Do you really need an iPhone 3G? We give you 5 reasons it’s the world’s best cell phone—and 5 reasons to wait to buy one or just keep rocking your 2G iPhone.

We admit it—after hearing Steve Jobs’s keynote at the Worldwide Developers Conference on June 9, we all wanted an iPhone 3G. Badly. There’s plenty to like about the iPhone’s second coming, but we wouldn’t be doing our jobs if we didn’t show you both sides of Apple’s newest smartphone, the good and the bad. In fact, the original working title of this article was “10 Reasons You Need an iPhone Now,” but in researching the story, we couldn’t look past the device’s clear downsides.

So in the spirit of the proverbial angel and devil that sit on either shoulder when you’re weighing a decision, we present both the good and the bad news about the iPhone 3G, so you can you make the most informed choice possible.

{Good}
5 Reasons to Buy an iPhone 3G

First let us say that despite a few misgivings (see p26), many of us at Mac|Life opted to buy iPhone 3Gs in the end. These five reasons in favor of the device ultimately proved too compelling to ignore.

{Reason 1}
3G: Because faster is better.

A lot of people got very excited about a 3G iPhone, but for some, the question remained: What exactly is 3G? On a purely technical level, AT&T’s 3G network is a third-generation HSDPA (High-Speed Downlink Packet Access) data network. AT&T’s 3G network has been available for users of a variety of smartphones and other 3G-capable handsets. With the release of the iPhone 3G, iPhone users are gaining feature parity with users of other smartphones on AT&T’s network. As Steve Jobs illustrated during the WWDC keynote, AT&T’s 3G network can be quite fast, often several times the speed of its previous EDGE (Enhanced Data rates for GSM Evolution) network, and coming remarkably close to speeds you might expect from a Wi-Fi network.

AT&T’s older EDGE network gives you download speeds in the neighborhood of 100Kbps, although it can vary widely. In our recent tests with an original iPhone, we were able to connect to the EDGE network at 29Kbps on the low end, all the way up to just over 100Kbps, although AT&T claims EDGE speeds up to 135Kbps. On the 3G network, AT&T is boasting speeds up to 1.4Mbps. While real-world usage varies considerably, the 3G network offers an undoubtedly improved Web-browsing experience.

All this speed means several things. Email and Web browsing is easier on the iPhone 3G. Beyond that, however, the improved network makes the iPhone an attractive platform for developers, as well as for cellular carriers overseas, where 3G networks are often more well-developed than they are in the United States. The bottom line is an increase in user base that promotes more innovation on the iPhone as a platform, resulting in better user experiences for all iPhone owners, in addition to the faster Net connection.

{Reason 2}
Game On: Because nobody hates fun.

The iPhone 3G plays sophisticated games with 3D hardware-accelerated graphics and 3D positional audio—think PlayStation 2 or GameCube quality, beyond anything possible on the tiny screens and wimpy processors of most mobile phones. The iPhone has a touchscreen like the handheld Nintendo DS, plus an accelerometer for gesture-based controls, like the Nintendo Wii controller. Players can tilt the phone to steer race cars, tap the screen to shoot enemies, drag body parts to build Spore creatures, and so on.

Cro-Mag Rally ($9.99 in the App Store) lets you steer your caveman’s car by tilting the iPhone around.

The iPhone’s unique features should lead to some creative game development too. Since it’s got an Internet connection, it’s plausible that a game could send data back to a central server and then down to a companion game on your computer, combining at-home and on-the-go experiences. The iPhone’s camera and GPS could also combine gaming with social networking based on players’ real-time locations.

The current handheld game devices, the Nintendo DS and Sony’s PlayStation Portable, also offer Wi-Fi, and the PSP can play MP3s and make VoIP calls with Skype—and of course, there’s no monthly fee to AT&T. But each is still another gadget to carry around, plus you have to drag along removable game discs and cartridges, which range from $20 to $40 a pop. 

