When iPods first came out, it was not widely appreciated that the things were just portable disk drives. Storing and listening to music on them was clearly not the most revolutionary of its applications, and Derek pointed out that you could record everything you ever say, several days worth of live recording, or more if you shut it off when silent. Now, Apple's selling it.
What's next? My guess: add a little chip to it and make it a PDA. Oh, and bluetooth. I have a few ideas about what you can do with a little computing power and 20Gb in your pocket.
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