I'm not an insider, I just think I'm a pretty good guesser, even though I was so very, very wrong on the Intel thing... anyway here's some guesses, so after the announcement I can either yell out I told you so, or, umm, slink away in disgrace.
There's an iTunes phone. The most predicted model is the ROKR E1 - the Moto e790. People say it will be sold with 256K or 512K memory by Cingular in the US, T-Mobile in Germany, O2 in the UK. The iTunes on it will sync up with your iTunes on Mac like a Shuffle. Cingular will also let you buy iTunes music for $2 to download straight into the phone. By the way, that's notable because it would be the first time you tranfer a tune FROM the portable device INTO iTunes on the computer - iPods have been one-way sync.
But is that worth this big "here we go again" announcement? Even with some good iPod bumps tossed in? Moto announced, way back when, there will be a whole line of iTunes phones. So here's my big guess: We will see more than one model announced, and the top of the line will be more than a phone with iTunes software stuck on top of it. It will be a phone based on hardware identical or similar to the Moto e680i. It is a phone, yes, an 'iPod' yes, but it is also the first 'Video iPod'.
That phone can hold at least 2GB memory on an SD card. It runs a fast Intel 300MHz XScale CPU. It runs Linux, and that makes it incredibly customizable. Apple can drop in a simple iTunes program, but it can do more - now, or later through downloadable firmware updates. It could replace just about all the software, or it could change things module by module - the UI, the PDA, syncing, whatever. Think about Apple making a phone from scratch. It would pretty much have the hardware in this thing. A decent set of chips, Intel based, *nix kernel. The hardware and software in this existing, tested phone is a great place to start.
The hardware is a GSM phone, controls that look a bit iPod-ian, even has the headphone jack on the top. Standard fast mini USB port for syncing and charging. The screen is 320x240, touch sensitive with stylus. There's an FM radio, stereo "3D sound" speakers, the new stereo Bluetooth and a VGA camera with 8x zoom. Vibration. And the logo lights up in multiple colors.
The software is Linux. There's Java, 3D graphics, PDA functions. An MPEG4 decoder. It plays video in landscape mode. It records video. It plays MP3, MIDI, and RealVideo. IT does texting, handwriting recognition, voice recognition, IM, MMS, POP and IMAP EMail. GRPS data, WAP and Opera. The Linus does Samba and even telnet.
If you were Apple, would you use this phone, smaller than the Sony Ericsson 910, that sells now for less than $350 without subsidy, as a starter for an Apple phone/music/video pod? I would.
And I'd expand the video stuff you can get now on the iTunes Music Store. SHORT, pocket sized video for geeks on the go - 2 minute news and weather, 3 minute music videos, 4 minute video podcasts like Rocketboom and Tiki Bar which are there already. Cartoons. Animations...