Another huge issue is that Apple hasn't announced built-in Exchange connectivity, so businesses will completely ignore it. Okay, I know what I'm about to say is going to traumatize a lot of people, but I feel it must be said: Exchange is not the alpha and omega of messaging and groupware. Those of you with the vapors, please, do sit and drink some cold water.
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Seriously, I work in an Exchange shop, I know how important Exchange connectivity can be, but again, we don't know the full story, and even if Apple doesn't ship it with an Exchange client, so what? Prior to Windows Mobile 5, Exchange 2003, and AKU3, Over The Air (OTA), connectivity on Windows Mobile devices was, well, I'll be nice and say it was "sub-optimal". Goodlink didn't become a wildly popular product because out of the box OTA access to Exchange was the bomb-diggity on Windows Mobile devices and Treos.
As well, with Microsoft pushing Web Services as the "new" way to connect to Exchange 2007, and the fact that Apple is shipping a decent browser with the iPhone (certainly better than what's shipped up through Windows Mobile 5, and infinitely better than what comes on Treos), there's going to be at least one way that will be mildly tedious, and a potentially not-tedious way to talk to Exchange.
However, there is a rather huge amount of people who want email and web access on their phone, and don't give a ding-dong about Exchange connectivity. They want something more than what you get with say, a Razr, but they either don't have, or don't need, Exchange connectivity. For them, the iPhone is a great device.
The price is a non-issue. The iPhone is hardly the most expensive phone ever released in its class. I paid, with rebates, about $400 for my PPC-6601, and when the 6700 came out, it certainly wasn't dirt cheap. If you remember when the Razr first appeared, they weren't exactly giving it away in boxes of Tide either.
Same thing with not having an SD I/O or other memory card slot. First, it comes with 4GB or 8GB of storage, which is huge, even now, for a smartphone. Secondly, I have a phone with a SD slot. I've had the same 1GB card in there forever, mostly because it's in use a lot, and getting the stuff off of it onto another card would be a rather huge pain in the keister. But the truth is, it's been all the storage I need. Sure, if I listened to a lot of music, I'd need more, but then I'd also need a bigger battery. That's a heck of a tax for what my iPod already gives me.