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Cingular Wireless (in the process of becoming AT&T) will be Apple's exclusive carrier-partner in the U.S. when the eagerly awaited iPod/mobile phone/Internet device (sic) is released in June. The operator wasn't Apple's first choice however.

Although Steve Jobs spent some time during his presentation introducing the iPhone at MacWorld a couple of weeks ago talking about how great Apple and Cingular's relationship is, and the carrier's CEO Stan Sigman basically did the same when he came out to pat Apple on the back, Apple first approached Verizon Wireless about the iPhone, according to USA Today.

Talks between Apple and Verizon apparently started a couple of years ago. But an agreement couldn't be reached in the end because Apple wanted too much control.

First off, Apple wanted to limit the iPhone to its own and Verizon's stores, leaving the carrier's usual distributors out of the loop. "That would have put our own distribution partners at a disadvantage," Verizon VP Jim Gerace explained to USA Today.

Apple also wanted a percentage of monthly service fees and to be the sole decider of what malfunctioning iPhone would be repaired or replaced, a deal breaker for Verizon. Gerace said to USA Today, "They would have been stepping in between us and our customers to the point where we would have almost had to take a back seat … on hardware and service support."

Although Cingular hasn't revealed the terms of its agreement with Apple, it is likely similar to what the computer maker asked of Verizon. Cingular reportedly didn't see the iPhone until shortly before it was unveiled even.

One thing Cingular got from Apple - to its benefit - is a 5-year exclusivity agreement (including iPhone follow ups), according to USA Today sources, which is a length of time unheard of in the wireless industry. These agreements tend to last for months, not years.

There won't be any unlocked iPhones during this time either. So there won't any way for subscribers of any other GMS operators in this country to use the device without switching to Cingular.

Interestingly, if Apple and Verizon reached an iPhone agreement then the U.S. version would have been based on a different cellular technology (CDMA) than those shipped to most of the rest of the world. The majority of carrier networks worldwide are based on GSM technology. There are about 2 billion GSM subscribers today.

This makes GSM essential if Apple is going to achieve its goal of 1 percent of the approximately 1 billion cell phones expected to be sold in 2008.

iPhone
The quad-band GSM/EDGE iPhone includes a 3.5-inch wide touch-screen display and is only 11.6 millimeters thick. Specs include 4 GB or 8 GB of storage, a petite home button, a 2 megapixel camera on the back, speaker, mic and iPod dock connector on the bottom, and a ring/silent switch and volume controls on one

It also has a 3.5mm headset jack and a SIM card tray, of course. A light sensor controls screen brightness to save power, a proximity sensor tells the iPhone turn off the touch screen when you bring it to your ear, and an accellerometer automatically switches the iPhone to portrait or landscape mode, depending on how you're holding the device.

While the iPhone offers Wi-Fi and Bluetooth 2.0, with the ability to switch from a cellular call to a WLAN automatically, it lacks 3G, which is expected to be available in the future.

The iPhone runs on a version of the Mac OS X.

Apple chose not to go with keyboard or even stylus input, but rather invented a new technology the company is calling Multitouch. iPhone includes a full QWERTY soft-keyboard

Multitouch places the emphasis of input and navigation squarely on a one's fingers. The technology is, supposed to be much more accurate than a regular touch display - with support for multi-finger gestures and the ability to ignore inadvertent touches.

A feature called Visual Voicemail, developed with Cingular, lets users look at a listing of their voicemails, decide which messages to listen to, then go directly to those messages without listening to the prior messages.

A 4 GB edition of the iPhone is slated to cost $499, while an 8 GB model will sell for $100 more. Cingular is not going to subsidize the device.

iSuppli estimates it costs Apple $245.83 to build the 4 GB edition and $280.83 for the 8 GB version, which leads to profit margins over 50 percent, and plenty of room to lower prices.