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Why you shouldn't buy the iPhone 3G on Friday

Time is a funny thing. A few weeks ago, eBay and Google were flooded with pricy first-gen iPhones starting at about $400 and people were snapping them up like crazy. Now, the same auction sites are showing dozens of listings from just $200 for 8GB iPhones.

The iPhone, as you will remember, debuted last year at $499 for a 4GB model and $599 for 8GB. Then there was the price drop, the $100 store credit and the introduction of the iPod touch. Soon after, the refurb units appeared at a slight discount, and then a bigger discount and then by March they were retailing $250 for the refurb 8GB model. Late adopters got great bargains by any stretch of the imagination, particularly those who mixed unlocking with creative data plan purchases.

Now it's time for the iPhone 3G to appear and it's horribly priced--as is every other subsidized smart-phone out there. Unless you live in the Netherlands, the rate plans range from bad to unspeakable. If you're in Scandinavia or New Zealand, our hearts go out to you.

From a price perspective, the cheapest way to use the phone is to buy it outright, unlock it and use it with inexpensive calling plans. Data plans, particularly, work best when you don't have to mortgage your children to afford to visit a few websites.

Using the iPhone outside the sanctioned plans involves giving up visual voice mail but otherwise it works pretty smoothly. It also involves running unfamiliar possibly scary software and taking risks with your unit that many iPhone users would prefer to avoid. Thus there exists the always growing market of third party unlocking and resales.

The iPhone dev team hints that they're ready to deliver unlocking and jailbreak tools as soon as Apple releases 2.0. Theoretically, you'll be able to use your current iPhone SIM and data plan (whether licit or less licit) with the new iPhone 3G. Obviously no one has been able to test or confirm this yet outside the dev team, which remains tightlipped.

In the US, AT&T is offering a "commitment-free" 3G iPhone for just $599. It's still locked to the network, and we're told you still need to activate it with AT&T before it can be used. Similar overpriced "commitment free" units will go on sale in Italy and a few other countries as well. You should be able to activate and then tell your carrier goodbye if I'm reading the terms correctly. I am not a lawyer.

So here's the question: do you want to pay the early adopter tax in order to play with shiny new iPhone? For US customers, the question reverts to bandwidth. If you can afford it, the new iPhone delivers 3G speeds. You won't have to call out for pizza as you wait for a website to load. But if you have the flexibility to wait, you can buy a better cheaper unit soon.

Other than 3G speeds and GPS, the new iPhone does not bring a lot to the table. It still has the same crappy 2 MegaPixel camera. It appears to have the same sized screen, the same speakers, the same microphone with a few cosmetic re-designs. If the speed issue isn't do-or-die for you, this is the upgrade to skip. You'll pay a lot of money for little more than a design bump.

Frankly, Apple would be foolish if they didn't have a better iPhone already in the works--one with a decent camera and other upgraded features. The 3G iPhone that goes on sale Friday, represents nothing more than last year's iPhone--that finally got delivered a year late.

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