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Analysis

Apple iPhone 3.0 Update: the Good, the Bad and the Still Missing

Apple held its iPhone 3.0 event today and unveiled a slew of new features, but no real surprises. Cut and paste is finally here, Flash is still not, and Push Notifications are apparently here for real this time.

Perhaps the biggest news -- or at least the news with the most far-reaching consequences -- is related to commerce. The iApp store will now have support for "in-App" purchases along with subscriptions. That means you can buy new furniture within The Sims, buy new books within an eReader app, or subscribe to a magazine or online financial service. The "one-and-done" method of purchasing iPhone apps could well be over. As I "semi-live-Tweeted" the event, I called iPhone 3.0 the "Monetization" update and noted that it would be interesting to see how the inevitable attempts by developers to "nickel and dime" the iApp buying process would fly in the face of the existing 99¢ per app mentality that seems to be dominating the market.

According to Apple's numbers, both the iPhone and App Store are performing very well. A good part of the event was devoted to citing statistics that back up that statement. As they say on the TV law programs, we'll stipulate to that and waive reading.

In addition to the changes in App Store commerce, Apple said it was also opening up 1,000 Application Programing Interfaces (APIs), including some that were previously there but unavailable, to allow for things like email within an application and turn-by-turn directions. (Map-using app developers will have to provide their own maps, however -- Google's are covered by a separate license and not available through the APIs.) These newly opened APIs will also allow accessory developers to explore new territories by creating devices that talk to the iPhone through its dock interface. Apple demonstrated a blood pressure application that used a cuff connected to the phone and another app that measured insulin levels for diabetics. Also new: peer-to-peer connectivity with other iPhones and more robust Bluetooth, including support for stereo headphones.

For those keeping score with our iPhone 3.0 wishlist, we got the Cut and Paste we hoped for, in a seemingly well-thought-out implementation. We also got the long-promised push notification service that Apple hopes will serve as a suitable alternative to background processes. Apple explained the delay by saying that developer response to the iPhone was much bigger than they expected and that they needed the extra time to ensure they had a scalable solution.

We did not get the video recording we hoped for, although Apple has opened the door for more methods of video streaming. The company also says it's been working hard on improving performance. And although application management doesn't appear to have changed, the new iPhone OS will gain Spotlight, a system-wide search tool accessed by "swiping" the home page to the left. Another system-wide (or at least system wid-er) enhancements is landscape view in almost all Apple-bundled applications.

As for the continued absence of Flash, I'm becoming more and more convinced that it's not so much a technical issue as it is Apple's wariness of losing control over the platform. Flash would enable the iPhone to do a lot of things, whether Apple wanted it to or not. And some of those things could bypass Apple's ability to charge for, or at least get a cut from them. Those capabilities, once in the wild, could be a very difficult genie to stuff back in the bottle.

You want more, you say? OK, there's also support for MMS messages, Voice Memos, the ability to email multiple photos, "automatic" login at WiFi hotspots, and support for tethering -- using your iPhone's connectivity to allow your computer to connect to the Internet. Tethering still requires support from the phone carrier, which Apple says "it's working on."

Apple says the iPhone 3.0 beta will be available today for developers and "this summer" for the rest of us. Those familiar with Apple's history of reading the calendar will note that summer lasts until September 19th (and a few hours into the 20th if needed.) Cost? Free for all iPhone users, which came as a surprise to me: I speculated that original iPhone owners would probably have to pay something for the update, due to Apple's use of subscription-based accounting for the iPhone. The update will set iPod touch owners back $9.95. Also of note: older iPhone and iPod touch owners will miss out on some functionality, due to limitations in the hardware. For first-generation iPhone owners, that means no MMS or stereo Bluetooth; owners of older iPod touch devices will not get Bluetooth.

If you're hungry for more of my take on the subject, I'll be taking part in a MacJury podcast panel where I expect to say "monetize" a lot.