Pangea Software’s Enigmo ($9.99 in the App Store) won Best iPhone Game at the 2008 Apple Design Awards.

iPhone game prices vary too, but Super Monkey Ball, Enigmo, Wingnuts Moto Racer, and Cro-Mag Rally cost just $9.99, and Tap Tap Revenge, Blip Solitaire, and Arcade are free. Some developers could give away games to build a user base and monetize by showing in-game ads, but even if that model never catches on, the lack of physical game discs or cartridges to manufacture and ship should help keep prices low. We expect a rash of accelerometer-based action titles and multitouch casual games to litter the App Store’s Most Popular lists by the time you read this, perfect for quick bursts of gaming in waiting rooms and train stations everywhere.

---

{Reason 3}
GPS: Because wherever you go, there you are.

Sure, other mobile phones have GPS receivers built in. There are even some phones, like Garmin’s nüvifone, whose sole purpose, other than making calls, is to function as portable navigation devices (PNDs). But this, after all, is not just any mobile phone—it’s the iPhone.

Those who make portable navigation devices have reason to fear the iPhone 3G’s impact on their business. iPhone 3G users have everything to gain, including a better sense of where they are and how to get where they’re going.

The original iPhone isn’t completely devoid of location-based features, of course, but Apple says that the A-GPS (the “A” stands for assisted) in the iPhone 3G uses a unique approach to finding the closest satellites, which means Google Maps on the iPhone 3G can tell you almost instantly where you are—and, of course, how to find what you’re looking for (Pizza? Coffee? Sushi? Leather goods?) or get where you’re going.

The iPhone 3G can also put you on the map by triangulating your position using Wi-Fi and cellular towers—you know, just in case the satellites are on the blink. Combine that with its Wi-Fi capabilities, and you’ve got a very powerful pocket tour guide to any new city you visit. In the typical Apple style of couching a techie explanation in “Isn’t it amazing?” simplicity, Steve Jobs demonstrated at the June 9 keynote how the iPhone 3G could track a user’s location as they drove down San Francisco’s famously zig-zagging Lombard Street. In our tests, the iPhone3G’s GPS feature worked well in most locations. Tap Maps and the phone “sees” your location and shows your movement in real time (this works best in a moving vehicle, of course)—pointless fun if you know where you’re going, but immensely useful if you’re lost.

Parks Associates Research Director Harry Wang says it remains to be seen how much of the PND market the iPhone 3G bites into, but “PND manufacturers should be concerned about iPhone’s GPS functions and the trend it will lead.” It comes down to apps that call on the phone’s GPS function, Wang says. “Apple developers hold the key to successful adoption of the GPS function on the device, because GPS technology is no differentiator, the applications and content are.”

Finally, built-in GPS means photos shot with the phone’s camera are automatically geotagged with the shot location’s latitude and longitude—a feature with negligible everyday usefulness for the average user, but a fun nice-to-have function, especially for Flickr nuts.

{Reason 4}
Exchange Support: Because you work, so the iPhone should too. 

Out of the box, the iPhone 3G comes ready to connect to most corporate networks. By adding support for Microsoft Exchange, Apple is making a play to put an iPhone into the pockets and briefcases of business users everywhere. If you currently carry a BlackBerry for access to work-related resources, in addition to your personal cell phone, the iPhone 3G could be everything you need in one slick package. And thanks to Apple’s inclusion of enterprise-level security tools, convincing your IT department to support the iPhone just got a whole lot easier.

For business users, the iPhone 3G’s push features are what make it a must-have device. Changes made to your contacts and calendars, as well as new email messages are sent to your iPhone in real time. This is in contrast to the old system where you had to manually check for new email, or wait for the next sync for recent changes to show up across your devices. This makes using email on the go much easier and allows mobile workers to keep important information in sync with colleagues back at the office.

Via MobileMe (www.me.com), Apple has also created a way for individual users to take advantage of most of the features available to enterprise users. Using the $99-per-year service that Steve Jobs calls “Exchange for the rest of us,” your contacts, calendars, and email will still sync automatically via “the cloud.”

From a security standpoint, iPhone 3G also comes ready to handle enterprise-class security. A built-in Cisco VPN supports IP-based encryption, and the iPhone 3G also supports IMAP email, bulk device-configuration, and a Remote Wipe option, allowing enterprise users to remotely erase confidential information when company iPhones get lost or stolen.

{Reason 5}
The App Store: Because a smartphone without apps ain’t so smart.

