Background you may choose to skip over:

So, everyone knows by now that O2 are being somewhat obstructive about upgrading to the new iPhone – by which I mean that instead of doing what they did last time Apple released a new phone, they’re demanding that customers pay their way out of an existing contract, pay a couple of hundred quid for the handset, and sign up to a new contract.

Well, okay. The first thing which came to my mind was that I’d been talking about how we all have unrealistic expectations regarding price. Was I being daffy again?

Well, yes and no. O2 are making users pay for the old handset – which is, of course, heavily subsidised – before getting a new handset at a subsidised price. It looks as if the business models Apple and O2 are using are not entirely compatible…

This is the first hole in Apple’s amazingly dominant entry into mobile phones: a bottleneck. If there’s a competing product out there worth anything at all, this is the moment for it to find a foothold. At the same time, O2 re in danger of losing their exclusive grip on the iPhone, at which point they’ll be at a stark disadvantage if they don’t play a little nicer with their customers, even if that costs them money. Is that Apple’s way of dealing with the culture clash of new-shiny vs. mobile telephone costs? Pretty hard-core, if so: use O2 to make a splash, then shed them when they become burdensome.

Why do I care?

Because the iPhone GS has a video camera, and that video camera is for a lot more than shooting clips of your own feet when you’re pissed. The GS has brought Augmented Reality to life.

And that’s just the beginning – there’s a Twitter app in the works which shows you where people are as you move around with the camera, and there’ll be more. Basically, AR apps make the internet’s invisible overlay visible. Standing outside a restaurant? You can look at it and see what people have to say – or even what they’re saying on Twitter about it even now. AR knits the digital world back into the real one, and makes the two work together. Everything becomes a spime. The whole world becomes a Nabaztag. (Well, not exactly, but you see what I mean.) There’ll be more and more of it as people become more inventive.

And this is what Apple – and O2 iPhone users – potentially miss being part of during its formative moments. If the phone isn’t out there because of O2′s decision, there’s the possibility of a genuine iPhone killer – a term I usually snort at. It’s a very narrow window, but it’s there.