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The consumer electronics maker is rolling out games for the iPod and is in talks with EA about games for the forthcoming iPhone

As iconic as Apple may be in consumer electronics—from personal computing to digital music and, now, mobile phones—it hasn't exactly set the gaming world on fire. The Mac lags behind competing brands in gaming software.

But in recent months, Apple has shown a new openness to gaming by introducing a spate of titles for its iPod digital music players. The company tapped several game publishers, including Electronic Arts and Namco, to deliver a selection of casual games. Titles include classics such as Tetris and Pac-Man, updates of old staples like the Arkanoid-inspired Vortex, and diversions with current pop-culture cachet like Sudoku and Texas Hold'em.

The news that Verizon Wireless, Apple’s first carrier choice, passed on the iPhone two years ago is generating immense chatter in the telecommunications community.

For Apple supporters, Verizon Wireless made a dreadful mistake in turning down a chance to co-brand with the Cupertino, California-based marketing juggernaut. Particularly since the iPhone’s interface could spur wireless data usage among well-heeled subscribers.

I used to be an iPhone skeptic. Then I cleaned out my bedroom closet. Let me explain. In the two hours or so I spent sorting the detritus of the last six years of my life, I came across my first iPod, the first-generation, Mac-only version that Apple unveiled in late 2001 to a world that initially didn't seem to understand the significance of what was coming. It was then that I was reminded of the introduction of a good but imperfect product that would be tinkered with and improved on by the Apple machine, all the while ushering in nothing less than a revolution in consumer electronics. History may soon repeat itself.

The cost to make an iPod, Xbox, and other electronics has big bottom-line implications at Apple, Microsoft, and their peers. Some companies are willing to swallow losses on some gadgets—for instance, gaming consoles—in hopes that they'll make up the difference, and then some, on sales of related gear, such as video game software. Other companies, including Apple, are able to sell many products for a healthy profit from the get-go.

Apple dropped the “computer” from its name Tuesday, further underscoring the company’s plan to permeate every aspect of a consumer’s digital lifestyle, as CEO Steve Jobs delivered the type of fast-paced and entertaining presentation that has become synonymous with the company.

Mr. Jobs delivered on rumors of an Apple-branded phone, called the iPhone (see “Steve Jobs iPhone Call”). It also brought out Apple TV, a digital media adapter Mr. Jobs talked about last fall (see “Apple Tunes iTV for Battle”).

Apple's (AAPL) introduction of the iPhone on Tuesday (see BusinessWeek.com, 1/10/07, "The Future of Apple") underscores the lesson Motorola (MOT) learned with the Razr: A sleek, sexy design can create lots of buzz and drive sales, but without smart, usable interface design, consumers will end up angry and disinclined to buy your next "hot" mobile-phone offering.

Design has nominally been a priority of cell-phone makers for a while now, at least since Nokia took the No. 1 spot in the market, thanks, in part, to its focus on color and style. Samsung played the design card in its rise. Then came LG, with its "Chocolate." But design, as these companies have embraced it, is little more than styling. It is design in the service of product lust, rather than user experience.

Apple Chief Executive Steve Jobs says the new iPhone is a product destined to ignite a "revolution" in telecommunications.

But could the iPhone also spark a civil war between the companies that produce it?

That's what business experts are wondering as Apple, founded by hippie renegades in a Silicon Valley garage in the 1970s, partners with one of the nation's oldest corporate entities.

Cingular Wireless, which has an exclusive, multiyear agreement to provide cellular service for the iPhone, is a subsidiary of San Antonio-based AT&T.

Cisco Systems Inc. said on Wednesday it sued Apple Inc. over its use of the iPhone trademark held by Cisco, a day after Apple unveiled a widely anticipated multimedia device of the same name.

The highly volatile shares of Apple, which was not immediately available for comment, initially fell 1.3 percent in after-hours trade following the announcement and then pared the loss to less than half a percent.