When Apple announced that third-party developers could write native applications to be sold via a wireless App Store on every iPhone and iPod touch, the response was huge—the SDK was downloaded more than 250,000 times in three months, 25,000 developers applied for the paid iPhone Developers Program, and this June’s Worldwide Developers Conference, featuring 62 iPhone sessions, sold out. Mobile development is exploding, with the 500-plus apps in the App Store leading the way.

Third-party apps mean your iPhone can be a true computing tool, not just a call-making iPod. And getting apps is as easy as buying a new song in iTunes—on your Mac or over the air. No typing a credit card number, no discs, no emailed license codes. You tap “Install” in the App Store on your iPhone, then your iTunes account (linked to your credit card) is charged and the app is loaded on your phone.

Don’t worry about someone else going on an App Store spending spree if you ever lose your phone—the Store prompts you for your iTunes account password when you want to install any app, paid or free. The apps are synced back to iTunes 7.7 when you dock your iPhone, so you should be able to load them to another iPhone in case you end up upgrading later. While Apple touts Remote Wipe as a key feature of the iPhone 2.0 software, it appears that feature applies only to enterprise customers (whose IT departments can set up and remotely manage a group of iPhones across a company), but we hope Apple provides some way for regular Joe customers to de-link a lost or stolen iPhone from their iTunes account over the Internet.

But do you even need an iPhone 3G to take advantage of the App Store? Not at all—it’s open to iPhone users as well as owners of the iPod touch (which uses Wi-Fi). Apps smaller than 10MB can be downloaded to an iPhone over the 3G or EDGE networks, which means the iPhone 3G, in a 3G network area, grabs them about twice as fast. Apps larger than 10MB can be purchased over Wi-Fi on either iPhone or the touch, or bought within iTunes and synced to the device. At launch, more than half the apps were $5 or less, with entries in nearly 20 categories, and more will be added in the coming months. This phone is starting to look pretty smart indeed.

Still Can’t Commit?

If the iPhone 3G sounds too risky (not sure if you’re in a 3G coverage area? Don’t know if 16GB is big enough for your needs?), don’t worry too much about getting locked into a two-year contract—as long as you remain vigilant. After signing up for your iPhone 3G data and voice plan, you still have 30 days to change your mind before you’re subject to the $200 cancellation fee. To get out of your contract within those first 30 days, bring your iPhone in its packaging and all your receipts and paperwork to an AT&T store. You won’t get to keep your iPhone 3G, though—the purchase price will be refunded. So take heart, commitment-phobes, but don’t space on the date: We suggest setting multiple reminders for yourself in iCal, Google Calendar, or whatever you use, starting a week before the deadline and increasing in urgency until zero hour.

---

{The Bad}
5 Reasons to Wait

If you earmarked 200 bucks for an iPhone 3G on June 9 when it was announced, you’re not alone. But you know what Mom would say: ”If all your friends jumped off a bridge, would you do it too?” Mom’s got a point. So before you take the leap, here are five key points to consider.

{Reason 1}
Size Matters: Because we all know a 32GB iPhone is coming.

Of course it is. It must be. A 32GB iPod touch is available today for $499. And the price of flash memory has fallen sharply in the past year. In fact, if you search Google for the terms “flash memory” and “Apple effect,” you’ll find dozens of articles about how Apple’s massive orders for NAND flash memory chips have been one of the main forces driving growth in the industry. (Besides the iPhone, flash memory is used in the iPod nano, iPod shuffle, iPod touch, and in 
the solid-state disk drive available as an option for the MacBook Air.)

Recently, prices have been slipping—an 8Gb memory chipset (which is equivalent to 1GB of memory) was down to $2.28 at the end of June 2008. That’s a 31 percent drop from its price of $3.26 at the end of May, and a whopping 72 percent less than its $8.25 price in June 2007. And in early July, the first sign of these lower costs being passed on to consumers in the form of price drops hit Apple’s retail line: The solid-state disc option in the MacBook Air dropped to $599 for a 64GB drive—when the Air was first introduced, that same upgrade cost $999.

