The iPhone 3G is an updated version of Apple's touch-screen smartphone, adding support for faster 3G network connections and also GPS capability for location-based services such as navigation. However, despite the addition of some enterprise-friendly features, the iPhone is still more of a consumer device than a business tool.

Available in the UK since July on O2's network, the iPhone 3G is a slick, user-friendly device that offers support for Microsoft Exchange email systems and an impressive web browser. This makes the device attractive for accessing web-based applications, but the lack of a keyboard will be a handicap for many users, and its device management capabilities are still rudimentary compared with other platforms.

The new iPhone is almost identical in appearance to the first version, with a 3.5in display that almost fills the front panel. There are few other controls – a single button beneath the screen returns the user to the "home" screen when pressed, an on/off switch is on the top edge of the case, and the left edge has a ringer off toggle and volume up/down button.

At 133g, the iPhone is heaver than a standard phone, but still lighter than many smartphones. It is also roughly the same size as many rival devices, such as the BlackBerry Curve. Like the original iPhone, this new model has 802.11b/g Wi-Fi and Bluetooth in addition to its GSM and 3G cellular radios.

Unlike most other touch-screen devices, the iPhone's user interface is entirely finger driven. No stylus is supplied, as these do not work - the screen does not respond to pressure. A bonus of this is that you are less likely to accidentally dial a number with the iPhone in a bag or your pocket. The device's 320x480 display is also one of the best we have seen on any mobile device.

The home screen presents a set of application icons that the user simply touches to activate, with key functions such as phone, email and Safari (web browser) in a row at the bottom of the display. Inside an application, the controls are likewise activated by touch. When data input is required, an on-screen keyboard appears, and some functions are controlled by gestures. Inside the browser, for example, putting two fingers on the screen and pulling them apart zooms in, while an on-screen slider control is used to unlock the device.

We found the on-screen keyboard unsatisfactory compared with a physical keyboard, especially those on many BlackBerry models. Whenever your finger goes anywhere near the screen, it registers as a keypress, often causing the wrong character to be entered. In our experience, this makes the iPhone unsuitable for heavy-duty messaging, although the phone dialling keypad with fewer keys works just fine.

The iPhone's new 3G support provides HSDPA download speeds up to 3.6Mbit/s, and we found this noticeably improved loading of web pages in the Safari browser compared with the original iPhone, although browsing over a Wi-Fi connection is still faster.

For enterprise customers, the iPhone 3G now supports Microsoft's Exchange, and is capable of receiving email, contacts and calendar updates pushed over the cellular connection. Administrators can also gain limited control of an iPhone using policies applied via Exchange, such as enforcing passwords or remotely wiping a device. However, the iPhone does not implement all Exchange features.

To provision a handset, the iPhone 3G supports Configuration Profiles, XML files that contain settings for device security policies, VPN configuration, Exchange settings and certificates. Apple provides a web-based configuration console that enables administrators to create configuration files and email them direct to users from the console itself, or post them to a web site for downloading.

The other major new feature of the iPhone 3G is GPS. This provides the user's location for applications such as the built-in Google Maps, which can give directions to local amenities and user-specified destinations. The iPhone supports Assisted GPS (A-GPS), which makes use of information from the cellular network as well as satellites to determine location.

We found that the iPhone was unable to get a fix on our location in central London, due to the number of tall buildings that interfere with the satellite signals. Outside the capital, however, the iPhone had no difficulty pinpointing the location within minutes.

Another new feature aimed at enterprise buyers is VPN support. This includes L2TP, PPTP and Cisco IPSec protocols, with authentication via RSA SecurID or CryptoCard tokens. L2TP and PPTP additionally support MS-CHAPv2 authentication.

From a business perspective, the iPhone 3G thus has potential for some vertical applications, if developers can match the level of ease of use demonstrated in the built-in software. Our review unit shipped with 16GB of Flash storage (an 8GB unit is also available), which should provide ample space for applications and data.

This must be measured against the fact that the iPhone doubles as an iPod media player and has a link from the home screen direct to the iTunes music store, features that are unlikely to endear the device to corporate buyers.

There is also no easy way for a customer to replace the battery. Unlike most other mobile handsets, this means that users cannot carry a spare on a business trip in case the main battery runs out. It also means that the iPhone must be returned to Apple to replace a defective battery.

Apple would not specify the size of the battery inside the new iPhone, but quotes the handset as lasting for five hours of talk time, or up to 300 hours on standby. Apple also claims the device can deliver up to five hours internet use on a 3G connection, or six hours on Wi-Fi.