You might have heard that O2 will sell the iPhone in the UK, reportedly giving up a staggering 40 percent revenue share from iPhone users to Apple. It’s the same 2.5G iPhone that’s available in the US with no new features, and the price is pretty steep. Tarek Abu-Esber gives a good rundown of the specs and pricing details, which make the iPhone look pretty expensive in comparison to other devices in the market, so no surprise there.

It’s worth looking at the reality distortion field Steve Jobs tried to create at the press event in London today, beautifully illustrated by Gustaf Erikson. My favorite part is when he tries to gloss over the lack of 3G, saying it’s a battery killer, and that in any case, Wi-Fi is faster. As Gustaf points out, plenty of handsets seem to do a fine job managing battery life with 3G, while the speed of Wi-Fi versus 3G isn’t the issue — coverage is. O2’s CEO seems really excited that they’re building out their EDGE network, but what’s the point when they could be using that money to beef up their 3G service? It would seem they’re spending a decent chunk of change just to support this version of the iPhone, which is somewhat questionable given that 40 percent revenue share.

Jobs also talks some BS about opening the iPhone to third-party developers: “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.” Apparently “opening the iPhone to third-party developers” means that iPhone users can visit web sites. The rest of his comment doesn’t make any sense, either: “But people hold their phones to a higher standard than their PC.” So that means that people shouldn’t be able to load software of their choice on their phones, as opposed to their PC?

Speaking of the iPhone, I’ve been using it for almost a week now and I’ve got some early impressions.

Things I like:

• the screen. Seriously, it’s nice, and it’s huge.

• the speed. You tap something, and it happens. No lagging, no delays — just like it should be.
• no “out of memory errors”. S60 users know what I’m talking about.
• the browser. The Safari browser in here is the best mobile browser I’ve ever used, when it comes to viewing full PC-focused sites, especially when you turn the device sideways and get the landscape orientation.
• the Settings menu. It’s pretty simple and straightforward and easy to use. But I think part of that is a function of the fact that there’s not a lot to change around on the device.
• iPod functions. Work as well as you’d expect and Coverflow feature is cool. Being able to listen to podcasts through the speaker is cool, too (though I sort of discovered that by accident, as you’ll see below).

Things I don’t like:

• the earphone jack. I can’t get over this. For all of Apple’s vaunted industrial design chops, this is a real problem. The jack is recessed from the top of the device, so a lot of earphones can’t plug in far enough to reach it. I discovered this when I tried to connect the iPhone to a stereo with a standard patch cable, but no dice. Then I tried it with my Shure earphones — no dice. Of course, the crappy white earphones Apple includes with the iPhone work just fine, but they don’t really work with my ears. I’ve bitched plenty of times about the stupidity of handset vendors forcing people to use proprietary earphones or connectors with so-called music phones, and what Apple’s done here is just as bad. Of course, you can buy a $10 adapter to solve the problem — but that’s pretty ridiculous considering this device is an MP3 player with a phone shoehorned in.

• no real third-party app support. On one hand, I realize that I probably use more installed apps than the average user. On the other, the list of “cool things you can do with the iPhone” is pretty short. It can check stock prices and the weather with Dashboard-looking widgets. Yay. Google Maps is cool, for sure, and maybe YouTube is (I haven’t been able to get it to work), but those tricks get old pretty quickly. And most users won’t be able to extend the functionality, so no IM, or anything else users might want to do to make their iPhone more personalized and more useful.
• text entry. Honestly, I find it terrible. I don’t like having to use two hands to enter messages, and I’m much faster with T9 on a standard keypad or by using two thumbs on a QWERTY (which is impossible for me on the iPhone).
• the email client. I really think it’s pretty awful. Checking Gmail is really slow over EDGE, and I think the Gmail Java client is superior in almost every way — particularly since you have the ability to search your entire Gmail account, which is a very useful feature.
• the camera. no flash, no autofocus 2 megapixels = hardly exciting. Quality is decent, but not great.
• sharing photos is a real pain. The only way to get your photos to Flickr or another service without using a PC is via email. No automatic or one-click sharing, and what’s more, when you email photos, they’re resized and sent at 640×480.
• having to sync podcasts via cable is annoying. Mostly because I forget to do it. My iPhone is close to my Mac for large parts of the day; it would be great if they could talk to each other over Bluetooth and sort this out automatically, or the iPhone could grab the podcasts via Wi-Fi.

I’m still not convinced that Apple has a long-term winner on its hands, without significant improvements and a much lower price — particularly now that the iPod touch has been released. There’s no doubt that the iPhone is an interesting device, if for no other reason than the UI was created by people with no preconceived notions of what a mobile phone UI should be (for better or for worse). In the end, I don’t think that the UI is as easy to use as fanboys and the blogosphere would have you believe. I think that’s a fundamental deception touchscreens — the idea that they’re easy to use because “you can just tap on what you want to do.” But what if what I want to do isn’t there for me to tap on, as I frequently find with the iPhone?

The media hype and loud cries from fanboys that this is the greatest phone evar may drive some sales among the general pubic, but they’ll largely fall on deaf ears. The phone is still too expensive, especially compared to the latest iPods, and really, its features won’t hold that much interest for the general public as they stand, and simple device convergence isn’t powerful enough to overcome all the other drawbacks.