New iPhone faster but still lacks vital features

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I gushed about the iPhone when it appeared last year, waxing about its ease of use and its ability to draw people in with its intuitive and beguiling touch-screen interface.But it had its limitations, and the phone was in essence a very good first effort for a company with no history in cell phones. A little over a year later, the iPhone 3G shows that Apple has built on what many felt was still the best smart phone available.The most glaring problem with the first iPhone was the slow data speed, because it ran on AT&T's Edge network. The iPhone 3G is named for the faster 3G network that powers most of the top phones these days, offering DSL-like speeds that are not tied to a Wi-Fi hotspot.With 3G access, the latest iPhone pulls up Web sites much faster and cuts the load time for YouTube videos in half.Another improvement is the inclusion of a Global Positioning System chip. With GPS, you can do Google map searches for restaurants, bars or post offices, and the map will deliver results based on your location -- no more entering where you are or relying on cell towers to find your general location. You can also use the GPS chip to geo-tag photos and get directions, though the chip is not precise enough to deliver turn-by-turn navigation.Those are two of the biggest and necessary hardware changes to the iPhone, which looks similar to its predecessor. The dimensions remain almost the same, although the phone has a slightly curved plastic back that is more comfortable to hold than the original iPhone.Apple has learned to get in line with the cellular industry's way of charging customers. Instead of the $499 and $599 price tags of the original iPhone, the updated version sells for $199 for 8 GB and $299 for 16 GB.The iPhone 3G, however, has higher data fees, which push the cost of ownership over a two-year contract to more than the older iPhone.Apple has also learned that a smart phone needs to offer more to business customers, who comprise the user base. The iPhone 3G offers Microsoft Exchange support for e-mail, contacts and calendars for another $15 a month for Microsoft's ActiveSync.The Exchange support is part of the iPhone 2.0 update for all iPhones and iPod Touches. The update includes Apple's $99-a-year MobileMe online e-mail, calendar, contacts and file service, a successor to its .Mac service. In addition to international language support and better e-mail and contact management, the new software also includes access to Apple's App Store, which has more than 600 paid and free downloadable applications.This is where Apple's history as a computer and software company shines. By opening up the iPhone and encouraging developers to write programs, Apple is turning the phone into a true computer that can support a wealth of applications. And by collecting the software in one easy-to-find store, it encourages people to buy applications, both serious and trivial.The apps range from the free downloadable versions of The New York Times, Facebook, MySpace and Twitter to engaging games, productivity tools, business apps and music software that help you discover or create music. I played with Band, a simple $10 tool that lets you create and record multitracked music using different instruments. Another fun application is Enigmo, a puzzle game that requires you to divert the course of falling water droplets.No doubt, software will be key to the success of the iPhone 3G, and perhaps address some of the shortcomings I still see in the device.Developers, Apple or otherwise, should be able to tackle the lack of picture messaging, voice dialing, video recording and cut-and-paste tools that are missing from the iPhone 3G. I'm particularly disappointed in its lack of video recording and voice dialing, which is especially helpful now that California's hands-free law is in effect. These are things that most cell-phone manufacturers wouldn't dare leave out.(E-mail Ryan Kim at rkim(at)sfchronicle.com.)(Distributed by Scripps Howard News Service, www.scrippsnews.com.)