Boy Genius Report is claiming that two separate sources have told them that AT&T is looking to sell an 8GB iPhone 3GS for $99 US before Christmas. While this news wouldn't come as a shock, it would certainly take more than AT&T to make it happen. As most of you know, Apple doesn't make an 8GB iPhone 3GS and it would probably mean the discontinuation of the iPhone 3G in general.

If you think back to the time of the first generation iPhone (it was so long ago now), you'll probably remember that Apple quickly discontinued the 4GB iPhone after realizing that most people were opting for the larger capacity. Not too long after that, Apple introduced the 16GB version and discounted the price of the 8GB. Now that the iPhones themselves are subsidized by the wireless carrier, the game is a little different.

I doubt that we'll see AT&T discount the 16GB iPhone 3GS to $99 US, even though it would be a huge strategic move before the holiday season, but I have a hard time believing that Apple would be willing to manufacture an 8GB iPhone 3GS. It's one thing for them to continue with the 8GB iPhone 3G because they already have the manufacturing in place, but for Apple to start manufacturing another iPhone 3GS at a capacity less than its current models -- that just seems out of place.

I've found it disappointing that the iPhone (a professional device) has had a smaller capacity than that of its sister, the iPod touch. Currently, the iPod touch is shipping at a top capacity of 64GB and the iPhone only 32GB. Here's the point: if AT&T and Apple could work together and release the 16GB iPhone 3GS at $99 then that could potentially allow for the 32GB at $199 and a 64GB model at $299. That would be a killer plan for the two companies just before the holiday season.

While this may be far-fetched, I don't think it's impossible: Apple did release a bump in storage to the 16GB iPhone in early 2008 without any warning. Here's hoping that they do that again.

With the introduction of the iPhone 3GS back in June of this year, iPhone lovers finally got what a lot of other smartphones already had -- video recording capabilities. A little over a week later, I wrote a post titled "How to make iPhone videos sparkle with iMovie." At the time I remember thinking, "Wouldn't it be great if I could do editing on the iPhone instead of having to do it on my Mac?"

Somebody at Nexvio was obviously thinking the same thing, and the company has introduced ReelDirector [US$7.99, iTunes Link], a video editing app for iPhone. One reviewer noted that "it's not Final Cut Pro," but make no mistake -- ReelDirector is a powerful, easy-to-use, and fun iPhone app for creating videos with titles and effects. It's perfect for putting together on-the-spot vacation videos to send to friends and relatives, making quick video podcasts, and teaching kids (or yourself) the basics of video editing.

Rogers Wireless has a little over one week left of its Canadian iPhone exclusivity. Wireless carrier Telus announced today that it'll start sales of the iPhone 3G and iPhone 3GS on Thursday, November 5, 2009.

While the Telus network has been CDMA-only, the carrier is not selling a modified phone. Rather, the company is launching its iPhone-compatible HSPA network, which it's marketing to consumers as 3G+.

Prices on the new network match what many expected from Bell, which is also starting Canadian iPhone sales soon. Telus will sell an 8GB iPhone 3G for $99 (Cdn$), a 16GB iPhone 3GS for $199.99, or a 32GB iPhone 3GS for $299.99 with three-year contracts. Minus the monthly plans the 8GB iPhone 3G will run buyers $599.99, the 16GB iPhone 3GS will run $699.99, and the 32GB iPhone 3GS will run buyers $799.99.

[via Telus]

Every so often an app comes along that you just get excited about. Well, I'm excited about the Layar Reality Browser [iTunes link], and even better: it's free!

This app has been available on the Android platform, and iPhone users have been eagerly awaiting it. Wait no more.

The Layar app will only run on an iPhone 3GS because it really needs that built-in compass. So what does it do? Quite a lot. The app displays real time information based on your location and the direction you are facing, overlaying the camera with locations and information that you are looking for.

Yes, like other apps with augmented reality, it can find food and shopping, but that's only the beginning. You can find apartments for rent, Flickr photos taken near your location, mountain peaks, tourist information, and the list goes on and on. The Layar screen shows your live camera view, a radar-like display showing you a 360 degree view of 'hits' near you, the accuracy of your GPS fix, and the number of items it has located.

The Layars app is based on an open architecture, so it can interact with an unlimited amount of information set up to talk to the platform. It is globally aware, not just U.S. centric, and lots of 3rd party developers are jumping in.

In operation it generally worked very well. I didn't see any crashes, but at times some of the many servers supplying information did not seem to be up and running. When I wanted to see some information on the mountains in my area, it worked great one time, and the next time it said there was nothing around, even though I was standing in the foothills of some 5,000-foot peaks.

