This is the perfect example of an up-sell. People abandoning a low profit margin device for a high profit margin device. Go Stock Prices! Not necessarily immediately good for the consumer, but inevitably prices will fall.

as in me, because i'll have an iphone, my big ipod for the car, my wife's nano and then either a new nano or shuffle for me depending on how much i like the nike+

damn you apple... at least the margin on your stock price is covering my addiction.

LOL!! I second that!!!

Wow, 50% would consider Apple. That's nice. Now, how many of those will actually buy an iPhone when they see the price is close to $800 US (Apple's usual mark-up for Europe)?

I reckon the cost will still be in line with something like an N95 that costs about £500 over here.

The problem I see is that Apple will have to update their phones quite frequently to stay in the game - which will upset consumers who shell out so much for them. I'm going to be a 'waiter' and hang on until their are better models available for less money...

I'm absolutely happy with my iPod - especially since I've installed The Filter and been able to fill the thing properly!

... update the phone regularly, that is. Two things point to that: Steve said as much when he showed it off; second, their accounting for the phone is different - they are planning to report it in installments, thereby making it easier to provide 'free' substantial software upgrades to it.

There is also third, rather obvious, thing pointing to easy functional upgrades: its hardware. The only aspects of its human interface are: one single button; one large touch-screen; one camera lens; one audio in/out; one accelerometric sensor; one proximity sensor; one iPod dock. Most importantly, only ONE button - no keys. The substance of phone's design and features is not (so much) in the hardware; it is all in software. The phone could be totally changed into something totally different (unrelated to phone), such as some medical device, or gaming console, or something else. It is the most flexible device ever built.

This isn't going to cannibalise iPod sales that much. People who already have iPods will want this too (the article says exactly that). Some of those who wanted but never got iPods might choose the phone now. It can't be that bad for Apple, though, since the phone margins will be even higher than the iPod (roughly 300% vs. 200% on iPods).

As for the price, it is ideal. Many forget that Motorola's StarTac was the best selling phone ever (when it came out) and was selling for $500, and that was with a one-year commitment (at the time, they haven't been pushing 2-year contracts on the consumers yet). RAZR was the same thing - $500 with the contract. This was several years ago. In today's money StarTac would probably be $650; RAZR around $550. Essentially, the phone is priced exactly right.

As for European pricing, it may be more expensive in Europe, but their overall cost-of-living there is higher as well (as is their income; no wonder they visit US in droves to do their shopping here - like in some cheap developing country...).