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Of course it's a pocket computer, all smartphones and PDAs are, they have CPUs, RAM, Storage, OS, installable SW...
Can iPhone replace Notebook - only if your requirements are really really small (low) and if you are willing to compromise a lot.
Is it better than PocketPCs and WM devices as Computer/Notebook replacement - NO, it can compare in some areas, it's better in some and it lacks in some.
Not just because it doesn't have SW yet, but simply because it's still too limited compared to WM and older PPCs to really fill that role - pretty interface is not enough in this case, you need SW that can handle more than just WEB and Mail, like Office creation, maybe access to file system... and you need HW capable of delivering somewhat decent experience like external keyboard and mouse, VGA output, USB host, expandability, maybe higher resolution - it's a pain to create office files on VGA device HVGA or QVGA it's just much worse.
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