Click here for the first hands-on review of the 3G iPhone

Update: O2 says some won't get iPhone until August

A year ago Apple's iPhone set a design benchmark for the industry, offering a combined mobile phone, music and video player and internet browser to a world that had been whipped into mini frenzy by Apple's expert marketing machine. But a year is a long time in technology and the American computer giant is preparing to repeat the trick with the launch tomorrow of its updated, sharper 3G iPhone.

The new model is intended to attract more business users with its support for 3G networks, making it much faster to download pages from the internet. Crucially for those business users, it is compatible with Microsoft Exchange e-mail servers, making e-mail easily accessible on the move.

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• O2: some won't get new iPhone until August

• Queues as new iPhone takes on BlackBerry

• 3G iPhone price plans: what it will cost you

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These features pit the 3G iPhone against RIM's successful BlackBerry smartphones. Apple sold four million iPhones last year and plans to sell another ten million globally this year. BlackBerry has 16million subscribers worldwide, of which 60 per cent are business users, but its non-business customers are growing sharply with the introduction of more consumer-friendly features.

Analysts are divided over the likelihood of the iPhone making significant inroads into BlackBerry's market share. RIM is developing a device similar to the iPhone for release possibly later this year. Pictures of the BlackBerry Thunder leaked on to the internet a few days ago show that it is remarkably similar to the iPhone. RIM's new release, the BlackBerry Bold, aimed much more at general users, will be going on sale in the next few weeks.

The most far-reaching additional feature to the iPhone is the iPhone App Store, a simple catalogue of new software that can be directly installed. The programs available tomorrow include instant messaging and an eBay auction tracker.

Businesses will be able to create their own programs to run on employees' phones because Apple has made its developer program platform available to all. More than a quarter of a million developers have already downloaded the kit. The iPhone 2.0 platform also offers a remote wipe function that can be used to clear data from the phone if it is lost or stolen.

At a presentation in San Francisco, Steve Jobs, the chairman and chief executive of Apple, said: “The iPhone is the third part of Apple. The iPhone 2.0 platform is a giant step forward.”

Last night, queues had formed outside stores in New Zealand, Japan and in New York City. In Britain, the iPhone will cost substantially less than its £269 predecessor but will still be available only from O2, Carphone Warehouse and Apple stores, and it will work only on the O2 network.

Retailers have spoken of “incredible demand” and advance orders are no longer being taken. Customers will have to queue tomorrow. O2 and Carphone Warehouse will give away the 8GB version of the iPhone to customers who sign up to tariffs costing £45 or more a month.

The device will cost between £99 and £159 for customers on cheaper tariffs. O2 has said that it will include the iPhone on its new business tarrifs.

The choice

£30 contract

iPhone cost (8GB): £99
iPhone cost (16GB): £159
UK minutes: 75
UK texts: 125

£35 contract

iPhone cost (8GB): £99
iPhone cost (16GB): £159
UK minutes: 600
UK texts: 500

£45 contract

iPhone cost (8GB): Free
iPhone cost (16GB): £59
UK minutes: 1,200
UK texts: 500

£75 contract

iPhone cost (8GB): Free
iPhone cost (16GB): Free
UK minutes: 3,000
UK texts: 500

All include unlimited browsing

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