While the licensing will no doubt be successful for both Apple and Motorola, wouldn't Apple be better off just to find a way to produce a high-end iPod with a cell phone built in? The logical way would be some sort of physical metaphor with a rotary dial -- though most of the iPod target audience likely has little or no experience with rotary dialing, so designwise rotary emulation might be more of an implementation of physical constraints than a feature. Having to drag from one point to another on the touchwheel to input a number would be a good failsafe to try to prevent butt calls, but with the adoption of the click wheel for the white iPod, there is plenty on the wheel already. People buy Apple hardware because of elegant design -- overloading one control is confusing. A mic could be included between the screen and wheel at any rate, though this would rightfully leave Belkin and Griffin rather upset.
So for dialing, that leaves a few options:
1. Dial address book entries only, and no means of producing tones for menu systems -- so you can forget voicemail, which is mostly essential for cellular.
2. Buttons around the scroll wheel, not unlike the Nokia 3650, I suppose. This would allow numeric input for the dialing system (though not prohibiting dialing per #1) as well as Touch Tone generation for menu systems. Buttons would have to be touch buttons to maintain the beneficial lack of moving parts and large enough for practical use.
3. TouchTone keypad on the back, perhaps as a slide-down of some sort (but then that becomes jammed . Again, no moving buttons that can become stuck et cetera. Again, #1 is not rendered impossible by this.
Of the three, #2 seems the best option if it could be done correctly. Or iTunes could be licensed to a cellular company, which is no doubt cheaper for all parties involved and produces a better end product.
This will probably not cannibalize iPod sales much because fancy cell phones are rather expensive and this doesn't sound like it'll have anywhere near as much storage per dollar as an iPod (which has so much room that most can only conceivably fill it legally if they are using it for data backup etc. as well), if people are buying it rather than other cell phones primarily for music abilities.
Bearing in mind the complexity of the above listed alternatives and relatively small market for adding a telephone to the iPod, this seems to be the best course of action...as I imagine that there are plenty of people who will want to buy it.