I could, however, afford the $229 iPod Touch - and got it as a gift, as it happened. It has most of the same goodies: a Web browser, e-mail, YouTube. And it stores way more music than the iPhone. (Ha!)

Plus, the other day I used it to call China.

Yup, a call around the world - on a device that doesn't have a phone. A handful of applications on Apple Inc.'s iTunes store will let you do this, as long as you're in a Wi-Fi hot spot.

My iPhone complex hasn't disappeared, but at least now I have a device that looks just like it, has no monthly service fees, and lets me make free or cheap phone calls.

The best part of these applications - which require the second-generation iPod Touch that came out last year - is that they are free to download, and calls to other people using the same app won't cost you anything.

Two of the services I've tried, Truphone and Fring, will also let you make free calls to Google Talk users and type instant messages to friends online. Both automatically queue up a list of buddies from different services you might have, including Gmail chat, AIM and MSN Messenger, once you log in.

But it's Truphone's pay feature that puts it ahead of the others. TruPhone charges you to make calls to landlines or regular cell phones, but generally at better rates than most wireless carriers. And it's upfront about what you pay.

Your balance - which you can add to with a credit card, either on the device or on your computer browser - pops up with the dial screen. Calls in the U.S. are all 5 cents per minute (2 cents if you sign up to pay a $4 monthly fee).

Rates outside the U.S. vary wildly but you can check in the application before you dial. To call cell phones in China, for instance, is only 5 cents per minute, while France is 25 cents. Antarctica? A whopping $2.25.

You can make regular calls with Fring using a Skype account, but that's another layer to deal with.

The calls on these services sound pretty good, a little tinny but clearer than my regular cell phone connection. IPod Touch users will need Apple's $29 ear buds that have a tiny microphone on the back of the volume control along the cord.

The most serious drawback is the most obvious: While the iPhone uses AT&T's wireless network to provide Internet access anywhere, on the iPod Touch you'll need to stick to Wi-Fi hot spots. For rural or suburban dwellers who don't encounter lots of free Wi-Fi zones, that may very well mean limiting yourself to your house, or other places where there's a computer with the same Internet phone call capabilities anyway.

That means these apps probably won't replace your cell phone. But they can moderate your iPhone envy.

Copyright 2009 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed

Ahead of the Bell: Analysts cheer iPhone update

Apple Inc.'s new iPhone operating system should help the company win a larger share of customers buying smart phones, analysts said.

Thomas Weisel analyst Doug Reid said Apple's presentation on the new features Tuesday left him "more confident that (Apple) remains well positioned to gain share in the smart phone market."

In a client note Tuesday, he estimated the Cupertino, Calif. company will capture 11.8 percent of that market this year, up from 7.7 percent in 2008. He kept an "Overweight" rating on shares.

Apple's new software will allow users to cut and paste text for the first time and offers new tools to third-party software makers, including the ability to create applications that have items for sale within them and access to customers' iTunes library of songs.

Needham & Co. analyst Charlie Wolf told clients in a note Wednesday that the new system shows "that Apple is not standing still but continues to build on its leadership in the smart phone operating system and application software market." He kept a "Strong Buy" rating on the shares.

Copyright 2009 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed

How iPhone 3.0 Will Feel Different

Apple says it is expanding iPhone features

Apple Inc. is broadening the ways that third-party software programmers can sell content on the iPhone.

Apple (nasdaq: AAPL - news - people ) says software developers now will be able to create applications that have items for sale within them, such as electronic books or additional levels of a video game.

he company unveiled the new tools along with the third generation of software for its iPhone during an event for journalists at its headquarters in Cupertino.

Apple launched the most recent iPhone last summer. The company sold 13.7 million iPhones in 2008.

Copyright 2009 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed

In a few hours, Apple is for the first time showing off its iPhone 3.0 operating system at an event at its headquarters in Cupertino, Calif. The event, which came up at the last minute, is expected to showcase some major changes to the platform. Today, I’ve heard what one of those change may be.

Apple is likely looking at a way to integrate iPhone and iPod touch apps with other devices, a trusted source tells me. Basically, this means that if you have an app on the iPhone, Apple wants to allow other devices, including those not made by Apple, to be able to access those apps. This would likely occur through the 30-pin dock connecting socket, says my source.

While there are some significant ramifications to such a move short term, in the long term, this still says to me that Apple is looking for a way to move its robust app platform beyond the iPhone and iPod touch, and into several devices.

