Burlingame, Calif. -
What do mobile phone geeks call their useless, deactivated handhelds? Bricks.
But enterprising new owners of Apple (nasdaq: AAPL - news - people )'s iPhone have discovered that even if they remove the tiny activation card from their new toy, it’s still far more useful than a paperweight. Instead of a phone, it becomes a Web-browsing device with a big, beautiful screen--and a vision of what's next for personal computers.
For Apple, it's a round trip. The company's Newton kick started the idea of mobile computing in 1993 before morphing into a limited "personal digital assistant." Now the iPhone and its product-line descendents offer a glimpse of what's to come--a world of small, elegant machines allowing users to take true, full-featured Internet access with them anywhere.
It's already happening. Hackers that embrace this side of the iPhone can eventually shed their $60 to $220 per-month, two-year contract with AT&T (nyse: T - news - people ), and continue to use their iPhones for unlimited e-mail and Web access over WiFi, as well as for playing music and movies. The Unofficial Apple Weblog is calling this strategy the "sixth-generation iPod."
None of this pleases AT&T, but the fact remains that the iPhone functions well as an attractive Web-browsing tablet as long as the user remains in range of a WiFi hotspot.
Ironically, AT&T is enabling that, as well. The company said Tuesday that subscribers to its high-speed DSL Internet service at home or work will get free access to 10,000 WiFi hotspots across the country in McDonald's restaurants, Barnes & Noble stores, UPS stores, coffee shops and airports. For non-subscribers, access to the ubiquitous hot spots costs $8 a day.
Why would consumers pay $600 for an iPhone only to deactivate it and use it as an Internet tablet and media player? Well, not many will. But for those that do, the iPhone-as-tablet will look attractive, if a bit pricey (typical of Apple’s computers) when compared with similar products on the market.
Reactions to Palm's (nasdaq: PALM - news - people ) $500 Foleo, announced on May 30 (see "Palm Opens Up"), which the company describes as the future of mobile computing, have been mixed. It has a nice, laptop-like keyboard unlike the iPhone, but it's bigger, has little media storage space or playback software, and far less sex appeal.
Neither has Nokia's (nyse: NOK - news - people ) $400 N800 tablet taken the market by storm. It remains a cult favorite among fans of the open-source operating system Linux, but, like Apple’s 1990s-era Newton, the N800 has thus far failed to capture the mainstream.
Various over-priced models of the Microsoft-envisioned Ultra Mobile PC devices have hit the market in the past year, from companies like Samsung, Asus and OQO. So far, that Windows computing platform has fared little better than the tablet PC, which was introduced in late 2002. Tablets currently make up only a tiny fraction of all laptop sales.
All of these products fail the crucial "pocket" test--they’re just too big to be carried conveniently. Until now, the trouble with a tiny computer has been the squint-inducing tiny screen, along with hard-to-place buttons. But the iPhone’s giant touch screen takes a crack at solving those problems (and, so far, won’t crack in the pocket).
When Apple Chief Executive Steve Jobs launches new iPods in time for the holiday-buying season, we may see a non-phone iPhone. And if, as software developers are hoping, Apple loosens its grip on the device’s operating system, we may soon see more ways in which the device can be used as a true mobile computer.
Some developers are already trying, even though Apple has restricted them to using only the Safari browser as their canvas. Top on their list of desirable creations? A version of eBay's (nasdaq: EBAY - news - people ) Skype software that allows voice calls over WiFi, and turns the iPhone back into a phone for free. Mountain View, Calif., and Luxembourg-based start-up Jajah is nearly there, announcing this week its "Free Your iPhone" campaign for making 3-cents-per-minute International calls via the company’s mobile Web site.

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