Generally though, the app was well behaved, and as you explore the riches it contains your mind races with all the possibilities an app like this has. You don't have to use only the camera view. You can get a list of nearby points of interest or see everything on a 2D Google map. Wikipedia is even available. When I brought it up, it gave me some information on my town, a nearby school, and some info about nearby parks.

I hope this app really grows, because the potential here is limitless. Try it for yourself. There's no cost, and no risk. You'll be surprised at all the stuff around you. I'm going on a trip soon, and can't wait to explore with Layars.

Let us know how it works for you.

When I opened my iPhone 3GS, I was surprised to find that the power adapter was nothing but a little 2-prong AC plug (I live in the US) that allowed you to plug in the standard USB to 30-pin connector to charge the phone.

I wanted to get a spare; checking online told me that the Apple Store wanted US$29 for the little plug, which just seemed like too much for too little, so I went shopping.

On eBay I found a bunch of auctions based in Hong Kong selling what looked like the exact same thing for anywhere from under around $2-4, and they often included the USB cable to boot.

I ordered four from a vendor and after a few weeks received them. They looked perfect, right down to the little green dot -- but none of them worked. They might start charging, but after a few minutes the iPhone would beep a few times and I would be informed that "this accessory is not compatible." And so it went for all four pieces. After sending some pictures back and forth and reading a few emails containing a combination of surprise and amazement from the vendor, my money was refunded.

Undaunted, or maybe just dumb, I went back to eBay and found another vendor that claimed to be selling, "100% Brand New Original OEM Charger and Original OEM USB Cable for iPhone/iPod" for around US$4. I just checked eBay and found this same vendor raising the price to US$10 in one auction and lowering it to $US.01 in another.

The iPhone was slow to launch in Canada and after a rocky start, Rogers has been the exclusive carrier. That changed this week when Bell and Telus both announced independent deals with Apple. Starting in November, each will carry the 3G an 3GS. Just in time for holiday shopping!

Keen customers know that both Bell and Telus are CDMA-only right now. However, they've both pledged to deploy compatible HSPA networks that will serve as an inroad to 4G.

Neither company has released details like pricing, plans, etc., but Telus has set up a web page for interested customers.

After the debacle earlier this year when I lost my iPhone 3G, I decided to not only protect the new phone -- my lost 3G had been "naked" -- but make sure that whatever I used to protect it had a bit of heft.

My choice of case was the locally-grown (Fort Collins, CO) OtterBox Defender, which fit the bill perfectly. It has what OtterBox refers to as a 3-layer design, including a thick screen protector, a hard shell that encloses the iPhone, and a rubberized exterior jacket that cushions shocks and keeps ports covered. While it has been an awesome case in terms of protection, it's pretty chunky and I've often wished I had something a bit skinnier.

OtterBox came to the rescue last week with a new line of protective cases called the Commuter. There are two models -- the Commuter (US$34.95) and Commuter TL (US$29.95). Like the Defender, these cases work with both the iPhone 3G and 3GS. Read on to hear more about the OtterBox Commuter cases, and a chance to win either a Commuter or Commuter TL case from TUAW and OtterBox.

The legendary Dev-Team has done it again. It just released the new version of the Pwnage Tool, a desktop application that's used to create custom firmware packages to jailbreak iPhones and iPod touches.

Jailbreaking is the act of modifying the official firmware in order to run applications not approved by Apple. Chief among those applications, at least for the iPhone crowd, is the SIM unlock that allows the phone to be used on unofficial cell phone service providers.

The Dev-Team has found holes in previous versions of the iPhone OS that allow this code modification and has developed tools to make exploitation easier for the average user to accomplish. Once implemented, the jailbreak process installs an app that acts an unofficial App Store of sorts. The iPhone or iPod touch user can browse and install games, utilities, themes, and general applications. Cydia, one of these installer apps, even has a store with applications for sale.

Traditionally, when Apple releases a new iPhone OS version, that software upgrade breaks any jailbreak and SIM unlock present on the device. And so, you end up with the cat-and-mouse game that Steve Jobs alluded to shortly after the first firmware loophole was exploited and the original iPhone was unlocked.

Well, the mouse has stolen the cheese once again, and the Pwnage Tool released today will jailbreak the latest firmware, version 3.1.*

The big asterisk at the end of that previous sentence is that the Tool will only work on about half of the devices that use the iPhone OS -- only the original iPhone, original iPod touch, and iPhone 3G. The iPod touch line just released, as well as the 2nd generation iPod touch and the iPhone 3GS, cannot be jailbroken at this time. That means if you've already upgraded to 3.1 on your 3GS, you still won't be able to SIM unlock it as of the time of this post.

