iPhone 3G Analysis: Apple's Big TeaseiPhone 3G Analysis: Apple's Big Tease

Oh, Steve Jobs, how you torment me! You've been teasing me for months with rumors of the upcoming new iPhone. Now, at last, you announce the thing -- but I have to wait another month to buy it. Curse you, Steve!

Apple announced the long-awaited iPhone 3G on Monday, with 3G support for double the network speed of the first-generation iPhone. Apple also slashed pricing. The device starts at $199 for an 8 GB model, and $299 for 16 GB, compared with a starting price of $399 for first-generation iPhone a year ago.

The iPhone supports Wi-Fi, 3G and EDGE networks and will automatically switch between them for the fastest download speeds. Apple beefed up battery life for the iPhone. With the introduction of iPhone 2.0, the iPhone has native support for third-party applications for the first time.

The new iPhone and software will be available July 11. The software will be a free upgrade for existing iPhone customers, and $9.95 to users of the iPod Touch.

Enterprise users will like the added support for Microsoft Exchange, the ability to remotely wipe the iPhone memory (useful if the iPhone is lost or stolen) and remotely install applications to users. Also appealing to enterprise users: Native support for Microsoft Office applications.

The announcement had only two real surprises.

The first surprise is the price cut. The steep discounts were rumored prior to the announcement but never really confirmed. However, don't get too excited -- monthly service charges are increasing, meaning total cost of ownership for the iPhone 3G is actually greater than it is for the current iPhone.

The other surprise is the delayed availability. We didn't expect it today, we expected it June 18. We had an inside source who swore to that date. So much for inside sources.

Location Services: Game-Changer

"What is really going to be a game-changer, though, is the higher speed in combination with the GPS chip, which will open up a whole slew of location-aware apps (some of which we’ve already seen)," writes Erik Schonfeld on the blog TechCrunch. "That and all the new iPhone apps that will be built for it by outside developers."

TechCrunch is right. While GPS-enabled cell phones are nothing new, the iPhone will offer market penetration and an elegant user experience that competitors lack. The iPhone was the second-most popular phone in the US in the first quarter of 2008, with about 19% market share, second only to Research In Motion, which had 45% market share, according to IDC. And RIM also offers GPS.

Consider: When the iPhone ships, almost two-thirds of the smartphones sold in the US will have GPS, high-speed wireless networking, and support for third-party applications. Location-based applications will become standard on smartphones.

So what do you do with location-aware mobile applications?

Find your nearby friends who also have GPS-enabled smartphones. I expect we'll quickly see apps that are interoperable between different models of GPS-aware smartphones. You'll be able to look at your phone display and see where all your friends, family, and business associates are. Of course, they'll also be able to see where you are. The availability of ubiquitous GPS-enabled smartphones will open a new privacy debate, about peer-to-peer privacy, hiding your location from friends, family, and co-workers. I'm sure this man caught on Google Street View walking into an adult bookstore will be displeased by this development (see #4 on the list).

Find the nearest ... whatever. Find the nearest Starbucks. Find the nearest cheap gas. Find the nearest place you can buy a new memory card for your camera, or AA batteries, or the nearest movie theater or park. You name it.

Getting lost will be something kids learn about in history class. TomTom has a version of its extremely popular navigation software ready to go for the iPhone, according to Engadget.

But I'm sure I can't conceive the most interesting location-aware applications that we'll see on GPS-enabled smartphones.

More Features, More Battery Life

The iPhone adds a couple of interesting small features: Users will be able to mass move and delete multiple e-mail messages -- previously, messages had to be moved or deleted one at a time.

And the iPhone 3G has a flush earphone jack. The existing iPhone has a recessed earphone jack, which means users can't use their standard cell phone accessories without an adapter.

The iPhone will also have a new scientific calculator, and parental control restrictions for specified content.

Apple bragged about improved battery life: 10 hours of talk time on 2G networks and 5 hours using 3G, with up to 5 to 6 hours of web browsing, up to 7 hours for video playback and up to 24 hours for audio playback. But Om Malik, writing on the blog GigaOm, is skeptical: "I will believe it when I see it, for Apple makes some wild-ass claims about battery life that are just flat-out wrong," Malik said. He cited battery the Macbook Air as an example.

The big change from a software perspective is that the iPhone will be open to third-party apps. Currently announced apps for the iPhone include several games, blogging client TypePad, location-aware social network Loopt, MLB at Bat for baseball video replay, and eBay auctions. The most interesting apps: Associated Press Mobile News Network, providing you with news updates based on your location, and iCall, a free Wi-Fi VoIP calling service that allows users to switch from cell to Wi-Fi even in mid-call. Those applications and many more be will be downloadable from the iTunes App Store.

More Costly In The Long Run

Data prices will go up, from $20 to $30 per month for unlimited usage, plus $40 for voice, according to a statement from AT&T, which adds that Apple will no longer be taking a monthly cut of the monthly network service fee; instead, AT&T will be paying Apple a share of the initial iPhone hardware sale.

iPhone buyers will end up paying more for the iPhone 3G over the two-year life of their AT&T contract than they paid for the first-generation iPhones, notes information's' Eric Zeman. Unlimited data services for business users will cost $45 a month.

Apple "has completely changed the basis of its deals with AT&T and other wireless carriers," writes Saul Hansell on the New York Times Bits blog. He adds:

The iPhone is still locked to the AT&T network, users of other networks won't be able to use it without a relatively complicated -- and potentially illegal -- unlocking. Also, users are still required to commit to a two-year contract. That's disappointing.

Another disappointment: I want it now.

MobileMe And Snow Leopard

Apple announced a rebranding and upgrading to its .Mac service, renaming it MobileMe. The service now offers push e-mail synchronization for e-mail, contacts, and calendars between the iPhone, iPod Touch, Macs, and Windows PCs. It also has a Web gallery for sharing photos and iDisk for storing and Exchanging documents online. It uses native apps on the Mac, iPhone, and iPod Touch, and uses Microsoft Outlook on Windows. It provides up to 20 GB of storage for $99 per year for individuals, and $149 for a Family Pack, with a master account with 20 GB of storage and four Family Member accounts with 5 GB of storage each. Subscribers can purchase up to 40 GB additional storage for up to $99 per year.

The upgrade to MobileMe is nice, it means that you don't need to dock your iPhone or iPod Touch to your PC to synchronize data -- unless you buy new music, change your playlists, or subscribe to podcasts. Also, the 60 GB storage maximum is scant in an era when the hard drive on a low-end iMac is 250 GB. MobileMe looks nice enough, but I want more -- music synchronization, and unlimited storage.

Apple also described Snow Leopard, according to the Unofficial Apple Weblog. It's the next version of Mac OS X, focused on quality and performance rather than new features. It will be optimized for multi-core processors using technology code-named Grand Central, support up to 16 TB RAM, and include native support for Microsoft Exchange 2007 and a new JavaScript engine for improved performance. Apple plans to ship Snow Leopard in about a year, TUAW said.