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Steve Jobs has claimed that the iPhone runs a true version of Mac OS X. Third party applications may be limited to web applications on Safari, but Apple can decide to put any program that works on OS X onto the iPhone. What Apple application would be a good candidate for a device like the iPhone?
I think GarageBand would be an excellent candidate for porting over to the iPhone. I suggest “porting over” instead of putting the full application onto the iPhone because of usability. The interface would require some tweaking for using the application on such a small screen and be easy to use.
GarageBand could easily act as a voice recorder for notes or for podcasting. A plethora of accessories are bound to be developed for the iPhone through its dock connector. A different microphone could easily be attached through the dock connector for more sensitive recording applications.
Additionally, if this device truly runs OS X, it should be able to support external USB devices. A dock connector to USB attachment is bound to be developed which would allow the use of hundreds of new devices with the iPhone. This could allow hooking up an iPhone to a USB mixing board or an external hard drive or adding additional flash memory for recording on the go. GarageBand on the iPhone, with the right peripherals, could be a music studio in your pockets.