So, if you want to SIM unlock your iPhone 3G or the original model, Pwnage Tool 3.1 should do the trick. On the 3G, you'll need to use Icy or Cydia to also install the ultrasn0w app that actually performs the software unlock; however the original iPhone should be unlocked without this additional step.

You will need a Mac to run Pwnage Tool 3.1, but a Windows version is expected in the near future. Also expected soon is redsn0w, for both Mac and Windows, that further simplifies the jailbreak process by avoiding the need to create a custom firmware package.

Keep in mind, if you've been waiting for a jailbreak solution before upgrading to the latest firmware, many users have had fairly substantial issues with iPhone 3.1. My fellow TUAW blogger, Josh Carr, has reported that lots of iPhones and iPod touches are working poorly after upgrading. You may wish to hold off and stick with 3.0 or 3.0.1 until a solution is found, either by Apple or some other group of smart people.

But, if you're so inclined, you may find links to download Pwnage Tool 3.1 on the Dev-Team's official blog. Make sure to read the instructions thoroughly, and take heed of all of the warnings. They are there for a reason.

Our planned look at the camera feature on the iPod nano got delayed by a household medical emergency, as described in one of our nano example videos above. It did give me a bit more time to go a little more hands on with the nano video camera, and the end result is satisfactory. You're not going to buy this nano for the camera; it's just a bonus feature. Will it be the deal breaker over buying a nano versus another iPod, an iPhone or even a Flip? It all depends what you want out of it.

The video above was shot indoors using the nano. It was actually my fourth attempt at taking an indoor video because if you want any luck with the nano's camera, you've got to have decent lighting. This shot was my first attempt with the camera, and you can see the difference the lighting made.

As mentioned during the keynote, Apple is looking to take on Flip mino with the new nano. As such, we decided to see not only how the nano compares to the Flip, but also to an iPhone 3GS. Continue on reading to see how these shots turned out.

The Apple Support forums are a'buzz with reports of several users upgrading to iPhone OS 3.1 and discovering a new "feature" which was not available previously. As mentioned in our comments, after upgrading to 3.1, some original iPhone and iPhone 3G owners with Exchange accounts are having trouble accessing their email. Apparently the server-side encryption policy option for mobile devices (only available as of Exchange 2007 SP1) is now being appropriately enforced.

This is not affecting owners of the iPhone 3GS, due to the newer device's support for Exchange encryption. Prior to iPhone OS 3.1 the encryption policy was ignored for all models. Now that 3.1 is available, users are seeing this policy being correctly enforced and older iPhones without encryption support are left without access to Exchange services.

I have yet to find any reports of issues with the iPod touch, but I suspect that it will also be affected by this software change. We're awaiting confirmation from Apple on whether this will impact the newly announced iPod touch models as well.

While many are reacting to this issue as though it's a bug, and are reporting it as such, the reality is that the Exchange encryption requirement is a feature and the fact that it was not being correctly enforced was actually a security hole. IT administrators with Exchange 2007 SP1 servers and iPhone clients are probably going to be fielding an above-average level of incoming questions, but at least they can rest easy knowing that Exchange encryption is now working correctly. Cold comfort for their users, though.

If you are running into this issue, the straightforward (though pricey) solution is to upgrade to the iPhone 3GS; or consider bribing your IT guy with Red Bull so he will disable the encryption requirement for mobile devices. But we want to hear from you; are you using an Exchange account? Can you still access it following the upgrade to 3.1? Which device are you using, iPhone or iPod touch; 3G or 3GS? Is this a little thing that means a lot to you from a security perspective or have you been left high and dry without access to critical email?

Update: MacRumors points out that Apple has now covered this situation in a new KB article.

[Via Broadband Reports]

One of the first surprises out of today's Apple event, other than Steve Jobs appearing on stage again (!!!), was the announcement that iPhone OS 3.1 and iPod touch OS 3.1.1 were available. We're still waiting for the download to complete, so this won't be a hands-on review, but we do want you to know what the new features of 3.1 are:

• Improved syncing for music, movies, TV shows, podcasts, and photos
• iTunes U content organization
• Redeem iTunes Gift Cards, codes, and certificates in the App Store
• Display available iTunes account credits in the App Store and iTunes Store
• Save video from Mail and MMS into Camera Roll
• Option to Save as new clip when trimming a video on iPhone 3GS
• Better iPhone 3G Wi-Fi performance when Bluetooth is turned on
• Remotely lock iPhone with passcode via MobileMe
• Use Voice COntrol on iPhone 3GS with Bluetooth headsets
• Paste phone numbers into the keypad
• Option to use Home button to turn on accessibility features on iPhone 3GS
• Warn when visiting fraudulent websites in Safari (anti-phishing)
• Improved Exchange calendar syncing and invitation handling
• Fixes issue that cause some app icons to display incorrectly

There's now also a App Store Genius function, which will recommend Apps based on your purchase history. The Genius of Apple also extends to iTunes, which will now create up to 12 playlists for you based on what's in your library. You can now purchase and download ringtones from your iPhone, and organize apps in iTunes.

