Exactly 12 months after Apple released their revolutionary iPhone, they have today released the much awaited next version — the iPhone 3G.

Read my review of the original iPhone here and here

iPhone 3G has some significant advantages:

1) It now supports 3G (its a shame this wasnt avbl in the original version, in the first place)
 2) It now supports Microsoft ActiveSync (attention: corporates)
 3) Everything else including GPS (which by the way I am not sure is the real GPS in which case they would have had to include a hardware chip like Sirius III or if it is the glorified version of triangulation) are existing features or trivial advancements which anybody would expect from any software over the course of 12 months.

There are already a flurry of websites they claim iPhone to be missing a zillion features. Well, so be it. I consider iPhone to be revolutionary, not just because of the market hype, but in many ways, it changed how we make calls and use internet. Thanks in part to ATT for structuring a voice/data package, which otherwise is a expensive combination on a normal phone.

Which brings us to the other vendor in the equation — ATT.

It’s half as expensive. Or so they claim.

Here is the reality:

1) Its $199 for a new contract. This means $235 for a non-ATT customer establishing a new contract ($35 activation fee) and $217 for an existing customer eligible for an upgrade
 2) Which brings us to what they mean by eligible for an upgrade. They have not published what the guidelines are for being eligible, but I’d think the tenure in your current contract and your bill payment patterns matter the most. So if you have not even completed 50% of your current contract duration, chances are that you will be nixed the option of $199. Does that mean you cannot buy iPhone at all? Of course, not. You just have to pay the regular price which is $399 (and $499 for 16gb variant)

Which clearly means ATT’s focus is on attracting new customers and not delight existing customers. Makes sense from a business standpoint.

So the bottomline is Apple’s (and ATT’s) commercial of $199 comes with fine print. A more honest commercial would have been “iPhone 3G costs $399. If you are an existing ATT customer eligible for an upgrade, you get a discount of $200”

But then hiding important stuff from bold print has become an accepted trend in advertising.

So, what the heck?

PS: From when iPhone 3G was being rumored, I have been wondering if ATT will continue to provide 3G data service at the same cost at EDGE. While ATT is not incurring additional cost per se, it would cost them more to maintain, upgrade and expand 3G coverage. I am getting conflicting versions of whether the new iPhone package will cost $59 or $69. ATT’s website has both the values published in different parts of the same page. Any of you have an answer?