I'd like to know what "be picking up the phone" means in the following. Does it mean a person is holding the phone, or is about to pick up the phone?
John is picking up the phone.
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It means 'about to', but the point of the expression includes what John is doing now not just what he will do. John is engaged in 'picking up the phone activity'... ie he has gotten up from his chair, is walking to the phone, etc.
This separates it from, "John will pick up the phone" which is purely in the future, and "John picked up the phone" which is in the past. The John that is 'picking up the phone' is moving, he has intention, he said something, etc.
In addition to what Vaughn Ohlman says, to "pick up the phone" often means to answer an incoming call.
The "pick up the phone" idiom got its meaning in the days of heavy wired telephones with handsets; to "pick up" was to lift the handset, thus accepting the call.
So "John is picking up the phone" could mean "The phone is ringing, and John is on his way to answer it"
It's almost a direct match for answering the phone, which can be used to mean any part of the process between (and including) going to the phone and greeting the person who's calling. It can also mean the more general idea of potentially doing so in the future.
"Who is working today?" "Mary is at the cash register and John is picking up the phone."
If the phone rings then it's John's job to answer it, but the phone is not necessarily ringing right now.
"What are the responsibilities of this position?" "Greeting customers, responding to e-mail, and picking up the phone."
Lexico.com has this definition for answering:
[with object] Act in reaction to (a sound such as a telephone ringing or a knock or ring on a door)
Does it mean a person is holding the phone, or is about to pick up the phone?
Pedantically, it's between those two. A more explicit rephrasing would be:
John is currently in the process of picking up the phone.
I.e. he is holding the phone and lifting it as we speak.
Alternatively, it can also mean that John is the one who always picks up the phone during the time period we're discussing. For example:
I've been calling Joe and John's shop all day because I need to talk to John, but John is picking up the phone today.
This phrase can also be used to describe John being en route to pick up the phone, e.g.:
The phone is ringing! You don't have to drop what you're doing, John is picking up the phone.
This sentence is reasonably correct regardless of whether John already has the phone in hand or if he is still walking towards the phone.
Pedantically, it means he already has the phone in hand, but common parlance often isn't that pedantically precise.
An alternative example that better highlights the distinction:
I'm picking up the children from soccer practice
The surrounding context defines which interpretation fits best.