iPhone 4 is sharp. Literally. It’s not just sharp-looking: Apple’s new iPhone is actually physically sharp, with hard edges that you’re just not used to finding on an Apple product.

The stainless-steel-and-glass body, with its hard edges, is the newest obvious thing about iPhone 4, but the new model is packed with new features. There’s an Apple A4 processor, a 5-megapixel camera with HD video capture, FaceTime video calling, and of course the “retina display”—at 960-by-640, the highest-resolution display available on any smartphone today.

The iPhone 4 is 9.3mm thick, which is 24 percent thinner than its predecessor, the iPhone 3GS ($199, ). The phone’s glass back is smooth, and the edges and buttons are hard. It’s a little less comfortable to hold than a classic, rounded iPhone, but it feels more expensive—if only because it’s a new style.

The display is so high-res that Apple says your eyes are physically unable to see the pixels. It uses IPS (in-plane switching), an LCD technology we haven’t seen on any other phone, to offer very good contrast and true colors. Existing apps will automatically be updated by the OS to show high-res fonts and smooth graphics on the new screen, so all older iPhone apps will still work.

The phone has volume buttons and an orientation lock switch on the side, as well as a MicroSIM card slot. According to Steve Jobs, Apple had to use a MicroSIM to save space and increase the available room for the battery. The phone is good for 7 hours of talk time, six hours of 3G Web browsing or 10 hours of Wi-Fi Web browsing, Jobs said.

iPhone 4 Performance
Turn the iPhone on, and it’s…an iPhone. Like the iPhone 3GS, the iPhone 4 will run iOS 4, which adds “more than 100″ new user features to Apple’s well-known platform. Most notably, they include limited multitasking, folders for apps, a universal inbox for mail, wireless keyboard support, and the new iBooks and iMovie apps.

Apple didn’t call out the iPhone 4′s phone-calling features, but this phone may offer significantly better call quality than previous models. The entire stainless-steel frame is an antenna, and the phone includes a second microphone for noise cancellation, much like the Google Nexus One ($179.99-$529.99, ) does.

The 5-megapixel camera offers an LED flash and HD video capture. Apple has also included a gyroscope on the iPhone 4, which is tied to the accelerometer to provide six-axis motion sensing to tilt and rotate when you turn your body. It joins three other sensors included in the iPhone—compass, proximity, and ambient light.

FaceTime video calling using the VGA (640-by-480) front-facing video camera isn’t as sharp as I expected. It’s tremendously easy to use, just another button in the phone calling panel. But frame rates were just a bit jerky, maybe 15 frames per second, and the video looked pixilated. My demo guy confirmed it won’t interoperate with any other program—it’s just for iPhone-to-iPhone calling, which was disappointing. It’s definitely a 1.0, and I’m hoping Apple will build on this initial version to provide higher-res chatting and connections with iChat on the desktop.

To many people’s disappointment the iPhone remains an AT&T exclusive in the U.S. The phone comes in black and white, in 16GB and 32GB versions. The 16GB version will cost $199 with a two-year contract, and the 32GB version will cost $299. Everyone at least a year into an AT&T contract will be eligible for the lower price as long as they’re willing to extend their contract for two more years. Without a discount, the phone’s two models will cost $599 and $699.

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