If (when!) the iPhone's design and OS migrate to a non-phone package, it won't be a huge change - some buttons lost, a portion of the software excised, but otherwise the same device. It's already pretty thin for a phone, and removing the comm chipset and antenna that are no doubt adding to the "bulk" would make it a pretty cool iPod/PDA indeed. In fact, if the wi-fi were kept in, it would be arguably the best stab yet at the Xerox PARC "pad" concept that was dreamed up so very long ago in the Ubiquitous Computing project.
Seems to me that the iPhone is just the first shot at an entirely revised iPod line that throws the "wheel" concept nearly out the window in favor of buttonless multi-touch and widescreen form factor. I wouldn't be surprised if the big sellers in this new design family aren't the phones at all, but the non-phone devices spawned off of it. Or perhaps they'll always have cellular capabilities, or morph into Skype phones, or something along those lines. Now I'm just spitballing, but you get my point. "iPhone" amounts to a pretty nifty misdirection away from the true promise of this design.
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