Why Apple’s iPhone is Not the Next iPod:

Additionally, the potential success of the iPhone could be dampened by its price. If looked at as three devices in one, the price isn’t unreasonable — buying a 4GB iPod Nano and a BlackBerry 8700c (which acts as a phone and Internet device) separately for instance would set you back about $500. But when looked at as simply a phone, which is the way many people perceive the device, it’s just plain expensive. People may not be willing to pay $499 to $599 for a cell phone that does not function any better as a phone per se, in that it makes calls as well as the next phone.

Bullshit.

Other devices priced around $500 when they debuted:

• Treo 600
• Motorola RAZR
• iPod (first generation)