Gruber has a great post on the $500 price tag of the iPhone. I mostly agree with his thesis, which really boiled down is that if it works technically then it will be successful, because if people pay $399 for an iPod, why wouldn't they pay $500 for an iPod + phone in one?
The only thing I have to add is that the price of the gadget really doesn't matter. It will be the service pricing that makes or breaks the iPhone. If it's $150/month for voice and data, it doesn't matter if the iPhone price is $10, $100 or $1000: the mass market won't be able to afford it. I presume it will be something like $100: my Cingular/AT+T voice and unlimited data plan on my Treo is about $95/month. That's the tricky part of iPhone: if they want to sell 10 million of them, what's the pricing plan they need? Blackberry pricing seems to constrain their appeal to the small number of millions (2-4 million is what I have read recently) of Blackberry addicts. If Apple wants 10+ million iPhones out there, they are going to have to appeal to a lower tier of wireless subscriber, maybe in the $40-70 range for voice + unlimited data. Or have some reasonable data rate that would allow web browsing at that price point.
