9:17AM BST - We're, ahem, queuing alongside a few dozen other journos outside the Apple Store Regent, iPod touch ads in the window and all. And guess who just turned up...
The iPhone guy! You know, the iPhone project manager dude who gave all the online tutorials. What's his name again? Bob!
9:23 - Strange packages keep entering the store. We wonder what's inside. Click on for continued live coverage!
Steve: "The 3G chipsets are real power hogs. Handset battery life cuts power to 2-3 hours." Yeah yeah, we've heard it before. "Our phone has a talk time of 8 hours and that's really important when you want to use your phone for internet and music. 3G needs to get back up to 5+ hours, something we think well see later next year. ... WiFi is way faster than any 3G network. Energy efficient EDGE with better, faster WiFi. That's why we chose it."
10:19 - Q: 7,000 hotspots in the UK... but are they free?
Matthew: "Cloud is the WiFi provider, and yes, it's free." Steve goes on to again tout the advantages of WiFi. Matthew nodding head vigorously, "It's a lot faster."
10:21 - Q: Is the same deal with Starbucks coming here? [Here being the UK, obviously.]
Steve: "You'll have to ask Starbucks about that. They love the UK." Smiles.
Q: What about iTunes activation?
Steve: "Yes, iTunes will work in the UK like it does in the US, allowing you to select your plan and then activate your phone. Of course, it also allows you to update your phone."
Steve: "That's the iTunes WiFi Music Store, coming this month to the UK."
Matthew: "18 months contract. There is a limit: 1,400 internet pages per day would break the deal as part of fair usage agreement." Wait, what?
Q: What's the revenue sharing from data and device sales between Apple and O2?
Steve: "Unfortunately, we're not going to go into that, but good question!" Laughter. "...Sometimes you get what you pay for."
10:26 - Q: Is unlocking a concern?
Steve: "It's a constant cat and mouse game -- we have the same thing with the iPod with music." Steve looks at Matthew, "Are we the cat or mouse?" 'We have to stay one step ahead of them. It's our job to keep them from breaking in."
Q: To Matthew, what do you have to do to get your network ready for the iPhone?
"We're investing in EDGE. As many people have noticed, hey I have EDGE! By launch we'll be north of 30% and build from there." Only 30% folks. It's important to remember that many parts of Europe doesn't use EDGE, they've often moved on to UMTS (i.e. 3G)!
10:30 - Q: Were you aware that the iPod touch was coming out when you were negotiating the iPhone deal?
Matthew: "One of the great things about working with Apple is they are always moving forward." Yes, and one of the great things about O2 is how it dodges questions.
Steve: "Well, one's a phone, and one's not. The iPod touch is training wheels for the iPhone." Ha! Oh boy, that's rich.
Q: How many [iPhones] do you hope to ship before Christmas?
Matthew: "80% of high end customers from other networks would be willing to switch carriers based on their data." But he won't discuss specific sales numbers.
10:32 - Q: What are your plans for iPhone launch in Europe, and your reaction to upsetting other carriers who feel played-off in terms of not getting this deal?
Steve: "We said we'd be in a few countries in Europe and we still plan to do that. As to the carriers, we took the approach to see who would be the best fit -- it's like going out on a few dates before getting married. So yeah, we have a few upset girlfriends out there." Laughter.
10:35 - Q: Can you be more specific about other European countries? [You know you're talking to Steve "Stonewall" Jobs, right?]
Steve: "We're here to talk about O2 UK, and that's all we're willing to talk about today."
Q: Why not one single European carrier if O2 is such a good fit?
Steve: "We were faced with lots of decisions to make and we think we've made the right decisions. We certainly have with O2."
10:37 - Q: Have you thought about opening the iPhone to 3rd parties?
Steve: "Yes, we've already done that with Web 2.0. We're looking at more intimate apps. But people hold their phones to a higher standard than their PC. The more open you are, the less predictable." Again, same ol' same ol'.
10:37 - Q: £900 for 18 months on up to £1260. Any assurance you won't slash the price by 1/3rd? (Laughter.)
Steve: "I don't think that's going to happen. But this is technology so you never know. We have no plans to change the pricing, but we guarantee it will change in the future just like all technology products. We're working on the next iPhone and the next one after that. That's what our customers expect."
Q: Do you feel a 2 megapixel would be a concern to European customers?
Steve: "No, the camera is great. More megapixels don't make a better camera, the iPhone is actually a great camera especially, with great lighting." Ok, sure, but isn't every camera a great camera if the subject is well lit?
Matthew: "On 1st October we'll be rolling those out for all out customers."
Steve: "It's the future."
And that's that! Steve and Mathew are all finished up here. Stay tuned for additional coverage of the O2 iPhone!