Samsung Electronics, which supplies the NAND chipsets to Apple, told its other customers to expect reduced supplies in July so Samsung could fill Apple’s latest order for 50 million 8Gb-equivalent chipsets, which is enough to make 3 million 16GB iPhones, 6 million 8GB iPhones, or some combination. Apple needs to move at least 7.7 million iPhones from the 3G launch to the end of 2008 to hit its goal of 10 million sold, which shouldn’t be too tough since it’s debuting in dozens of new countries. But a late-year refresh could provide a welcome boost, turning July’s hot product into the must-have holiday gadget. Think of all the extra apps, movies, and music a 32GB iPhone could hold—that’s a lot of extra coin jingling around in the iTunes and App Store coffers to boot.

Of course, Apple doesn’t comment on its future product plans, but we expect to see a 32GB iPhone on the market by the end of 2008.

{Reason 2}
Money Matters Too: Because it’s not really cheaper.

Sure, the $199 price tag on the 8GB iPhone 3G looks great, especially compared to $399. And Apple certainly did its part with the “Half the price” tagline. But what does the iPhone 3G really cost? Turns out, the new “half price” isn’t really half the price. Worse, in the United States, over the life of the required two-year AT&T service contract, the new iPhone is actually more expensive than the original.

The 8GB iPhone was most recently selling for $399, with a minimum monthly plan of $59.99. That put total cost of ownership at $1,838.76 for the mandatory two-year contract. The iPhone 3G sells for $199, but AT&T has increased the cost of the data plan by $10 over the cost of the old EDGE plans. With a monthly cost of at least $69.99, the iPhone 3G will cost $1,878.76 over the same 24-month period, and that’s without any text messaging. To get the same 200 texts that are included in the older plans, you’ll have to add a $5-a-month text plan. Over the course of a two-year contract, the new “half-price” iPhone 3G will cost at least $1,998.76, or $160 more than the original iPhone.

Current iPhone owners are eligible to upgrade to 3G at the $199 price. If you’re an AT&T customer with a different phone, however, you’re subject to some secret AT&T math that takes into account how far you are into your existing contract and how good you are at paying your bill on time. If you don’t quite make the cut, you can still get an iPhone 3G, but you’ll have to pay an additional $200 for the privilege.

Of course, those piles of extra cash are getting you GPS capabilities and data speeds approaching Wi-Fi, but the truth is the iPhone 3G is not half the price of the original and is in fact more expensive, despite what Apple’s marketing department would have you believe.

---

{Reason 3}
Apps for everyone: Because you don’t need 3G, or even 2G, to shop the App Store.

Just to be clear, the iPhone 2.0 firmware update, which includes the App Store, is free and available on all iPhones—you don’t need the new iPhone 3G. In fact, if you don’t want to be saddled with a monthly AT&T bill, you could buy an iPod touch, upgrade to the 2.0 firmware for $10 if needed, and hit up the App Store over Wi-Fi. An 8GB iPod touch is $299, just $100 more than a subsidized 8GB iPhone 3G, but after two years the iPhone will cost almost two grand in phone bills.

If you stick with the iPod touch, you’ll miss out on any apps that require the iPhone’s camera (the touch has none), but if you opt for the original iPhone 2G over the new iPhone 3G, the biggest hardware upgrade that’s missing is the GPS. But no real-time navigation applications that would rely on the GPS chip were announced in the first several days after the App Store launch. Apple could be planning its own, of course—“real-time route guidance” apps are forbidden by the SDK license agreement. Navigation services often charge monthly fees for access to updated maps and data, and the App Store is set up for one-time payments only.

Plus, the iPhone 3G uses A-GPS, rather than pure GPS to determine the phone’s location. For A-GPS to get a location lock, the unit needs signals from at least three satellites, which can be tricky if you’re indoors and/or surrounded by tall buildings. 
The iPhone 3G uses uses GPS satellites plus cell towers and Wi-Fi access points to determine your position. Since the original iPhone also uses cell towers and Wi-Fi hot spots to find your position (see “iFaux GPS Put to the Test,” Apr/08, p18), location-based recommendations and social-networking apps work pretty well on either phone.

One more note: If you performed a jailbreak on your iPhone 2G, don’t upgrade to the iPhone 2.0 firmware without first restoring your phone to its non-jailbroken state. We’ve got friendly directions online at www.maclife.com/article/how_to_restore_your_hacked_iphone.

{Reason 4}
Let Freedom Ring: Because the 2G iPhone is more easily jailbroken.

