that looked marvelous. Another difference between phones and entertainment devices is that phones must be much more rugged and less prone to breakage while being subjected to all kinds of abuse. Can the iPhone take such abuse without a high failure rate? We'll have to see.

Second, the price is steep. Yes, I understand that the astronomical list prices of US$500 and $600 are simply initial inflations meant for the early adopters willing to pay almost anything (and to limit volumes while Apple ramps up to catch up to demand). But even if the prices were cut in half, that is hefty for a phone device these days, even one with loads of features. How many consumers are willing to pay that much, plus $40 to $80 per month for a plan that includes data services (which will be necessary to access many of the phone's features).

Third, who is the target for this device? At $300 to $400 (assuming the price falls rapidly), an iPhone clearly is not a casual buy. In the past, most high-end phones have been sold to business users willing to pay for a fancy phone with the capabilities they wanted. But these users almost universally demand connectivity to corporate systems, especially through push e-mail and Outlook integration. How well the iPhone does at integrating to these systems remains to be tested. And although I would bet the iPhone will integrate and sync well with the Mac, very few businesses run on Macs. If the iPhone doesn't do a good job with PCs, Apple has a big problem.

Fourth, the device runs the Mac OS. This is a major constraint, since few third-party application vendors (e.g., Good Technologies for a push e-mail client) run on the Mac. There are a lot of unanswered questions. Will these vendors port to a proprietary operating system when they have the option of running on Symbian with far more devices, or Palm OS or Windows Mobile? And will the iPhone support J2ME-based applications, of which there are a growing number? Apple can't afford to build a dead-end system with no ability for users to enhance the device with third-party applications. But Apple will likely have a tough time convincing application vendors to build specialized clients for the iPhone until the volumes are there, and the volumes could be limited by the lack of third-party applications -- a Catch 22.