Most of the people predicting that the iPhone will not be as successful as everyone believes give two reasons: price and the fact that it does not run Microsoft's Office. The price argument is moot considering that other phones such as the RAZR cost quite a bit when they first came out and the iPhone is years ahead of devices such as those. The software point, however is important, especially considering that Apple still has not decided whether or not they will let third party applications on the phone.

As true as it might be that the iPhone will not run Microsoft's Office, the truth is, it does not have to. Open source alternatives have been adopted by many companies, because you don't really need Office, you just need to be able to work with office documents… And it looks like the iPhone will be able to do this.

In an interview for The Seattle Times, Glenn Lurie, AT&T's "point man" on the Apple iPhone project let slip a little bit of information that confirms rumors and speculation.
When asked about the price of the device, Lurie said "...you have the widgets, some of the Google applications that are coming - there are just so many things here that the price will not be an issue."

Google applications on the iPhone were expected by many, considering the fact that Apple and Google have been very friendly as of late, and that both companies have a history of rivalry with Microsoft. Apple intends to beat Microsoft hard in the mobile software market, and play the game their way. It is not surprising that Google was invited to the party, neither that there will be no Microsoft Office for the iPhone. Apple probably wouldn't use Office even if Microsoft was giving it away for free.