 


Chuck La Tournous (twitter.com/RandomMaccess) is a writer, marketer, musician, speaker, podcaster, pundit, art director, web developer and all-around geek. In addition to writing for The Mac Observer, Chuck speaks about technology and marketing issues and appears on podcasts like the MacJury and Your Mac Life. Once a year or so, he dusts off his bass guitar to play with the Macworld All-Star Band.

8 comments from the community.

You can post your own below.

Lee Dronick said:

Good point about Flash maybe taking things from Apple.

I hadn’t missed cut and paste much until today when I thought about it. A good use would be for boilerplate text kept in Notes. Also to clean dross out of an email, before replying.

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grady15 said:

Well apple says there are 100 new features they showed us about 20 today so thats hope they still have some fun up there sleeves!!! Cant wait till june/july!!

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Terrin said:

Apple is using subscription accounting on both generation iPhones so that it can give away feature updates. The cost of the updates is accounted for in the deferred payments. I believe Apple is drawing the accounting out two years. So I suspect first generation iPhone users will have to pay for subsequent updates (e.g. iPhone 4.0). The iPod Touch on the other had uses traditional accounting and the update will be charged for.

You write, “Free for all iPhone users, which came as a surprise to me: I speculated that original iPhone owners would probably have to pay something for the update, due to Apple’s use of subscription-based accounting for the iPhone. The update will set iPod touch owners back $9.95. Also of note: older iPhone and iPod touch owners will miss out on some functionality, due to limitations in the hardware. For first-generation iPhone owners, that means no MMS or stereo Bluetooth; owners of older iPod touch devices will not get Bluetooth.”

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Chuck La Tournous said:

@Terrin. Exactly right, and that was my point. You’re correct that Apple’s using a two-year subscription period. That puts the first flock of iPhone owners outside of their two-year window when the 3.0 update will come out, which is what made me believe original iPhone owners would have to pony up something for the update. It will be interesting to see how Apple will handle for-pay upgrades when time comes. Will they somehow base it on purchase date? That seems like a difficult task. Perhaps the next update won’t be made available at all to 1st-gen iPhone owners. Time will tell.

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azarkon said:

I disagree with your assessment of lacking flash.  Flash is a popular web environment, but it’s not very processor friendly.  this is especially true with flash video, one of the most common uses of flash on the web, and also notoriously processor hungry.  I had a G4 powerbook for years, and it was incapable of playing anything but the smallest web video without stumbling, but video has kept getting richer.  Let alone munging battery life, it might well be impossible for flash video to run on the iPhone.  Apple’s investment in writing a custom YouTube application, and converting all of YouTube’s content to H.264, betrays that there must be some technical hurdle to warrant such jumping-through-hoops.  Since apple has released a public SDK and hosts all sorts of free applications, it’s hard to see the merit of your argument that flash would allow the iphone to “do a lot of things… [that]could bypass Apple’s ability to charge for… them.”  Given apple’s public support of newer and better open source web-development tools, (and things like Hulu which can compete with iTunes) I can understand why apple is disinterested in bringing flash to the iphone if it could?I don’t think it’s deliberate manipulation on apple’s part.

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golook said:

WoW 13,000,000 million ipod touches!
Mulitiple that by 10$ and its 130 million $$$
Even though it can’t use a good portion of 3.0
Not to mention that the people who have an ipod touch are that much more likely to buy games!
Maybe Apple should consider a considerable update to the ipod touch, with GPS, with a Microphone and with Bluetooth!
Right?

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drjason said:

“Free for all iPhone users, which came as a surprise to me: I speculated that original iPhone owners would probably have to pay something for the update, due to Apple’s use of subscription-based accounting for the iPhone”

Ummmm….correct me if I’m wrong, but as long as you have an active iPhone on the AT&T network you are still a “subscriber”, I would expect there will NEVER be a charge for iPhone OS upgrades.

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Chuck La Tournous said:

@drjason “Subscription” in this sense refers to the accounting methodology Apple is using to book the revenue from the iPhone. It’s spread out over two years rather than immediately. It has nothing to do with being a “subscriber” to AT&T.

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