Apple's security info page will be listing the security content of the OS updates shortly. The new versions include 10 security fixes, including patches for SMS vulnerabilities, Exchange passcode lock workarounds, and Unicode character spoofing flaws.

We'll have a hands-on review later!

Piper Jaffray senior research analyst Gene Munster, who is not pictured at right, is continuing his love affair with all things AAPL. In the last few weeks he's told us that the iPhone will be picked up by another U.S. carrier in 2010, that Steve Jobs will be on hand at the September 9th Apple music event, and that there would be an AppleTV announcement at the event (this was quashed by Jim Dalrymple at The Loop).

Now the Munster-man is back with even more good news. He believes now that manufacturing capacity for the iPhone 3GS has ramped up and supply is adequate, Apple is on track to sell 7 million iPhones during the quarter ending September 30th.

According to Munster, tight supplies of the 3GS at launch led AT&T store managers to recommend the less pricey 3G to customers. Now that supplies are adequate, store managers are recommending the 3GS, which remains the best selling device at AT&T outlets. Piper Jaffray's figures indicate that during August, the iPhone took share from BlackBerry, the Nokia E71x, and other competitors.

Munster's last prediction isn't so rosy, but is based on historical precedent -- he expects Apple's stock price to dip after tomorrow's event by about 1 percent.

[via AppleInsider]

Earlier today I was reading about Metro Paris Subway [iTunes link], the first augmented reality (AR) app to hit the App Store and lamenting the fact that there wasn't an AR app for me to play with. Then we noticed this tip from Robert Scoble: It seems that Yelp for the iPhone has a hidden augmented reality feature. I downloaded the app and tried it out. I'm glad to say it works, but only on iPhone 3GS. Here's how to activate it (again, note that a 3GS iPhone is required):

1. Grab the app here
2. Launch it and shake your phone. Robert says you need to shake it 3 times. I got it working with one good shake, while other TUAW bloggers needed more than 3.
3. A message appears indicating that you've activated "Monocle." That's what they call the AR feature.
4. A monocle button appears on the top right of the app. Press it.

From there, the camera activates. Simply point your iPhone 3GS in any direction and take a look! I live out here in the middle of nowhere and was certain that I'd get a blank screen. Instead, Yelp found a number of restaurants, bars and other shops right away.

The screen is a bit jumpy and you've got to hold the phone REALLY still to get a good look. Plus, unlike Metro Paris Subway, the graphics depicting the different business aren't distinguishable (restaurant vs. bar, or example). Still, it's a lot of fun and a free way to play with augmented reality. Check out the gallery below for screenshots.

Grab Yelp [iTunes link] while you can and give it a try. Of course, we'd love to hear about your experiences.

Stepping up to a shiny new 3GS? Thinking about selling your old iPhone on eBay or craigslist? Don't forget to wipe!

I buy iPhones from time to time to unlock and offer to our local customers. One such phone arrived today and I eagerly opened the box to get things prepared. After charging the dead iPhone for a while, I powered it on and was greeted with tons of personal information about the previous owner.

The phone was loaded up with three accounts full of literally thousands of emails, 107 contacts, 974 songs, a few dozen photos and a handful of apps -- all still happily filling the 8GB. There were faxed checks related to the previous owner's sales position, visual voicemails available to anyone's ears, and a huge log full of text messages.

The previous owner hadn't deleted anything before sending his iPhone off to a complete stranger! While I was taking care of that important step for him, I thought "This is a perfect opportunity to save some TUAW readers from this sort of embarrassment, not to mention potential ID theft, with a quick reminder."

Clearing all of the data from your iPhone was made simple with the 2.0 firmware update last year.

1. Go to Settings
2. Tap on General
3. Scroll all the way down and tap Reset
4. Choose Erase All Content and Settings
5. Confirm (twice) that you REALLY want to lose everything

Make sure you have it plugged in, as the process will take quite a long time, "about an hour" according to the warning. But, believe me, it is time well spent!

Once the process is complete, you'll be left with a "factory fresh" installation of the iPhone OS with no trace of you or your data, and you can safely sell it and upgrade to the latest and greatest model. Oh, and do me a favor -- if I'm the auction winner, include a working sync cable this time!