Brian of Gizmodo is hard at work transcribing nearly word for word the whole dialogue between Walt Mossberg and Steve Jobs. I’ve clipped out parts of the discussion pertinent to MY iPhone.

NEWS FLASH!!

Straight from the the BIG man Steve Jobs himself.

Question: We’d love to write apps. Will it open up?

Steve Jobs: This is a very important tradeoff between security and openness. We want both. We’ve got good ideas, and sometime later this year, we can open it up to 3rd party apps, and keep security.

So what are analysts going to call the iPhone now?!

WM You have a phone?

SJ Yes (whips it out) best ipod we’ve ever made. Best phone we’ve ever made!

WM Coming out end of june, last day?

SJ Uh yeah. I’ll send you one. (giggles)

12:26 WM Selling it through the stores and cingular?
SJ Yes, cingular, which is the new AT&T
WM Just like the old AT&T. You’re a lot nicer to the phone companies now.
SJ Well, yes, We haven’t sold one yet but they broke a lot of rules. And we did the same. We wouldn’t show it to them. And we took a gamble on each other. I will never forget that.

12:27 WM Why did this work? They wanted your brand to go along with their new brand?

SJ So far, music not doing well on phones. On phones, you have 3g, but not good way to use. You get the baby internet and the mini internet, but nothing real. We’re doing that in an entirely new way. We’ll see.

12:28 WM Any feature in the iPhone you’d like to announce that you haven’t yet shared?

SJ Uh, no.

WM Is the iphone a phone with an ipod inside or is it the ipod wiht a phone inside

SJ it’s 3 things. It’s the best ipod, a remarkable phone, and the internet in your pocket.

12:34 WM how much back in forth is there inside, developing. I assume its like the UN where you have a veto.

SJ It’s not like that. If you want to keep talented people you can’t tell them what to do all the time…much.

WM How much debate about physical keyboard?

SJ None.

WM Really? In ALL of cupertino.

SJ. Yep

SJ I’ll bet you dinner, after a few days, after you get one, you’ll think its great.
Once you learn to trust it, you fly. And the screen UI can change as you come up with new ideas.

SJ Cingular said we need this button. They hadn’t seen it yet. Oh, I said that we’ll do that after we ship. They said, huh?

SJ Why is apple popular? Because the preeminent japanese gadget companies couldn’t do software.

The iphone is software wrapped in a beautiful package. And the companies couldn’t make that leap. And that’s why Apple has that success with the ipod.

If you look at hardware manufacturers for handsets, they haven’t been able to make the leap.

The usual suspects will try to copy the hardware. But the software is hard to do; 5 years ahead of anything we’ve seen. We started with an OS we’ve been working on for well over a decade and a browser, safari, which is regarded as many as the best.

12.41 WM But it doesn’t have the entire OS X software inside, or safari

SJ Yes it does. A lot of it is data. Desktop patterns, audio files. It has real desktop email, safari, OS X. And we took all that, and put a new UI on it. It’s an amazing amount of software.

WM On the technical side, could an OS X app run on the iPhone?

SJ We don’t think that’s a good idea. The phone has its own UI.