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What is your iPhone for?

It's been some time since the PDA disappeared off the shelves of retail stores. IDC saw PDA shipments fall by 60 per cent last year.

But amazingly, they still sell tidy numbers, earning the manufacturers money. Even without refreshing its product line for a year, and without serious competition for almost three, Palm's PDA products netted it hundreds of millions of dollars last year. (In the most recent quarter, PDAs earned Palm $109m - the lowest for some time).

While it's hard to find a Palm owner these days, they seem supremely content with their combination of Bluetooth phone and PDA. I can see why. The Palm T|X does music pretty well, photos and documents passibly well, and it still does PIM superbly, but with one or two exceptions the software library is dusty and aging.

The iPhone is really entering the premium portion of a space that Palm should own today, if it hadn't been so badly let down by its operating system supplier. PalmSource's failure to produce a next-generation OS that anyone wanted, Cobalt (and the reasons for this are hotly contested) ensured Palm missed the SatNav boom, and its aging browser is severely limited compared to Nokia's Web and Apple's mobile Safari. It's also an area that Sony should own, too, both with its PSP and through its Sony Ericsson investment. But the phone division has been let down by the UIQ 3.0 fiasco, which turned a successful product into a mult-pronged disaster, and Sony's own reluctance to open up its PSP as a platform.

But despite all its severe limitations, reading the web on a Palm is still less noxious than reading it on a phone, and everything else is a bonus. I'm primarily in the market for a web reader, which is what I use a Palm for now - if only because the screen is larger than the competition. If the price is right, the iPhone looks like a natural replacement. On the other hand, the screen is considerably poorer than Nokia's new Linux tablet, which promises to be considerably cheaper.

Equally, the iPhone could find a niche as an ersatz SatNav. Apple seemed to think so, inviting Google and Yahoo! to show off the iPhones map and directories. With Apple's gesture UI, it made for a great demo. If one or more of these functions takes off, the iPhone will have a new lease of life.

It'll need this, because as a phone, the iPhone will face an uphill battle in Europe, where 3G communicators are supplied for free. From this perspective, the iPhone looks like an expensive iPod that locks you into a utility contract you might not want. This year's phones will run at 3.5G-speeds, (HSDPA) and several, like Nokia's N95, will feature GPS mapping built in. Stuck on 2.75G, the iPhone begins to look like a rich man's toy.

(We don't know the level of Cingular's subsidy, but it could be disguising a $1000 boondoggle).

The question then becomes, is the price right?

When it first appeared the Mac received a very similar reception to the iPhone. It was two years before the Mac found itself a market, desktop publishing, one that it helped create (thanks to the Mac UI, Postscript and the Laser Printer). Apple will be hoping the iPhone can similarly find some unexpected niche.

It deserves to be far more than a US-only phenomenon. ®

Update

And a few observations we missed. Two howlers were highlighted by Gary Wood -

Actually it's not 2.75G they are battling Nokia et al with, it's 2.5G as there is very little EDGE here (so they'll be stuck with GPRS). The battle is 3.5meg vs 56k a second ... imagine using home dial-up again after your fat ADSL pipe.

Also, is the battery removable .. a fixed battery is one thing in a music player but not in something people will want to rely upon when the last train is cancelled or late ...?

We missed that. The lack of removable battery almost killed the Treo 600, we recall - but Palm swiftly made amends.

"Does look like a nice toy though," concludes Gary. We'd agree with that. A product in search of a market, then.

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