If you’re a card-carrying Libertarian, or you just feel that once you’ve purchased a gadget with your hard-earned cash, no one should be able to tell you what to do with it, you might think three times before stepping up to an iPhone 3G. The original 2G iPhone remains a known quantity when it comes to jailbreaking, not to mention the fact that if you want to remove your GSM SIM card and use the iPhone solely as a portable Internet device (or use a card from a service provider other than AT&T), you maintain those options. In the United States, iPhone 3G buyers are required to activate the phone in-store—or sign a binding contract requiring them to activate a new two-year service contract within 30 days. 

{Reason 5}
Who Needs Speed: Because in the age of Wi-Fi, 3G isn’t always necessary. 

Obviously, the 3G networking is the biggest new feature of the new iPhone—so big, in fact, it’s the No. 1 best reason to buy one. 3G Web access takes your iPhone from Net-connected smartphone to 3G Net-connected super-smartphone. But is it worth the added cost? Owners of the original iPhone—and new owners of hand-me-down iPhones—are able to keep their cheaper data plans, and for many users, that may be a better option.

iPhone 3G owners in 10 states will pay a premium for 3G data service they can’t even use.

Currently, AT&T touts 3G-network availability “in 280 leading metropolitan areas” and plans to reach 350 metros by the end of the year. Sounds good, unless you happen to live where there is no 3G service. Currently, that means that iPhone 3G owners in 10 states will be paying a $120 yearly premium for 3G data service that they can’t even use. Residents of Alaska, Iowa, Maine, Montana, Nebraska, New Hampshire, North Dakota, South Dakota, Vermont, and Wyoming—we’re talking about you. And states where 3G is available still have huge swaths where coverage isn’t built out yet. There’s a reason AT&T’s website won’t (easily) display a 3G-coverage map the same way it shows voice coverage: the 3G network is almost comically spotty.

Aside from network gaps, consider your average day. For a lot of people, that means going from home (where there’s Wi-Fi) to work (where there’s Wi-Fi), and back again. And even when you’re out and about, finding an open Wi-Fi network isn’t too difficult. If you’ve got Wi-Fi access nearly everywhere, how much time will you spend utilizing AT&T’s 3G network anyway?

GPS is Apple’s other big feature for the iPhone. But remember, reasonably good “faux-GPS” triangulation already exists in first-gen iPhones. Using cell tower and Wi-Fi network data, the old iPhone can already give you a pretty good idea of where you are. And then there’s the old stand-by: looking up at the street signs. Between the location services and Google Maps, you should be able to figure out where you’re going. You might not get pinged instantly when your friends show up at the bar around the corner, but you could always—gasp!—call them and find out where they are.  

AT&T Customers: Are you eligible to upgrade to iPhone 3G?

No one could accuse AT&T of being straightforward about its iPhone upgrade policy. If you already have a first-gen iPhone, you’re in the best position. Existing iPhone customers can buy an iPhone 3G at the fully subsidized $199/$299 price points—with a two-year service contract, of course. AT&T will also charge an $18 upgrade fee to existing iPhone customers. At that point, you can pass on your original iPhone to a friend or sell it on eBay. The original (non-3G) plans will remain in effect for first-gen iPhones.

If you’re an AT&T customer using anything other than an iPhone, things get a bit more complicated. Depending on the amount of time remaining on your original contract and your payment history, in addition to some other factors AT&T is keeping mum about, you might be eligible for an upgrade at $199/$299. Check your upgrade eligibility by logging in to your AT&T account and clicking on Check Upgrade Eligibility under Phone/Device.

If it turns out you aren’t eligible yet, AT&T will be happy to sell you an iPhone 3G…for $399 for the 8GB and $499 for the 16GB model. And if that offer doesn’t float your boat, you can always just bide your time for a few more months. By the time you qualify for an upgrade, there will be a newer 3G anyway.

And then there’s the “no contract” version of the iPhone 3G. AT&T has announced that the 8GB version will sell for $599, and the 16GB for $699. It’s not going to be an unlocked iPhone, so you’ll still need AT&T service, but even AT&T customers ineligible for an upgrade could buy an 8GB iPhone 3G for $399, then cancel their contract and pay the $175 early termination fee, making their total cost $574—$25 less than AT&T’s “full-fare” iPhone 3G.