• by Mark Walsh  @markfwal, March 17, 2009

Apple Inc. Tuesday unveiled details of its next-generation iPhone operating system, which will be released this summer and will offer a number of new features including "push" notifications, MMS messaging, the ability to cut and paste text and get turn-by-turn directions.

Apple will offer the new iPhone OS 3.0 to current iPhone customers as a free update, while selling it for $9.95 for the iPod Touch. The company provided a preview of the forthcoming iPhone software during a presentation at its Cupertino, Calif. headquarters.

Underscoring the continued demand for iPhone applications, Apple executives said more than 800 million had been downloaded to date from its App Store, with more than 25,000 available. More than 17 million iPhones have been sold so far in 80 countries.

Many of the new features and initiatives announced Tuesday addressed long-standing criticisms from iPhone users and developers. Apple, for instance, last year had promised developers it would deliver push notification--the ability to alert iPhone users running one application when new data, like an IM message, pops up in another app not in use.

Scott Forstal, Apple's senior vice president of iPhone software, described the new software as a major upgrade, with more than 1,000 new APIs for developers. They include new tools for streaming video and audio and in-game voice capability, and the ability to add Google Maps to apps (including turn-by-turn directions).

Developers will also now be able to sell subscriptions for their apps--and other content from within them--through a new In-App Purchase feature linked to the iTunes Store for authentication and transactions. As with applications sales, Apple will take a 30% cut of these purchases. Apple released the developer beta for the iPhone 3.0 OS Tuesday.

Other new iPhone features highlighted include Bluetooth wireless connectivity to find other iPhones or iPod Touches running the same app, Bluetooth stereo, voice memos, and Auto Fill. Search will be available across all Apple applications including Mail and Calendar and a new Spotlight page that will let user search all of them simultaneously.

Despite all the new iPhone frills in the works, competition in the fiercely contested smartphone space is far from over, according to at least one analyst. "Apple delivered no 'knock-out' blows to competitors with this release," said Avi Greengart, research director for consumer devices at Current Analysis. "Many of the features announced today are just catching up with what Windows Mobile, Symbian, and RIM have provided for years."

Putting aside the features checklist, the real impact of the iPhone 3.0 is that it will only enhance Apple's advantage in mobile applications. "Consumers are increasingly looking at smartphones as a platform investment that increases in value over time as applications are added," said Greengart. "By providing developers with an even richer set of API's in the iPhone 3.0 release, tying new types of hardware to the iPhone, and enabling the App Store to support in-application purchases or subscriptions, Apple is extending its lead in the application space."

Research in Motion, Nokia, Google and Microsoft are among Apple competitors that have already launched--or plan to soon launch--rival mobile application stores. Microsoft last week announced details of its forthcoming Windows Marketplace for Mobile, promising developers a speedy and open application submissions process in an effort to woo those who may have grown frustrated with Apple.

iPhone developers have complained for months that the approval process for apps is too slow and opaque. Part of the problem has been the sheer volume of submissions that Apple has to deal with, according to one iPhone and iPod-focused blogger.