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Countdown begins for the iPhone's arrival in Britain

Considering Apple sold one million iPhone units in the US within 74 days of its release, it is little wonder that the imminent arrival of the latest must-have product has sparked a consumer frenzy this side of the Atlantic as well.

The phone, which will be launched in Britain on Friday, is expected to sell rapidly with sales of the "breakthrough" handsets predicted to reach 400,000 over Christmas.

The much-anticipated iPhone, a cornucopia of the latest multimedia technology squashed into a palm-sized box that contains, among other things, a mobile phone, mp3 player, camera and wireless internet browser, will be available in shops under an exclusive deal with Britain's largest mobile operator, O2. Never ones to shy from even the smallest of publicity stunts, Apple and O2 confirmed that the handsets would be available in Britain from exactly 6.02pm on Friday.

Queues are expected to form early as Carphone Warehouse, the only non-Apple or O2-branded store allowed to sell the device, pledged to keep all 783 of its UK stores open during the night until the last customers leave.

The touchscreen handset will be one of the most expensive on the market at £269 but users will in fact have to shell out a minimum of £899 during the first year and a half of ownership because the phones can be bought only with an 18-month O2 contract, with the minimum monthly tariff starting at £35.

O2 hopes the technology, which represents Apple's first foray into the telecoms industry, will tempt thousands of Apple-loyal customers from its main rivals Vodafone and Orange, which both failed to secure the highly sought-after exclusive contract with the San Francisco-based company.

Analysts say the decision to charge such a high price for the handset is unusual in the UK telecoms market, which usually provides cheap handsets if customers sign a contract.

"It's definitely a new approach because the phone is not subsidised," said Carolina Milanesi, research director at the analyst Gartner, which predicts that Apple could sell as many as 400,000 units in the next two months. "Consumers are buying it for the user interface; it's essentially the latest and greatest iPod that also happens to be a phone. In the UK we're very spoilt because we normally get a phone cheaply if we sign up to a contract but that doesn't happen in countries like Italy, Belgium and Finland."

The launch of the handset, now Time magazine's "Invention of the Year", has also been dogged by controversy since Apple announced its first foray into the telecommunications market in January. Diehard Apple fans in the US, who queued through the night in their thousands in June on the US launch day, were incensed when Apple slashed the retail price by $200 (£100) 10 weeks later.

There was also widespread dissatisfaction that, as in the UK, the handsets were available only on one network, the US telecoms giant AT&T. The exclusive deals with network providers, a tactic Apple has pursued in wider Europe, has led to blogger backlash as well as a number of websites offering software that can supposedly "unlock" an iPhone's software, making it available on other network providers.

Apple has warned that unauthorised downloads could cause "irreparable damage" to the handsets and said doing so would void the phone's warranty.

The success of the iPhone will be closely scrutinised by Google, which also wants to tap into the telecoms market and has announced a new strategy to form an alliance with more than 30 handset makers and communications companies, which will work with the company to utilise its famously easy-to-use software in their phones.

Ringing in the changes

What you can do with an iPhone...

* "Visual voicemail" allows users to view all waiting messages on screen, and makes them accessible in any order.

* The music player uses the Cover Flow software that was recently made available to the newest iPods, the iTouch. Listerners can flip though album sleeve covers rather than simple playlists.

* The headphones act as a hands-free kit and a remote control for music. If you receive a call the music cuts out for you to answer and then returns to the same spot.

* The iPhone's Wi-Fi technology makes it possible to browse and buy music on the go. Tracks downloaded from iTunes can be transferred to your computer.

* The Safari web browser allows users to access the net as if from home. The iPhone runs on the 2.5G network rather than 3G so downloads times may not be quick.

* The iPhone could replace your BlackBerry as the best way to access emails on the move.

* Using Google Maps, the iPhone acts as a de facto GPS device. It's not as accurate or fast as GPS but the software in the iPhone gives directions from a user's house, for instance, to a local sushi restaurant, and tracks their progress.

... And what you can't

* The iPhone will only be available on one network, O2. Customers will have to sign up to an 18-month contract.

* There is no removable battery, no expandable storage, no multimedia messaging or musical ringtones.

* The iPhone's camera is only 1.6 megapixels and it cannot record videos.