So, here's the question: what's an iPhone for? The advantage to the thing being a fairly versatile platform is that the marketplace for apps might be able to answer this question for us. It's for whatever people decide to use it for -- even if that includes, say, editing Word and Excel docs?
Right now, you can read Microsoft Office docs on your iPhone, but not create or edit them. That may change, though, as the head of Microsoft's Macintosh BU hints that his company is seriously considering bringing Office to the iPhone platform. Since Office routinely costs hundreds of dollars to buy for PCs or Macs, it will be interesting to see how much Microsoft will charge for the iPhone version (my guess: not hundreds of dollars). They'll be beat by a longshot by Quickoffice, a product that promises the ability to edit Word and Excel files and should be here in the next few weeks for $9.99.
The question, of course, is whether anyone will ever want to do anything like this. I have my doubts, and apparently I'm not alone. I can see the usefulness of being able to read a Word- or Excel-based attachment, and I suppose some folks will want to make a few tweaks to documents while they're on the go, but it just really seems to me that the market for people who will want to do serious document authoring or editing is miniscule. The screen-based, no-tactile-feedback iPhone keyboard is pretty much my least favorite feature of the phone, and it would make any kind of serious work impossible. It might be worth $10 to people to make minor edits to files while they're away from their computer, but probably not much more; assuming Quickoffice does a good job with file compatibility, and that Microsoft charges more than $10 for their own iPhone Office, I don't see it being a big money maker for them.
The wildcard, of course, is the possibility that an iPhone OS-based netbook, with a real keyboard, is being developed somewhere in the depths of One Infinite Loop. Not that I think Microsoft has some big inside scoop on this, but it's a likely enough possibility that it might be worth their while to invest the resources in an iPhone Office port now to be ready. Of course, I'd imagine that Apple would also have iNetBook-ready versions of Pages and Numbers ready for that rollout too.