Just got back from CTIA where I saw a number of cool music-centric phones including the new one launched by Samsung and Sprint, which I liked a lot. At the Motorola booth there was a station dedicated to demonstrating the Q's multimedia capabilities. I know there are different "ways" to listen to music: some people would navigate their PMPs to look for a specific song, while others like me prefer a random selection from a specific music genre or playlist. For people like me, a WIndows Mobile phone with a 1Gb SD card and desktop synchronization works great. I bring my Cingular 3125 to the Gym, it is not bigger than most MP3 players and the external display and controls work great.
At the same time, we have to credit Apple for changing thew industry - even if they never ship an iPhone they have had a significant impact on how carriers and OEMs think about phones. I just saw the Neonode N2 built by a company based in Sweden with a management team that understands the wireless industry and who already has shipped a phone, the N1 (we will see how the iPhone does in network certification). Take a look at the UI in this video. My understanding is that this phone runs Windows CE, is compatible with most media formats, also boasts a cool touch user interface and is shipping now. If you could get this phone for $99 why would anyone spend $500 for an iPhone other than Apple zealotry?
I have said that the iPhone proves the value of branding, that Steve Jobs and Apple have a very loyal following and that we (Microsoft) should have more focus on user interface, simplicity and "coolness". However, I think the 10 million goal stated by Jobs is unrealistic, especially given the cost and that by June 12th (if you believe availability guesstimates floating around) the initial excitement will be worn off already. Sure there has been a lot of interest for the iPhone but there is a difference between being interested and typing your credit card number. Who knows, maybe I am wrong. This is certainly an industry that is always interesting.