Being so close to the actual event, I haven’t had the opportunity to corroborate this potential feature, so I’ll leave it as a rumor. But again my source is trusted, and even if this isn’t part of the announcement tomorrow, I’m confident that this will be coming eventually.

For what it’s worth, my source also didn’t believe that a tablet device would be a part of the announcement tomorrow. While they believed that eventually this will be a part of Apple’s plans, they didn’t see the timing as lining up well for tomorrow’s event.

VentureBeat will be at the event tomorrow, covering it live both on the site and in this FriendFeed room.

Shaking Up Advertising

Dockers' iPhone ad is the next wave of mobile marketing.

A number of addresses have also been reserved for private use. These addresses are nonroutable and normally should not been seen on the Internet.  Tables defines the private address ranges.

An executive from Google Inc. is becoming the latest CEO of AOL, raising hopes that he will be able to turn around Time Warner Inc.'s struggling Internet unit.

Tim Armstrong, who had been a senior vice president at Google (nasdaq: GOOG - news - people ) and head of the company's North and South American advertising operations, replaces AOL CEO Randy Falco, a veteran TV executive who took the job in November 2006. Falco, along with Ron Grant, AOL's president and chief operating officer, are leaving AOL.

Tim Armstrong, who had been a senior vice president at Google (nasdaq: GOOG - news - people ) and head of the company's North and South American advertising operations, replaces AOL CEO Randy Falco, a veteran TV executive who took the job in November 2006. Falco, along with Ron Grant, AOL's president and chief operating officer, are leaving AOL.

Armstrong, 38, also will take over from Falco as chairman.

This shake-up - one of several the company has experienced lately - could mean a spin-off of AOL is more likely. Time Warner (nyse: TWX - news - people ) CEO Jeff Bewkes has said he's open to a merger or sale of AOL, and in a statement Bewkes said Armstrong would help Time Warner "determine the optimal structure for AOL."

"Tim is the right executive to move AOL into the next phase of its evolution," Bewkes said. "At Google, Armstrong helped build one of the most successful media teams in the history of the Internet."

Armstrong worked at Google for 8 1/2 years. As the company's first employee outside of Mountain View, he started its New York office.

The transition is another sign of turmoil in Time Warner's decade-long attempts to salvage its 2001 acquisition by AOL, once known as America Online. The $147 billion AOL-Time Warner deal symbolized the astonishing wealth created by the dot-com boom and quickly became one of the most disastrous marriages in U.S. corporate history.

During the past few years, AOL has been realigning itself around three core businesses - its Platform A advertising unit, MediaGlow publishing unit and People Networks social media unit. These businesses are meant to bring in revenue through online advertising, as a way to offset losses from its fading dial-up Internet access service.

Besides realigning AOL, Time Warner has made moves to separate the dial-up operations from these ad-focused businesses, which would make it easier for Time Warner to sell one or both.

Problems have persisted, though. In early February, Time Warner reported that AOL's fourth-quarter revenue dropped 23 percent to $968 million, hurt by falling subscription revenue and ad sales.

There have been numerous management changes as well. A day before its parent company's quarterly report, AOL named former a Yahoo Inc. (nasdaq: YHOO - news - people ) executive, Gregory Coleman, to head Platform A. Coleman replaced Lynda Clarizio, who had come on just last March.

Another reminder of the ongoing troubles came the day of Time Warner's report, when Google - which paid $1 billion in 2006 for a 5 percent stake in AOL and is its largest shareholder aside from Time Warner - triggered an escape clause in its contract with AOL. The clause forces Time Warner to spin off Google's holdings through an initial public offering or repurchase the stake at current market value.

This came after Google wrote off $726 million of its investment in the fourth quarter because of AOL's falling value. Google had made the investment in an effort to increase its advertising partnership with AOL and prevent rival Microsoft Corp. (nasdaq: MSFT - news - people ) from trying to get involved with the company.

Richard Greenfield, an analyst with Pali Research, called the management change "a huge positive all around" for Time Warner investors. With Armstrong at the helm, he thinks it's more likely that Time Warner will eventually separate the AOL unit from its main business.

Kevin Lee, chief executive of search marketing firm Didit, feels the same. If the economy and stock market improve, and Armstrong is able to shape up AOL, Lee thinks it is possible that Time Warner would spin the business off as a public company or sell it.

Regardless, he's certain Armstrong has plenty of work ahead of him.

"If he wanted challenges, he picked a great place for challenges," Lee said.

Copyright 2009 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed

iPhone OS Preview

Apple on Tuesday will discuss new features for its iPhone software.

iPhone OS Preview

Apple on Tuesday will discuss new features for its iPhone software.