Well I finally got my hands on an iPhone and it's just as nice a device as all the media frenzy would lead you to believe. I am lucky enough to have a project that needs exactly such as device, so I can rationalize the purchase (in fact it's actually less costly than alternative solutions that provide the key feature set, and that was before the big price reduction of Sept 6th).
The user interface is genuinely very satisfying and the whole experience in really nice. Just as a mobile web client and PDA, it totally blows the socks off my prior Palm Treo and/or Windows CE (iPAQ) devices in terms of both aesthetics and usability. One slightly frustrating feature relative to the Treo is that the key on the on-screen keyboard are rather difficult to type with. This, apparently, improves with familiarity and is alleviated by a built-in automatic spelling correction engine; we'll see about that.
Activating the phone was tricky (without an AT&T subscription yet). In principle, the software does not permit this (and you can't get AT&T here in Canada), but inspired hackers have come up with a work around and now there are lots of tools for doing this. (I recommend the progran called iNdependence.) I would not recommend this for people who are not technically skilled and willing to risk an a few hours debugging, though. Better to get one of the (very attractive) AT&T phone plans, or (outside the USA) suffer it out until a carrier in your own country is available.
Activation was fairly "easy" on the factory-installed firmware (or I was just lucky). Once I installed Apple's 1.0.2 firmware update, however, the activation tools became very fussy and consistent told me that activation failed with an error code of -402653165 (i.e. "Activation failed with code -402653165") . I tried numerous tools and tricks. Simply attempting it several times in a row is supposed to work. I think getting it to work may well involve a random process since the set of alternative "solutions" people have reported on the web seems diverse to the point of being ridiculous. Key issues seem to be to (1) make sure all iTunes applications are stopped, (2) generating the proper home-made "plist" using the correct device codes, (3) re-enter jailed mode just while activating, and (4) making sure no other programs (such as iTunes) are using the same USB ports. I also though it was a good idea to kill USB camera demons (such as the PTP daemon for my Canon camera). The technically inclined should use "ps wax" and "kill" from the terminal window. Even so, getting it to work seemed to depend on an apparently random enabling and subsequent disabling of "jailbreak" mode (i.e. write enabled or protected modes) .
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